Hundreds of small and medium enterprises (SMEs) in the country involved in trade with Chinese companies have been duped of crores in the last two years, an RTI query revealed.
Hundreds of small and medium enterprises (SMEs) in the country involved in trade with Chinese companies have been duped of crores in the last two years, an RTI query revealed.
In 2011, 92 Indian companies registered trade disputes with Chinese companies, complaining to the government of India about being cheated. The government appears to have only forwarded these complaint letters to the Indian embassy in Beijing for ‘necessary action’, according to information obtained from the department of commerce, ministry of commerce & industry.
Several Indian companies DNA spoke to said that not a rupee has been recovered so far.
Mukesh Reengusia, commercial manager of Crystal India, a Mumbai-based company which was allegedly cheated of Rs80 lakh in 2011, said he was supplied non-pure glycol though he struck a deal for diethylene glycol with a Chinese company. “We complained to every authority possible — the ministry, the consulate, etc, but we haven’t even got an acknowledgment from them. The government is not at all serious about helping us,” said Reengusia.
According to the ministry of commerce and industry, the complaints have been mostly against Chinese companies registered in places such as Hebei, Tianjin, Qingdao, etc. An analysis of the complaints done by the Indian embassy in China revealed six different ways in which Indian companies were cheated.
Indian companies relying on B2B portals to import Chinese goods are “soft targets”, according to the embassy. In many cases, it was found that a Chinese company insisted on a percentage of the total sum as an advance. On receiving it, the company would end all communication and vanish.
In some other cases, the Chinese company’s responses slowed down after receiving an initial payment. After repeated requests, they would ask the Indian companies to pay the remaining payment. However, the Indian companies still stood to lose money if the Chinese firm cited reasons such as delay in making advance payment, increase in the cost of raw material, etc, to not supply the goods.
For instance, Amritsar-based Amar Colour Chem India complained that a company supplied water mixed with glycerine instead of refined Glycerine USP grade material. “Our company suffered a loss of about Rs30 lakh,” said Rohit Handa, managing director of the company. Handa said he wrote several letters to the authorities, but he has not received a favourable response.
Information obtained under RTI also shows that several industry associations, including the Federation of Gujarat Industries and Ankleshwar Industries Association, also complained that their members were duped, some by being supplied waste material instead of promised goods.
In another case, an Indian company which had seen proper samples of goods before making an advance payment, was sent a consignment full of sub-standard or different products.
Atulit Chemical Products Pvt Ltd was cheated in a similar fashion. After releasing the Letter of Credit upon arrival of its consignment, the company found it had been supplied with waste material instead of butyl acrylate as agreed upon. Atulit’s complaint was forwarded to the Indian embassy in Beijing two years ago, but not a rupee of the Rs46 lakh loss was recovered. “It seems that the Indian government is not taking up the matter properly with the Chinese government. That is why there has been no recovery of money by even one company,” said Atul Ghiya, a signatory for Atulit.
Another set of complaints referred to cases where right before the finalisation of negotiations, an Indian company received instructions from an employee of the Chinese company to transfer the advance/full sum in another bank account instead of the previously specified account. When the goods were not supplied, the Chinese companies said the money was not credited to the correct account. The employee who gave the intervening instructions had left the company.
Other firms have also complained about receiving requests for cash for gifts for senior executives and other local officials, “citing Chinese cultural values”. Companies which pay the amount have found that in some cases, upon their return to India, the Chinese company goes silent and puts an end to all communication.
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