A Belgian importer (“Belgian Importer”) had been purchasing stainless steel pipes from a company in Shanghai, China (“Shanghai Exporter”) for several years, and their bosses had also become very good friends. After Belgian Importer got to know that the EU was about to impose high anti-dumping duties on Chinese stainless-steel products, it owed more and more payments to the Shanghai Exporter, eventually reaching more than US$1 million. The Shanghai Exporter repeatedly called for the payment, but the Belgian Importer totally ignored it. When the Shanghai Exporter was very anxious, the Belgian Importer suddenly asked the Shanghai Exporter to issue a credit note for only 70% of the overdue receivable, and promised that the other 30%  would be made in the form of a price increase in future orders. The Belgian Importer alleged even after the EU imposes anti-dumping duties on Chinese stainless-steel products, the Shanghai Exporter could still use Korean companies to circumvent the EU's anti-dumping duties and continue to sell stainless steel products to them. The Shanghai Exporter had no other choice but to issue a credit note as required. After the Belgian Importer received the credit note, it paid 70% of the purchase price. However, the Belgian importer no longer placed orders with the Shanghai Exporter. The Shanghai Exporter asked the Belgian Importer to pay the remaining 30%, which was however rejected by the Belgian Importer.

After the Shanghai Exporter retained us to collect the account receivable, I asked the Shanghai Exporter to provide the relevant evidence that the Belgian Importer promised that 30% of the account receivable would be made in the form of price increase in future orders. The Shanghai Exporter searched thoroughly and found no evidence. The staff in charge recalled that the Belgian Importer contacted and communicated with them about the credit note totally by telephone call. At that time, they didn't think of recording and retaining evidence. In case that the Shanghai Exporter cannot provide proof that Belgian customers promised that 30% will be paid in the form of price increase in future orders, even if they sue in the local court of Belgium, there is almost no chance of winning. In addition, the Shanghai Exporter learned that after the EU imposed anti-dumping duties on Chinese stainless steel-related products, the Belgian Importer placed orders of stainless-steel products to Indian suppliers. At this point, it was clearly revealed that the Belgian Importer deliberately threatened and lured the Shanghai Exporter to issue the credit note in order to default on its debt.

Lessons and enlightenment:

1. Generally speaking, Western European countries have a sound rule of law, religious belief, and good corporate reputation, but don’t trust customers in Western European countries too much. Exporters should always maintain awareness of risk prevention at all times and should not relax vigilance, even to old customers .

2. The amount of accounts receivable should be kept within a reasonable range. If the amount of accounts receivable is too large, normal customers may also be bad-hearted to default on its debts. Obtaining foreign trade orders is not easy, but do not neglect to collect accounts receivable in time.

3. Develop the habit of retaining evidence, and consciously retain evidence in every step of the transaction, so that every step could be well documented. In case of oral or telephone discussion and communication, it is necessary and of much help to prepare the minutes of the meeting, which should be signed by the parties for confirmation. You may also consider audio and video recording considering the current technical equipment is also very convenient.