Asian companies are faced with tens of billions of dollars in non-performing receivables, a problem which is significantly growing with each passing month.
Free Cash
In a hyper-competitive world economy, many companies are utilizing their Asian manufacturers and suppliers as sources of free cash. It is common for companies to procure goods from Asian sources, either sell them through retail outlets or use them as component parts of items which will eventually be sold through retail outlets, all with no intention of paying the Asian goods provider. Such tactics create an uneven playing field at the retail level, with sellers of products who satisfy their obligations to their manufacturers and suppliers being unable to offer prices as favorable to consumers as those sellers who do not pay their bills.
Root Causes of Non-Payment
Notwithstanding the ethical issues involved, companies that are failing to pay their bills are doing so for two main reasons. First, Asian companies have historically not been aggressive in pursing recovery of their receivables through the use of the court system and, secondly, many Asian companies continue to ship new product even though they have not been compensated for previous consignments. Given these factors, unscrupulous retailers and other "purchasers" of Asian goods feel that they have little incentive to satisfy their obligations.
Strong Action is Essential
Westerners are accustomed to utilizing the court system to enforce payment obligations, most often resulting in the termination of a business relationship. In contrast, Asians are accustomed to the practice of conciliation to resolve disputes, preferring a resolution which concentrates on preserving the relationship and the reputation of all concerned.
Asian resistance to seeking redress through Western courts has created an untenable state of affairs. As such, in order to contain the growing receivable problem, and to send a message to the Western business community that non-payment is no longer an option, it is imperative that Asian creditors proceed to enforce the amounts due and owing them thorough the litigation process.
Resolution
Notwithstanding the foregoing, once a lawsuit is commenced and is energetically pursued, in order to save the resources attendant to litigation, to avoid negative publicity and reputational damage, and to prevent a disruption in its business operations attendant to court-sanctioned, pre-judgment remedies such as a writ of attachment, a debtor will often seek, frequently at the urging of the assigned judge, to mediate a resolution with the assistance of a well-trained and experienced neutral.
