What to Do When Your Chinese Supplier Goes Silent Amid Pandemic Challenges?
One of our clients from Tunisia purchased goods from a Chinese supplier. With a 30% deposit in advance, the Tunisian company would pay the remaining 70% of the purchase price upon receipt of a copy of the bill of lading from the Chinese supplier.
After the Tunisian company paid the deposit, the Chinese supplier closed its factory for traffic control to deal with the COVID-19 pandemic outbreak in its city. The Tunisian company lost contact with the Chinese supplier.
The Tunisian company wanted us to help it get in touch with this Chinese supplier.
We investigated the contact number of the Chinese supplier’s person in charge and had several calls with him. The Chinese supplier indicated that the epidemic control had led to a sharp increase in its costs. Its raw material procurement costs were even higher than the price previously agreed with the Tunisian company for the finished product.
We further investigated their production costs, including raw material prices, logistics costs, and labor costs, and then suggested that the Tunisian company adjust its price so that the Chinese company could receive a 10% interest rate. The Tunisian company accepted our proposal and raised the purchase price by 35%. The total purchase price remained the same, but the purchase quantity was reduced.
Finally, shortly after the end of the epidemic control, the Chinese supplier delivered the goods according to the reduced purchase quantity.
The Tunisian company and the Chinese supplier have been partners for many years and have done business many times over the past ten years.
However, the Tunisian company lost contact with the Chinese supplier several times due to the epidemic control in China.
The surge in costs caused by the epidemic control weakened the Chinese supplier’s willingness to deliver and deepened the mistrust between the two sides.
We helped our Tunisian client to calculate the product costs as accurately as possible, which helped them reach a new pricing agreement.