A DEAL WITH MANY MISTAKES. PART 1
13/06/2011
Several mistakes made by the importer from the very beginning of the deal led to serious financial losses in the end. Below is a short guide on what not to do when importing.
Recently we have seen a few similar cases and understood that companies from different branches make similar mistakes that can easily end up in financial losses. The worst thing in all these stories is that the mistakes were made from the very beginning of the deal followed by a number of wrong decisions at the very end when the money lost was difficult to recover.
We summarised these cases into one that clearly shows what mistakes were made by the importer.
Company A is a European importer of car tyres. While searching for a new supplier the company found an Asian exporter, Company B. The supplier was found on one of the leading internet trading portals and the firms had no previous experience in doing business with each other. After short discussions the companies reached the agreement and the buyer received a proforma-invoice for transferring 30% prepayment. The money was paid and the buyer was waiting for the consignment to be shipped.
Soon the seller informed the importer that the goods were prepared and shipped to the destination. Company A received the copies of the shipping documents and the invoice for the remaining amount. The money was transferred and Company B sent the originals to the buyer. By this time the importer did not expect any surprises from the seller and was sure that the deal was going smoothly.
When the cargo arrived, the buyer brought the container to his warehouse and started to unload the tyres. During the unloading Company A noticed that part of the tyres were of good quality but the remaining tyres were much worse than was promised by the supplier. Some of them did not have any identification marks and some even looked retreated rather than new. The buyer took photos of the tyres and began writing the claim to the seller. In the meantime, the tyres were stocked at the buyer’s warehouse. The good ones were immediately sold and since the company had customers waiting for the tyres it tried to repair the defected ones at its own workshop and sell them. Unfortunately, the repair did not succeed. The tyres were exploding, the customers were returning them, asking for a refund.
