Don't Chi Ku if You Don't Have To

By Edythe Huang and Robert J. Allan

Our clients are giving us déjà vu. It's better than many ailments, but the eerie feeling is just as disconcerting, especially when the root cause is known. As we sit in on client interview after client interview in which they tell us their story, we can't help but let that peculiar sensation wash over us. . . the sensation that we've heard this all before.

Typically, the story goes something like this:

There's a Chinese seller and an American buyer who have cultivated a relationship over a couple of years. According to the contract they have been following for the last year or two, the Chinese seller is to deliver goods in installments over a period of time. The American buyer has always paid on time, and the relationship is a good one.

Suddenly, upon receiving one of the installments, the American buyer calls up the Chinese seller and sternly says, "the goods weren't conforming this time and I'm not paying for them." The Chinese seller is puzzled, but writes it off as a singular incident and sends the buyer the next installment of goods on time.

This time, the American buyer accepts the goods and pays on time. The Chinese seller is reassured and sends off the next installment of goods on time.

The American buyer finds something wrong with this third installment and refuses to pay. Once again, the Chinese seller believes that there must be something wrong with the shipment. After all, he and the American buyer have a long standing relationship. Next time, he tells himself, everything will be fine and he'll get paid. . . just like last time.

He sends a fourth shipment. Again, the American buyer finds something wrong with the shipment and refuses to pay.

If he's smart and on top of things, the Chinese seller realizes that the long term relationship that he spent years cultivating with the American buyer may not be as strong as he thought it was. He calculates that he has sent three installments and is owed a few tens of thousands of dollars, yet knows he is not going to get paid. Many buyers do not realize that they are not going to be paid until a few more installments of goods have gone out and they are out a few hundreds of thousands of dollars.

Panic sets in. What can he do about it? Many decide that all they can do is chi ku, or ”eat the bitter.” The accounts receivable gets moved to a loss, a very painful loss.

But there are a few brave souls who have ventured into the American justice system. Those are the ones who are giving me déjà vu. They are approaching American lawyers to help them collect. And we're able to collect, but it takes the Chinese seller to, first, be able to recognize the problem, and second, get in touch with an attorney who can collect.

If you and your business don’t have to chi ku, then why would you?