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Advice, Suggestions and General Help New Topic Printer Friendly Version

  Caveat emptor
  Posted by: willowleaf on Apr-17-13 10:14 AM (EST)
 

I say "buyer beware" on buying anything substantial from Indonesia.

Some years back I was involved in analyzing evidence on a huge lawsuit involving construction of a specialized power plant here in the eastern US where the winning general contractor underbid his competitors by procuring low-ball quotes for the huge steel castings for the turbine assemblies from Indonesia (despite the fact that domestic casting facilities were less than 40 miles away.) When the components arrived, they were massively out of spec and didn't even remotely match up -- alignment on some pieces was off by FEET, not millimeters or inches. The contractor had no choice but to cut apart and field weld the parts or build modifications to connect them, losing time and paying huge fines. They halted payments to the vendor, but since they had to pay over 75% up front (millions of dollars) to get the "deal" from the Indonesians, the overseas foundry apparently felt they had made enough profit from the deal already and "liquidated" before they could be sued. Several separate US subcontractors ended up in bankruptcy over cost overruns and delays the project and the whole thing ended up in court. The Indonesian foundry, protected by their own laws, could not be prosecuted.

From the research I did in preparing documentation for the case, I discovered that shipment of grossly defective products from Indonesia is not uncommon and recovering losses from them is nearly impossible. Wages are so low and safety regulations so lax there that goods can be produced at very low prices. So suppliers there can make a quick killing undercutting vendors in overseas markets then do a corporate vanishing act before the disappointed buyers try to come after them.

Indonesia only enacted a domestic "lemon law" last year, decades after most industrialized nations. The World Bank ranks them close to the bottom among countries worldwide in enforcing contracts and resolving insolvency. Their rankings are more similar to those of small and corrupt third world countries despite being the 15th largest economy in the world (ranked between South Korea and Holland).

A bargain is no bargain if it's a dud and you're stuck with it.

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