Negotiating a return of your deposit from your China vendor

I just had a vendor cancel an order on a client of mine. There had been problems with the order and the vendor came to the realization that they could not sustain my client’s quality over a 10.000 pc order. So they gave up. Just like that. Done. Finished.

We went into this order looking at it as a “test” order. Of course we were hoping it would go well because the vendor did provide what my client had exclaimed were “great” samples. Yet alongside the hope was the consistent expectation that it just might not work out, because my client’s standards are very high ( as she says herself this product is not “el cheapo.” ) and we were not there to oversee production. As I do with anyone who comes to me asking me to help them source in China, I had strongly advised my client to get over there, or to send me or someone else but she did not have it in her budget to do this. Anytime you are doing an order with a first time vendor in China, you need to be there. Period. Yet no matter how much I say this many companies I work with just don’t seem like they want to be bothered, mainly because it costs a lot to get on a plane and spend a week or two in China. Or maybe they don’t like Chinese food. I don’t know. But lost sales and customers cost more I always tell them.

My client now, wants her deposit back. It is a very small deposit, so small that even I was surprised when she said she wanted me to ask the vendor to return it. But my client says she is acting on principal here. Because the vendor cancelled the order, they should return the deposit. I somewhat agree with her on this, although the vendor did make a solid effort to complete the order to my client’s satisfaction and I cannot say everything was the vendor’s fault. At the same time, I told my client that it was unlikely the vendor would return the deposit. China vendors are not in the habit of returning deposits especially when they have already put a lot of work into the order, as was the case with this order. The order was about half finished when the vendor gave up. Still my client wanted me to ask. Accordingly I sent the vendor, a lady I have met before and with whom I have over the last year established good rapport, a lengthy, very diplomatic email asking her to please return the deposit.

Things in China must be changing because the vendor agreed to return the deposit even though the order was half finished. This really took me by surprise because I am sure the deposit did not come near to covering the vendor’s expenses on the order. There were the manufacturing costs and then the costs to ship the product from the factory to the vendor’s warehouse, and I just can’t believe that a small deposit covered these costs. It is possible that the vendor just sold the product to another customer of hers. I have no idea. But she acted very honorably in returning my client’s deposit.

Does this mean you will always get your deposit back from a vendor if your order does not go well? Of course not. It means you have to be very careful about selecting vendors in the first place ( I chose this vendor because she seemed sincere) and then you need to establish a good working relationship with them so that when things do go wrong you can expect them to act honorably.

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