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How would you approach this?


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OK so here's a live situation.

 

A non food product is sold in the biggest convenience store in thailand for the last 6 months through a Thai company who obtained distribution from an overseas mnfr.

 

The item is thai fda approved.

 

60'000 units have been shipped to Thailand but the overseas company is deeply unhappy with the Thai distributor to the point no more stock will be sold to them.

 

The product has a footprint in europe across tesco/boots/etc etc.

 

The overseas company shipped 60k in one shipment they have zero visibility of sales but the item has been seen in the stores nationwide.

 

The Potential is huge and could be replicated throughout SEA and through many similar stores to boots/tesco etc.

 

The Thai Co.  Are in breach of contract the door is open for a long term distributor to step in and take the business but without visibility of sales with large store it's very difficult to guarantee the client is still buying.

 

The item is still in store. It's been 6 months.

 

How would you handle this?

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Just now, FritsSikkink said:

Go to court, sue the distributer and place a paid add to find another distributer.

Basic unsavvy advice. Sorry but that's a really poor response but you killed 2 birds with 1 stone so thanks for input.

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Clearly, the first consideration is what's in the contract (assuming there is one...).  Distributor requirements are typically specified, and remedies against non-performance usually specified in detail - along with dispute settlement processes.

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1 hour ago, Rc2702 said:

Basic unsavvy advice. Sorry but that's a really poor response but you killed 2 birds with 1 stone so thanks for input.

It is very poor to come with this sort of business issue to a forum like this. Contact the client yourself and get info about the sales.

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Just now, FritsSikkink said:

It is very poor to come with this sort of business issue to a forum like this. Contact the client yourself and get info about the sales.

The 2nd very weak response you have provided. You do not rock a boat without knowing if there are people aboard. 

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48 minutes ago, dinga said:

Clearly, the first consideration is what's in the contract (assuming there is one...).  Distributor requirements are typically specified, and remedies against non-performance usually specified in detail - along with dispute settlement processes.

PS  Am I correct in assuming you would like to replace the current distributor? 

 

If so, suggest the manufacturer needs to exhaust the contractural processes in order to formally cancel the current agreement.  That process should include trying to getting sales/whatever information you need in order enter into new Distribution Agreement.  I wouldn't be interested in getting directly involved until after the current contract has been formally cancelled - indeed you might want some indemnification that you won't be dragged into litigation as a result of problems between the manufacturer and the current distributor.

 

 

 

   

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3 hours ago, Rc2702 said:

The 2nd very weak response you have provided. You do not rock a boat without knowing if there are people aboard. 

 

Hey Rc2702,

 

Why don't you just send the answer you want, then someone can paste it in. 

 

No need to waste time with all these people who can't read your mind.

 

I thought your original post was so badly written that no one would be able to understand how you fit into the situation or how to help. I was actually impressed someone tried.

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Q1: Who obtained the Thai FDA approval? the manufacturer or your Thai distributor?

Q2: Is there a registered trademark on your product? and if yes who holds the Thai registration? 

Q3: Does your current distributor in Thailand have a special relationship with the outlets that are best placed to sell your product?

Q4: Is there a possibility that your product isn't actually going to fly off the shelf in Thailand regardless of who your Thai distributor is?

 

 

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6 hours ago, FritsSikkink said:

Go to court, sue the distributer and place a paid add to find another distributer.

 

Is there a contract? Does it spell out in detail, where the product must be displayed: near a door, middle shelf etc.,

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4 hours ago, Rc2702 said:

The 2nd very weak response you have provided. You do not rock a boat without knowing if there are people aboard. 

Sort it out yourself smart guy. I couldn't care less what happens to your company.

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9 hours ago, Rc2702 said:

Basic unsavvy advice. Sorry but that's a really poor response but you killed 2 birds with 1 stone so thanks for input.

Wow genius, that’s exactly the sort of comment that would encourage members to try to help you (not!).

