Exporters compare notes on risk
Exporters compare notes on risk
Exporters should carefully check the background of new customers and the terms before signing export contracts, a conference on risk management in international trade heard from bitter business executives.
Organised by the Handicraft and Wood Industry Association of HCM City (Hawa) in HCM City on Wednesday, the conference was held soon after a major trade dispute broke out between Czech furniture distributor Global Home S.R.O. and many Vietnamese woodworking companies.
Dong Nai-based furniture maker Gia Han Ltd Co was the first to accuse Global Home of not making payments.
Nguyen Huu Ngoc, the company's director, said Gia Han signed a contract with Global Home to export furniture in 2012.
As of July last year the Czech company had owed his company US$493,000.
It had also ordered another consignment of wooden products worth $280,000 but failed to take delivery. As a result, the items remain in stock, causing his company losses, he said.
His executives tried to meet Global Homes CEO Otto De Jager many times, but the latter refused, saying his company had not paid because of quality problems.
Gia Han has since complained to the provincial Police.
Executives of many other companies like Viet-My Co and Ha Noi-based Cuu Long Furniture Company said they were in a similar plight as Gia Han.
Nguyen The Truyen of Thien Thanh Law Office, who provided legal consultancy to Gia Han, said after seeing its contract with Global Home, he realised that many provisions were inimical to Gia Han, including the fact it was in English and based on British law and the international arbiter in case of a dispute was in Hong Kong.
Instituting arbitration proceedings in Hong Kong would cost Gia Han a lot of time and money, he said.
Truyen said many Vietnamese businesses only paid attention to the pricing and payment terms, not other provisions.
Pham Ngoc Hung, deputy chairman of the HCM City Union of Business Associations, said a dearth of new contracts meant many businesses were happy to get whatever they could and so mainly paid attention to delivery date and payment and not other conditions.
Viet Nam had the International Arbitration Centre attached to the Viet Nam Chamber of Commerce and Industry, and businesses could choose it to resolve disputes.
Tran Quoc Manh, Hawa deputy chairman, said importers and exporters should have staff well versed in foreign trade.
They should consult lawyers if the contracts were large, he said, adding that they should pay close attention to dispute-related provisions.
Nguyen Chien Thang, a former Hawa chairman, said firms needed to carefully study information about new customers to ensure they did not deal with dubious companies.
Delegates agreed that business groups played an essential role in their industries and called for holding more meetings to share information or provide warnings to help their members avoid risks.
The Hawa office, where the meeting was going on, had a visitor at the same time: De Jager, who came to meet Huynh Van Hanh, another deputy Hawa chairman.
Hanh said he had rejected Gia Han's charges and said it had been putting undue pressure on him, and furnished documents related to dispute with Gia Han and other companies.
He had told the visitor that the association received complaints and documents from several Vietnamese companies though it did not have the power to resolve the disputes, he said.
De Jager promised to come again two weeks later to work with the association on the problem.
