Sat. Nov 26th, 2022

VietNamNet Bridge – Having tasted bitterness in doing business with Chinese
enterprises, Vietnamese say it’s not the time to make a break with Chinese.

 

Vietnam, Chinese businessmen, scrambling for materials, payment method

Hiep Phat, a ball bearing trade company, decided to import the products from a
well-known company in Guang Dung, China, instead of Japan, because the Chinese
products were much cheaper.

At first, everything went smoothly. The problems were only found in the fifth
consignment of goods which were found as made not in accordance with the agreed
specifications.

The Chinese side knows that customs agencies only examine 5 percent of the total
amount of goods; therefore, they played a trick to make the goods go through the
customs agencies.

The transaction then caused the loss of nearly one billion dong to the importer.
The Chinese partner admitted that it delivered refuse to Hiep Phat Company,
promising that it would make compensations in the next consignments of goods.

The suggestion by the Chinese partner has been accepted by Hiep Phat, which
cannot see any other choices. If Hiep Phat sues the Chinese partner before the
court, it would have to waste a lot of money, while it anticipated the big
barriers in the language and the high fees for lawyers.

Mekong Trade JSC is another example. The company imported 3 containers of paper
from a Chinese partner at $100,000. When receiving the deliveries at the port,
the enterprise discovered two rolls of absorbent papers.

The shipping firm, after the examination, came to the conclusion that it was not
the fault of the transportation process, and that it was the exporter who
deliberately provided low quality products.

Mekong then suffered loss from the import consignment, because the insurer
refused to make compensation, reasoning that Mekong only took the insurance
policy for the risks during the transportation process, not for all the risks.

However, it seems that Hiep Phat and Mekong were still luckier than Phuong Dong,
who suffered heavily from the trick played by the Chinese partner.

Phuong Dong, which once served as the exclusive distributor for a Chinese
enterprise, made every effort to build up and develop the distribution network
in Vietnam. However, the company could not reap the fruits, because the Chinese
partner jumped into the Vietnamese market and distribute its products directly
to consumers. As a result, Phuong Dong had to quit the market, leaving the large
network it spent many years to build.

Prevention is better than cure

Though it is risky to do business with China, Vietnamese enterprises say they
still want to import goods from China which can bring good profits.

However, having learned from the lessons in doing business with China, the
enterprises have taken precautious steps to avoid risks.

Thanh from Hiep Phat said the company still keeps the business relation with the
Chinese company, but it has decided to change the payment method. Hiep Phat only
makes payment under the deferred L/C mode, 7 days after receiving the
consignments of goods. Especially, the two sides have agreed on a higher fine
for the breaking of the contracts.

Nguyen Lam Vien, General Director of Vinamit, said Vietnamese businesses should
ask Chinese partners to show their business registrations. Besides, they also
should consult with the enterprises in the same business field and the
Vietnamese Embassy about the capability of the Chinese enterprises before
signing contracts.

DDDN

By vivian