|
Strange thing: Apparel products exported under verbal contracts
A lot of garment companies admit that for the last many years, they have been making products and delivering exports under… verbal contracts, though they well understand that they could be cleaned out if partners refuse to make payment.
Verbal contracts have been surprisingly accounting for a large proportion of business deals of many garment export companies.
The director of a Nam Dinh-based garment export company acknowledged that in the event of disputes, Vietnamese exporters would lose the lawsuit as there is no legal document which shows the deals between the parties. If importers refused to pay debts, Vietnamese companies would not even know where to go to claim debts, since they often don’t have the exact addresses of foreign partners.
The director said that though his company makes FOB export deals, it is not holding the handle of the knife. He said that the deals have been going smoothly, but admitted that he is facing big risks.
Sinh Duyen from Hai Garment Company in Hai Phong city said that the only thing garment companies do to prevent risks of verbal contracts is choose prestigious partners to cooperate with.
Why do Vietnamese companies still accept verbal contracts, though they acknowledge the risks?
The problem lies in the fact that the companies have to do that because they get orders through intermediaries: It is the intermediaries, not the importers, who go directly to Vietnamese garment workshops to survey the production capacity and place orders. As the intermediaries take responsibility for arranging materials, designing and finding outlets for the products, they have “the power of life and death”, including the right of …not signing contracts.
A Vietnamese supervisor, who is working for an apparel export brokerage company, related that many brokerage companies, the intermediaries in the deals, do not make business registration and do not have permanent headquarters. They employ Vietnamese staffs and offer high salaries, but they do not sign labour contracts.
A Vietnamese supervisor working for a brokerage company has the income of $500 to several thousand dollars a month. Moreover, he can get extra money from Vietnamese companies who make export products, in return for a certain laxity in examining products.
The supervisor related that one day, when he had a disagreement with his company, he threatened to bring the case to court. The company promised to give him VND20mil in compensation if he kept silent. He realised that the company did not have a licence to operate in Vietnam.
However, a lot of Vietnamese garment companies still cooperate with the company and export millions of products a year through the intermediary. If the importers change their import plans and cancel deals, the intermediary will surely escape, leaving bitterness in the mouths of Vietnamese companies, the supervisor said.
VNN
|
