Importer - Have Problems Dealing With Thai Company

[OddTunes]

I need some advice, but let me first briefly describe the situation...

I manage a small Australian company which imports gift and fashion items, my partner is Thai. We met a company at the BIG fair back in April and a couple months later we signed an exclusive distributorship agreement with them for Australia. We began shipping their product out of BKK port every couple weeks. We immediately discovered quality issues with the product and initially the company was very generous and offered to solve the issues on their end and offered us replacement parts. But while they may have solved some issues, other quality issues came up as more shipments arrived. Over half the goods they shipped us were defective in some way, and appx. 10% were not re-sellable by us and needed replacement.

However the company started denying there had ever been any problem on their end, even claiming that somehow the goods must have been damaged during shipping, which is ridiculous since we were complaining about things like sharp edges on fittings, missing components, and obvious deformities. Things grew to a head when a few months later they suggested we cancel the contract! We did in fact cancel our remaining orders and demanded compensation in some way for the defective goods already shipped, plus an assurance that all future shipments will arrive in an acceptable condition. They demanded we ship all defective goods back to them first so they could make a determination whether they would replace them or not. We refused and instead emailed them digital photos of the goods and I even visited them at the next BIG fair in October and brought a handful of samples. They were unsatisfied and stated that their policy is the customer must return all the defective goods to them.

I had already prepared a complaint letter about this company in Thai and English and presented it to the organizers of the BIG fair and they acted like they had never seen any such thing before and it was obvious that it must have gone straight into the bin just as soon as I left their desk.

A few more back and forth emails and phone calls with this company, and with each email they wrote to us things got more and more insane. Whenever we tried to call them they would hang up on us and leave their phone off the hook for an hour or two! Eventually they sent an unsigned email to us using the most foul language I've every heard any Thai person use, and in essence they ridiculed us personally for ever having been so stupid to have done business with them in the first place and that they have decided the case is closed, they will never replace our goods or our money. Yes, they were right about one thing, I was bloody stupid to have done business with them. I should have seen the writing on the wall when they insisted we pay by cash directly into the company owner's personal bank account, minus sales tax.

Now, we're not talking about a lot of money here, only around US$5000 lost. But the biggest frustration I am facing now is getting somebody at the Thai Trade commission to take some action, let alone listen, to my complaint. Making calls locally or in Thailand to the Thai trade ministry we can easily find some person who sympathises with us, but says he can not help and so passes the buck to another department. At the very least, I'd like to see this company banned from exhibiting at future trade fairs. They clearly have no idea how to do international business.

Like I said, it's not the money. They personally insulted me. That's what finally pissed me off. Apart from hiring a mob to break someone's kneecaps, how can I get these guys back? It seems like they know very well that the trade ministry is ineffective at stopping them. When I mentioned I was going to file a complant, they actually said to me "Go ahead, we don't care!". And when I mention to any trade ministry person that they are not even collecting sales tax, it doesn't even get a reaction. I'm totally stumped what to do next.

Here's the real kicker -- we just sourced a new factory which produces the exact same product, better quality, faster lead time, and much cheaper. Guess where? China. Do you think the Thai Trade Ministry cares now?

Has anyone ever been in a similar situation? I'd love to hear how you resolved it.

[stopper]

I would recommend you contact the Australian Trade Commission. They can point you in the right direction.

http://www.austrade.gov.au

Austrade Bangkok

Australian Embassy

37 South Sathon Road

Bangkok 10120

Thailand

Tel: (66 2) 287 2680 Ext 3333

Fax: (66 2) 287 2589 or 1893

Email: [email protected]

Office hours:

8.00am to 5.00pm, Monday to Friday

[dr_Pat_Pong]

It is of no concern at all to the Austrade Office, neither their function or their interest. Their responsibility is Australians marketing overseas You can certainly try the Thai Trade Centre, 75-77 Pitt Street, Sydney 2000 Tel 02 9241 1075. That is a branch of the Thai Commerce Ministry in Australia.. Good luck.

[Guest IT Manager]

First point...caveat emptor.

Second, when foreign residents/expats say TiT, this is what we mean.

The money is gone. Name the company in a website then pass on details to me by PM and I will ensure it gets some sort of airing. Use a site on yahoo/tripod. It's free. Make the website and forward details.

Last point, use a foreign buying agent. The money it costs will save this. Don't use a Thai to do it, use a foreigner. The agent may end up being the brother of the owner.

Sorry.

[ThaiAdventure]

The only way to ensure quality is at the exit point. Goods need to be inspected and accepted by YOUR representative before shipping and refused if defective or of insufficent quality. This enables the Thai company to offer replacements at minimal expense. As far as the Thai company is concerned, they probably consider that they have fullfilled thier obligation of supplying the goods once they have been shipped. The more you complain, the less they will do....that is the Thai way. Once they have the money they really don't care that much. If the payment is dependant on acceptance at the exit point then you are in a much stronger position.

