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

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