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1. As already mentioned, who obtained the FDA approval is quite crucial. I'm not 100 per cent on this, but if a Thai company has the approval, aren't they the only ones who can import? That definitely needs to be clarified with the FDA.

 

2. You need a contact at, for example, Tesco (Thailand) Head Office who can give you their cost price and also sales data.

 

3. You might still run into problems because the previous company has paid the fees to get the product as far as the shelf, so I would imagine they would want the FDA fees, slotting fees and some advertising spend back as a minimum if they are going to exit - assuming they hold the FDA license and can make life difficult.

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1 hour ago, blackcab said:

1. As already mentioned, who obtained the FDA approval is quite crucial. I'm not 100 per cent on this, but if a Thai company has the approval, aren't they the only ones who can import? That definitely needs to be clarified with the FDA.

 

2. You need a contact at, for example, Tesco (Thailand) Head Office who can give you their cost price and also sales data.

 

3. You might still run into problems because the previous company has paid the fees to get the product as far as the shelf, so I would imagine they would want the FDA fees, slotting fees and some advertising spend back as a minimum if they are going to exit - assuming they hold the FDA license and can make life difficult.

Thanks for the responses. I think the FDA was paid for by the mnfr but the Thai distributor has it. I'm just trying to find out if this Thai FDA is registered and if it is allocated to a specific company.

 

I agree, we need someone with an existing relationship with the retailer who could delicately approach the matter. Existing supplier claims they are being paid "on scan" which indicates relationship is new and this payment method is being used as a reason for delaying payments to manufacturer and then some. This was not the deal agreed with overseas mnfr.

 

The legal route could damage the existing retailers appetite for the product but if it appeared available via one of their more trusted suppliers with a better marketing plan and more experience overall. It could be an easier transition.

 

There was no exclusive granted in any way shape or form and the Thai Co. has only paid 10% of what they owe and the last payment received was 5 months ago. 

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Just now, 8OA8 said:

Q1: Who obtained the Thai FDA approval? the manufacturer or your Thai distributor?

Q2: Is there a registered trademark on your product? and if yes who holds the Thai registration? 

Q3: Does your current distributor in Thailand have a special relationship with the outlets that are best placed to sell your product?

Q4: Is there a possibility that your product isn't actually going to fly off the shelf in Thailand regardless of who your Thai distributor is?

 

 

1. Checking, but paid for by overseas mnfr.

2.checking, will confirm thai TM. 

3. Does not seem to be the case at all. They have also been given enquiries for other big companies and do not seem to know how to handle them.

4. Very difficult to answer. My understanding of the process for nationwide exposure on shelf was the item was originally trialled in a batch of stores and upon successful trial it was rolled out to all stores.

 

The product sells a lot in EU and the purpose of the item is much more applicable in SEA and the price point has been brought in line with the region.

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Just now, scorecard said:

 

Is there a contract? Does it spell out in detail, where the product must be displayed: near a door, middle shelf etc.,

No idea but the contractual dispute is payment related between overseas Co.  And thai Co. 

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19 minutes ago, Rc2702 said:

...the Thai Co. has only paid 10% of what they owe and the last payment received was 5 months ago.

 

They gave the goods on credit to a company in Thailand? This will be a learning experience for them.

 

What's the approximate price per unit?

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21 minutes ago, Rc2702 said:

...supplier claims they are being paid "on scan"

 

Don't forget that with some companies it will be paid on scan, in bulk at end of the month, plus 90 days credit and then the cheque is printed 14 days later during the next print run.

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Just now, blackcab said:

 

They gave the goods on credit to a company in Thailand? This will be a learning experience for them.

 

What's the approximate price per unit?

Yes they did. Approx 120 baht a unit.

 

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I believe that all the repies were posted in Ernest and trying to be helpful. Let’s please be respectful of that.

 

I’m also in the distribution business but aerospace products so unrelated. 

 

The contract should lay out all the “what if’s” and sometimes important ones are missed. I don’t know how the stores in Thailand operate. In the US there’s a lot of different scenarios..... ie if your product is eye level so it’s easily seen it costs more for that space. 