I expect your contract with the supplier covers refusal of defective goods and has contingencies that the supplier must follow. It is very difficult to enforce if the goods have already arrived in Australia.

I agree in principle with IT but it will not solve the problem. Most companies put a quality inspector on location and they act as the "gate" for handover. This applies even in China.

[megashox]

My company had an incident with a Thai producer of plastic and silicone products. We have dealt with them for about 3-4 years. Some months ago, our accounting dept transferred money to their account by mistake (it was actually meant for another supplier in Thailand). On realizing the mistake, we immediately wrote to them asking for a refund - after deducting any expenses incurred by them.

So far, we have nothing and every time we call them they told us that the refund is awaiting their internal management approval. It sounds as if we are asking them to loan us some money!

The amount is less than US$ 10K, but now we know their nature and will not do any further business with this company for sure. China - Here we come!

[udon]

"IF" our great leader introduced 'The Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982 (as amended).'

95% of Thai companies or traders would be out of business within 6 months or less.

The attitude here seems to be "fuk-u" we don't give a <deleted>.......

Link

Good luck but I don'tlike yr chances of recovery of your $$$.

[OddTunes]

Thanks to everyone who replied!

I did contact the Thai Trade ministry representative in Sydney, but as I mentioned before, they really could only offer us a sympathetic ear. This person passed the buck on to another person in the Thailand office. We're in the process of contacting them now, and as I'll be in BKK next week for other business I'll see if making a personal appeal will make any difference. At this point, the money lost does not concern us, we really just want to see this company banned from the BIG show in the future, or investigated for tax evasion, or whatever else we can get to stick. That'll hurt them much more than reimbursing us.

I have to agree that we should have been much more careful to inspect before the goods were even shipped out of Thailand. However doing so involves removing all packing and product packaging, which is not a realistic option. The best option might be we post one of our people at their factory to inspect as they pack stuff up. This factory later admitted to us that they have no QA whatsoever, and when I suggested they hire even just one girl at a couple hundred baht per day to do the job, they said it probably will never happen. I don't know if they are stupid or keeneow or both.

BTW, I'm not clear how one would go about inspecting goods for quality which are to be delivered FOB Bangkok. Any suggestions?

Since we still do a lot of business with Thailand might I ask how you go about finding a foreigner buying agent in Thailand? What sort of fees or commissions will they charge typically? How could I determine if he is qualified? How can I tell if he's really trustable and fighting for the best price for us and also not getting a few points for every single purchase we make into the future. Is there any sort of buying agents association in Thailand?

Lastly, I would love to make a website to lay the facts out in public, maybe later if things don't work out well. For now I think overflowing their e-mailbox by signing them up to every porn/viagra/gambling spam list might be fun...

[Guest IT Manager]

You employ a buying agent and contract them to do QA at delivery and packing point. Pay them a commission on quantity against dollar value. Essentially they are contracting their service to you, to ensure you get what you are paying for as opposed to what the lazy natives reckon they can get away with.

It will cost you for transport, expenses invoiced and then payment is against the value of what arrives based on a formula discussed with and agreed to by the buying agent. They essentially become an arm of your company in-country.

PM me for specific details.

[ThaiAdventure]

If you contact the Chamber of commerce may then they can help you with contacts.

"How can I tell if he's really trustable and fighting for the best price for us"

The only way you can trust that anyone in Thailand is fighting for your corner is to place someone from your company there. While they are there, they can research buyers and vet them (double QA for the first...lets say 10 shipments). When they have sufficiently proved their competance you can retrieve the employee (but I would suggest leaving them here as liason). Most companies set up a field office/branch for this purpose.

I agree with IT in that the long term solution is probably a buyer but in the initial stages of your venture it may complicate matters by diffusing your control over the shipments and adding an extra level of complexity.....and finger pointing.

One last point.

Thai business has a huge emphasis on personal relationships (as do many East Asian cultures). It is very difficult to cultivate these relationships remotely.

[Butterfly]

Classic. Always have someone here verify the goods before they leave the customs.

Also 10% defective rate is pretty low. I have seen 30% and even 40% in other SE Asian countries.

You probably pissed them off by being snotty or too demanding. A cultural clash. With the Thais, you can't confront them if they are doing something wrong. You have to be "smarter" than that. I think you have "insulted" them in some way and this is how they paid you back. I am sure you didn't mean too, but still you did for them.

Let it go, it's costing you more in time and worries

[Richard Hall]

Thanks to everyone who replied!

I did contact the Thai Trade ministry representative in Sydney, but as I mentioned before, they really could only offer us a sympathetic ear. This person passed the buck on to another person in the Thailand office. We're in the process of contacting them now, and as I'll be in BKK next week for other business I'll see if making a personal appeal will make any difference. At this point, the money lost does not concern us, we really just want to see this company banned from the BIG show in the future, or investigated for tax evasion, or whatever else we can get to stick. That'll hurt them much more than reimbursing us.

