Question

Case analysis:

In 2016, an import export company of Shandong Province, China, signed a contract with a farming company of Kobe. Japan, according to which, the Chinese company exports garlic to the Japanese company on the basis of CFR of USD 450/ton via Qingdao to Kobe, with the delivery date no later than June 15th of 2016. Detailed requirements of the goods specification, package and transportation are clearly stated In the contract. The Japanese company proposed that, considering the first cooperation and the trading amount, T/T be adopted in terms of payment.

The Chinese company delivered the goods as requested and faxed the B/L to the Japanese company, but no feedback was returned because it happened to be a weekend. On Monday morning, the Japanese company informed the Chinese company of the receipt of the fax, and meanwhile, it asked the Chinese company to confirm the B/L because of the difficulty of identifying the B/L number. Obtaining the confirmed number from the Chinese company in the afternoon, the Japanese company promised to make remittance the next day.

Early next morning, the Chinese company received a fax from the Japanese company. in which it alleged that on inspection of the goods, they found disparity between the goods received and the required standards, and expressed its reluctance to pay immediately. The Chinese company looked into this allegation immediately and offered reasonable explanations, pleading for understanding from the Japanese company.

However the Japanese company insisted on a further reduction price with the excuse of the goods specifications failing to meet the required standards. Both parties came to an impasse.

Question:1. Talk about the reason that leads to the impasse.

2. How to deal with the impasse?

3. How to avoid the same situation fo the exporter?

Answer 1

1. The reason for the impasses is the i) loss of B?L no. for processing and ii)quality disparity or not matching with the standard they agree with. iii) non-satisfactory explanation and iv)Reduction in payment due to poor grade products.

so these issues brought the companies into an impasses situation.

2) Now both the company needs to justify their points.

a) IF the product quality is not up to the level then the Chinese company should come down with a low price what Japanese company asks for.

b) IF the product is good but due to transportation some damages came then the Chinese company should give a discount for a future good relation.

c) IF a Japanese company doesn't satisfied with the process and the product it could ask for modification or the exchange of products and pay the full amount. but there is a drawback w3ith that process as the consignment already reached and the returning shipment will cost added so better to discount the price and get paid.

d) they can completely return the product by giving some portion of packing and transportation charges.

3. An exporter can check before the transportation and all the quality should be properly checked as this is the beging of an exporter's business. so the exporter should be extra precutious about the product and document with proper evidence.