 

Wish you all the best and hopefully the products a great success. Get your arms around it and wade through it until you find a solution without alienating people you may need for success 

 

 

 

 

 

 

 

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39 minutes ago, DJ54 said:

The contract should lay out all the “what if’s” and sometimes important ones are missed.

 

I do agree with you. Unfortunately, if one party does not perform then often times the only remedy is Court.

 

In Thailand that can take a decade or more, and you will have to pay substantial legal costs in advance. Even if you get a judgement, the chances are the company will have no assets to seize.

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Just now, blackcab said:

 

I do agree with you. Unfortunately, if one party does not perform then often times the only remedy is Court.

 

In Thailand that can take a decade or more, and you will have to pay substantial legal costs in advance. Even if you get a judgement, the chances are the company will have no assets to seize.

I agree I don't see how a court direction will be helpful or productive. The opportunity is more important and understanding how the FDA certificate is allocated is the first issue we need to understand.

 

The mnfr went against the advice of a very well placed associate and handled this deal in a very unsecured way but the opportunity is real which is why I have sought advice from TV members, some of whom, clearly have an understanding of the issues and the FDA matter is critical.

 

If the opportunity for growth and a thai Co with significantly more experience can be sought then this is the main driver. Was a lot of work to get the FDA approval so this has got to be developed.

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2 minutes ago, Rc2702 said:

...understanding how the FDA certificate is allocated is the first issue we need to understand.

 

Let us know the outcome because that's very useful information for everyone.

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Just an update.

 

A contract was drafted for signatory but never signed by thai Co. 

 

I am just waiting for the manufacturer to dig through emails and advise the TFDA registration number. Once received will view the registration on MOPH website and update.

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19 hours ago, Rc2702 said:

Just an update.

 

A contract was drafted for signatory but never signed by thai Co. 

 

I am just waiting for the manufacturer to dig through emails and advise the TFDA registration number. Once received will view the registration on MOPH website and update.

I'm curious now as to what your role is in this business relationship? 

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Just now, 8OA8 said:

I'm curious now as to what your role is in this business relationship? 

I'm one of two people that advised him to ensure he gets payment in advance. I'm now the guy that is tasked with:

 

Identifying the Thai fda licence and if it is allocated to any particular Co.  Or person.

 

Identifying the existing resellers appetite for ongoing supply.

 

Identifying any potential new distributors with existing relationship with current and future resellers.

 

 

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10 hours ago, Rc2702 said:

I'm one of two people that advised him to ensure he gets payment in advance. I'm now the guy that is tasked with:

 

Identifying the Thai fda licence and if it is allocated to any particular Co.  Or person.

 

Identifying the existing resellers appetite for ongoing supply.

 

Identifying any potential new distributors with existing relationship with current and future resellers.

 

 

I suggest in the first instance that you request the Thai company to either show you, or a representative on the ground the stock still in their warehouse, or show the delivery note copy from the retailer.

The delivery note will be certified with the retailers company seal and even if they don't want you to know the price they are receiving from the retailer they can give you a redacted copy, as long as it shows the number of items delivered to them.

If they are genuinely not shifting the product, if this is the reason for non payment, they will be happy to show you or the representative such proof. Make the judgement call after that. 

FYI many items that were high volume in other parts of the world were only a sample container load to Thailand market and no repeat orders. Whereas similar stores in other parts of the world would be taking 3-4 containers of the same product each month. 

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14 hours ago, Rc2702 said:

I'm one of two people that advised him to ensure he gets payment in advance. I'm now the guy that is tasked with:

 

Identifying the Thai fda licence and if it is allocated to any particular Co.  Or person.

 

Identifying the existing resellers appetite for ongoing supply.

 

Identifying any potential new distributors with existing relationship with current and future resellers.

 

 

Can you visit some retail branches who are supposed to be selling it and see if its even on the shelves? 

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