I have to agree that we should have been much more careful to inspect before the goods were even shipped out of Thailand. However doing so involves removing all packing and product packaging, which is not a realistic option. The best option might be we post one of our people at their factory to inspect as they pack stuff up. This factory later admitted to us that they have no QA whatsoever, and when I suggested they hire even just one girl at a couple hundred baht per day to do the job, they said it probably will never happen. I don't know if they are stupid or keeneow or both.

BTW, I'm not clear how one would go about inspecting goods for quality which are to be delivered FOB Bangkok. Any suggestions?

Since we still do a lot of business with Thailand might I ask how you go about finding a foreigner buying agent in Thailand? What sort of fees or commissions will they charge typically? How could I determine if he is qualified? How can I tell if he's really trustable and fighting for the best price for us and also not getting a few points for every single purchase we make into the future. Is there any sort of buying agents association in Thailand?

Lastly, I would love to make a website to lay the facts out in public, maybe later if things don't work out well. For now I think overflowing their e-mailbox by signing them up to every porn/viagra/gambling spam list might be fun...

Dear Odd Tunes,

Sorry to learn about your negative experiences and wishing you luck that you can eventually straighten things out. Guess trying to "punish" them or even get them officially banned will not get you anywhere but just wasting your own time and resources. Anyway the BIG is organized by DEP (Department of Export Promotion) and these are the guys that really care about proper business practises particularly in respect of "badly" wanted export business. Black sheeps should be reported to them so that future invitations as an exhibitor are no longer extended.

Dealing with some Thai companies can be indeed kind of challenging if not say frustrating but after all there are still good ones around. Besides lacking quality keeping deadlines is another aspect of concern.

Actually, the kind of biz you are describing is exactly what my Bangkok located company is doing. We have much more to offer than just being an agent because we are a legitimately registered trading company offering much more that brokering.

Any interest to learn more and get the full background scoop just pass me a mail at [email protected].

Cheers.

[Richard Hall]

Any interest to learn more and get the full background scoop just pass me a mail at [email protected].

Cheers.

Whoops, it's still gotta be that x-mas influence - can not even write my e-mail address right. Forget about the triple w - the rest is already good enough.

On my next year's wishlist "improved writing skills" will be surely far on top.

[Crash999]

Oddtunes,

I manage a buying agency here in Thailand, helping importers and retailers export Thai products to North America and Europe. The problems you've experienced are actually very common. It's good that you found a cheaper source for your items (photo frames?) in China but I must tell you that our China office finds far worse issues with their factories there and without changing your system of product sourcing it's highly likely you're going to run into the same problem again.

One of our most important services for clients is performing QA inspection on the finished goods, and in the case of complex items like garments or furniture, multiple inspections. Only after we have inspected the items and found them to be free of duty issues will we release an inspection certificate to the factory, which is part of the L/C terms issued by our customer. Thus the factory can't get paid until we certify that the goods are free of defects.

I don't have the actual stats in front of me, but off the top of my head I'd estimate that we reject 30% of all garment inspections and 20% of all non-garment inspections. On occation we find serious issues with the product that would have rendered them completely unfit for sale. Now bear in mind these are goods the factories would otherwise have shipped and you can start to see how problems like yours arise.

The real question here is where does the factory's responsibility for its products end. In terms of FOB deliveries directly from factories, leverage is lost the moment the factories are paid- really this is industry standard practice, not only in Thailand but all over the world for goods shipped on an FOB basis.

You may find a sympathetic ear with the department of export promotion or BIG organizers, but the problems you described are very very commonplace- as factories will have different standards from their customers as to the level of quality they find acceptible. What the customer calls a defect the factory might call a natural variance of the product caused by customer requirements. Really it becomes their word against yours and the BIG organizers aren't going to step in to arbitrage the situation.

I'd recommend you cut your losses here, especially if you plan to continue importing products from Thailand, as the chances are slim to none that your efforts will do anything except waste more of your time and energy.

The first thing you should do before importing more goods is establish a local quality assurance representative to inspect your goods before shipment. This can be done relatively cheaply by local quality labs such as ITS (Intertek Testing Systems) or MTL (Bureau Veritas) on a per-shipment basis. They have offices all over Asia and will do a great deal to stop situations such as this one from happening again.

I also recomment (if you're not already doing so) requiring that vendors send a sample of the product you wish to order to the above-mentioned testing labs before you place an order- especially any product that can be dangerous (such as candles) or ever comes into contact with food.

Good luck next time around and see you at the next BIG show!

Crash

PS - PM me the name of the supplier- I know most of the larger ones here in Thailand and am curious to know who it was that has been jerking you around