: Many years ago, I was a consultant of a furniture export company that export wooden dining table. This exporter does not have any knowledge or skill in administration and furniture manufacturing but he bought a furniture factory. When he got the factory, he marketed the product by contact a purchaser in Japan. With regard to the manufacturing, he hired a factory manager to monitor the manufacturing.The Japanese buyer has opened an L/C (Letter of Credit) to purchase wooden dining tables, 2 containers in total. Thecompany owner was very glad because the order was obtained by the capability of the marketing team. Once the goods arrived Japan, the Japanese buyer asked the owner of furniture export companyto come and see the goods in the containers.The exported wooden tables and chairs are Knock Down Furniture, in other words, they were produced in pieces for assemble into Japanese chair and table. When the containers arrived Japan,Japanese buyer opened the containers in order to bring the wooden parts to assemble and show in the shop and also to hand over to the customers. However, it turned out that almost every piece of wood were not straight and smooth (as seen in the picture).Thewood parts were curved and distorted and they could not be assembled into chair and table.This incident happened because the two containers were delivered to Japan in winter and the wood was not properly roasted, so there was humidity in the wood and the wooden sheet became distorted and curved. The Japanese buyer told the Thai exporter to get the goods back and pay the following compensations:-
1. Transportation fee for sending the goods back
2. Opportunity cost
3. Expense for catalogue printing
4. Expense for advertisement in media such as television and newspaper.
5. Compensation for being sued by the customers because the goods could not be delivered in time.
The total compensation was more than millions baht. Apart from that, the Japanese buyer threatened that if the exporter does not pay the compensation as mentioned earlier, he would file a petition to Ministry of Foreign Affairs, Ministry of Commerce, Japanese Embassy in Thailand, and Thai Embassy in Japan. Moreover, he intimidated thathe would hire Japanese gangsters to deal with us as well. The factory owner was shocked and asked me for the advice about what he should do because he cannot afford to pay the compensation that high.
I contacted the purchaser in Japanand negotiate with him for many times. Later, the purchaser flied to Thailandand met the furniture factory owner and me at a hotel in Bangkok. At the first met, I sympathized with the Japanese purchaser very much because he could not sell any products and was complained by the customer.He also lost his credibility and reputation. After receiving official apology from the furniture factory owner and getting the additional explanation from me in English (I acted as the negotiator and interpreter as well),the Japanese purchase was calmer and agreed to accept the following proposal of the factory owner:-
1. To pay transportation fee for sending the goods back
2. To send new lot of goods and will have aQuality Control Company to check the goods before loading the goods into containers.
3. To give discount as the compensation
4. To make payment for the accommodation expense for 3 days for the purchaser
At first the Japanese purchaser did not accept the proposal because he suffered more loss than the compensation. However, I