How to Handle Deliberate Shipment Delays from Chinese Suppliers: A Case Study
One of our clients located in the US has long-term cooperation with a company in Shenzhen that sells headphones. The client has been purchasing products from this Shenzhen company continuously for 6 years.
The cooperation model of the two companies has always been to pay 30% deposit before delivery, ship out 30 days after the deposit is paid, and pay 70% upon delivery.
During the period of cooperation, Shenzhen Company occasionally fails to deliver goods on schedule, but Shenzhen Company can generally deliver goods according to the plan agreed upon by the parties.
Subsequently, our client informed us that, in the period from 2022 to 2023, Shenzhen Company delayed delivery longer than in the past and did not provide a clear delivery plan.
Our client frequently urged and reminded the Shenzhen Company for payment, but the supplier did not actively deliver the shipment. However, due to the long-term cooperation with Shenzhen Company, our client trusted Shenzhen Company very much because of its timely delivery and no serious quality defects. Therefore, when Shenzhen Company failed to deliver the shipment, our client did not stop placing orders and making payments.
However, since the Shenzhen Company has too many undelivered goods, our client expects us to claim the down payment from the Shenzhen Company and cancel the orders.
We immediately contacted the responsible person of the Shenzhen Company by telephone and then arranged a conference call. The Shenzhen Company told us that it had engaged a lawyer to assist in dealing with the disputes. The lawyer believed that there were disputes between our client and the Shenzhen Company during the cooperation, so that was the reason why the Shenzhen Company suspended the delivery.
We strongly requested the Shenzhen company to provide the materials about the dispute, but the Shenzhen company and its lawyers were never able to provide it. We adhere to this request and are in constant communication with them.
Since then, the Shenzhen company has changed its claim to have been unable to arrange production and delivery due to its financial difficulties. After our investigators visited the house, they found that the Shenzhen company’s raw material reserves were insufficient and could not continue production. Therefore, it may indeed have financial difficulties.
When we learned that the Shenzhen company was only temporarily in financial difficulties, we communicated sincerely with it and learned that it was in the process of financing. We recommend that our clients wait another 3 months.
Three months later, the Shenzhen company successfully financed and delivered all the unshipped goods to our client on time.
Therefore, if a Chinese company deliberately delays shipments, you need to understand the real reasons to judge whether they will not execute the contract in the future. If they will not execute the contract, you can cancel the contract and demand that they pay it back. If it is possible to execute the contract, you can give it a grace period.
Photo by Matt Zhang on Unsplash