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Claiming refunds from Chinese suppliers

Discussion in 'China Sourcing' started by chrisbawden, Aug 30, 2012.

  1. chrisbawden

    chrisbawden

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    Hi, I wonder if anyone has experience with getting money back from chinese suppliers when something goes wrong..

    I'll start off by saying i am not a newbie to importing, i have been importing for 8-10 years from China.. Its just the first time when something has gone seriously wrong.

    Basically, without going into too much detail on a open forum, there is a certain product line we sell which we imported from china after meeting a supplier at a international lighting fair.

    Its now came to our attention that the product is infringing patents of another company who invented the product, therefore we cannot sell the stock. Its value is around £5000-£10000 GBP cost to me.

    Does anyone have any idea what we can do regarding returning the stock and getting a refund, the supplier is not exactly being helpful with this matter.

    Thanks, Chris
  2. chrisbawden

    chrisbawden

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    Hi Johny,

    Thanks for the reply.. I thought this would be the case. Thought it was worth a ask though.

    Its already been written off really and is about to be skipped!

    The owner of the patent is already well aware, and i will keep nagging see what i can do.

    Thanks Chris
  3. Import Expert

    Import Expert

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    Oct 6, 2011
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    3,278
    Hi Chris,

    I can't really add too much more to what Johny has said really. As mentioned legal action would be costly and probably futile. Best you can do is as you have said, write it off on the books, but keep in correspondance with the Supplier to see if you can perhaps recoup part of the loss on a discounted future order (Should you wish to order from them again). If they have the carrot dangling of future business and you have had no problems with them previous to this on past shipments, there is an outside chance they might agree to something. More than likely not, but you never know.

    Would you happen to have any business insurance that you could claim on ? Not sure if this would come under E&O or suchlike.

    Do you ship air/sea ? Anything I can get you quotes on ?

    darren.brundell@woodlandglobal.com

    Kind regards,
    Darren.
  4. chrisbawden

    chrisbawden

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    Hi Darren,

    Didn't think about insurance maybe i can look into this, i suppose it all depends how much the premiums increase too. We shall see i suppose.

    We ship by both, air and sea. Maybe we can keep your details and get quotes in the future. At the moment we use cardinal over in manchester for sea and TNT for air.

    Chris
  5. Import Expert

    Import Expert

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    Oct 6, 2011
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    Hi Chris,

    That would be great - we would certainly be cheaper than Cardinal. If you get the chance at some point email me over the details of their invoice for a previous job and I can see how much we would be able to save you.

    Kind regards,
    Darren.
  6. chrisbawden

    chrisbawden

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    Ill try darren, so busy at the moment.. need to dig one or two out.. Chris
    Import Expert likes this.
  7. IMEX Sourcing Services

    IMEX Sourcing Services

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    Hi Chris,

    * Are you intending to mantain a long-term relationship with this supplier? If not, there are a few options. Legal action is most likely going to be expensive and frutile, but "warnings of legal action" can sometimes work. It would work on suppliers (especially genuine manufacturers as opposed to traders) who have a long term vision.

    * Start off with asking for a full refund and your supplier MAY settle for refund of about 50% - 70% of the cost or he may take it back, if you are willing to pay the freight back to the supplieer. In may cases, they are able to sell the stock locally.

    * There are some other things you can try. Drop me an email with details of goods if you can and I can suggest accordingly.
  8. chrisbawden

    chrisbawden

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    Hi, Thanks for your reply..

    We its turning out to be very interesting. The factory over in China, is very insistent that the product does not infringe patents and is now instructed the lawyers to prepare documents to show me this.

    So at the moment, i am sitting tight to see how this plays out.

    Thanks, Chris
  9. IMEX Sourcing Services

    IMEX Sourcing Services

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    Hi Chris,

    Does the company hold a "World Patent" for this product, as patents are usually specific to particular juristictions only, in which case, the supplier may not have infringed the patent in his jurisdiction.
  10. chrisbawden

    chrisbawden

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    Hi, Yes we have insurance but i don't at this stage want to bring them into this. Until i no exactly what has happened.

    Yes they have worldwide invention and production patents.. But our company is saying that they hold different patents due to different designs.
  11. Keith Elcomb

    Keith Elcomb

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    Personally I don't see any good outcome here. There is no such thing as a 'worldwide" patent. Can I also warn members about buying bladeless air heaters from China. They infringe the Dyson patents and they (Dyson) will go for your jugular! Also, UK customs will impound these.
  12. ylliu6688

    ylliu6688

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    Dec 26, 2011
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    ho, intesting case, seems risky always around where deal is making....


    to deal or not is not a question, the question is how to make the deal more secure and more safe...
  13. chrisbawden

    chrisbawden

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    It is very interesting, and i am trying to see the lesson i can learn.. To be truthful i cannot see one. Their was absolutely no way i would of known it was infringing any patents.

    I am now in the process of trying to decide, should i fight it and send further info to the company claiming they hold the patents or do i just walk away and cut my losses. Worse case scenario, lose a little money and buy the stock from them.
  14. IMEX Sourcing Services

    IMEX Sourcing Services

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    Hi Chris,

    Have you considered being able to re-sell the goods to a buyer in another country at cost or at slightly below cost?
  15. Import Export Business

    Import Export Business

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    Firstly was the contract in Chinese as well as English? If it is then you have more solid ground to pursue them legally in china (which is also much cheaper), and this may scare the factory to pay you your refund. Did it stipulate anything to do with patents in the contract?
  16. chrisbawden

    chrisbawden

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    Well if i believe what i am told by the "so called" patent holder than they have patents in 26 countries so it will be very hard to sell to buyers in other countries. They claim to have a Invention Patent and have showed me this, so it pretty much covers all grounds.

    Their is no real contract between myself and current supplier and to be honest to pursue them whether in the UK or China would probably cost a few thousand so it won't be worthwhile.

    The interesting thing, is a received a signed and stamped letter from the supplier in China stating the reasons why it does not infringe patents and stating the they will pay any lawyers fee's that my company incur as they are certain that they are in the right.

    So tomorrow, my plan is to research patents a little more, and speak to a patent lawyer (hopefully reasonably cheaply) and see what they suggest.

    The company i was dealing with just seem to honestly think they are doing nothing wrong, so i would love to get to the bottom of things and see who is telling the truth... if at all possible.
  17. Hihome Sourcing Limited

    Hihome Sourcing Limited

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    Good idea to dig a little more about the patents, you will have your own judgement whether it infringe patents or not. Good luck.
  18. Barry Packaging

    Barry Packaging

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    Sep 19, 2012
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    We've had this issue aswell, we buy in customer customised products from China, with all the Suppliers in China we can chop and change during the year in relation to price and quality. We were stung badly this year, Suppliers promised the sun moon and stars, provided us with samples and references. We sent orders to fill a container, first couple no problems few small quality issues but we were told no problem that these would be worked out. Our 3rd container took over 6 months to get here and nearly ever 2nd order on it was wrong, couldn't be used or damaged. Supplier has now gone to ground and we have had to have the products re-printed elsewhere at a cost to us. We've threatened legal action and as said earlier it falls on deaf ears. We've sent countless emails and tried calling but not a thing have we heard back.
  19. Hihome Sourcing Limited

    Hihome Sourcing Limited

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    It reminded me of a case I handled for my Indian client a few years ago. They imported some sample vehicles from a very famous Chinese manufacturer. Later on they tried many time to get some parts of engines but never got a reply. After called the factory several times, pushing, persuading, ( not threatening ) I found out the engines are from another factory, and the manufacturer wouldn't take a trouble for after sales service. After found out real reason then problem solved. Maybe we can help you to check what happened. What's your bottom line ?
  20. IMEX Sourcing Services

    IMEX Sourcing Services

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    Hi Ashley,

    So sorry to hear about this. Unfortunately, legal action in China is only effective, if you have done everything right to begin with, ie. contracts written out in mandarin, very detailed contracts, and most importantly "Good arbitration clauses".

    From my experience of dealing with chinese suppliers, pretty much on a daily basis, I have realised, you can have the best contracts and a host of other QC Levers, but nothing beats good old "high quality background & reference checks". If you find a supplier who is stable, professional and service-oriented to begin with you can avoid 90% of the problems.

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