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Big Buyers' Bankruptcies in Europe and US Hurt Wenzhou Exporters

big buyers bankruptcy in europe and us hurt wenzhou exporters

On January 19, the century-old US imaging giant Kodat filed for bankruptcy. As a supplier of Kodat, a chemical manufacturer in Wenzhou also gets in trouble. A debt of USD 200,000 may not be repaid and their stocked products cannot find a new buyer. Recently, some big names with a long history in Europe and US are struggling for survival with some planning for bankruptcy, which has incurred a heavy loss to Wenzhou exporters.

Since 2004, the chemical factory has been a supplier of Kodat and Kodat’s orders has been nearly half of the company’s total orders in recent years. Last year, the factory delivered USD 700,000 products to Kodat with USD 200,000 still unsettled. At present, they still have a stock worth USD 50,000 produced for Kodat.

For Wenzhou exporters, the recent European and US market is in trouble, the downturn market demand and deteriorating financial situation making many European and US companies in great trouble. The number of companies filing for bankruptcy has been rising since the beginning of 2012, bringing great trouble to Wenzhou exporters.

Peacock’s Stores, a century-old large-scale clothing retailer in the United Kingdom with nearly 10,000 employees and a registration capital of USD 800 million, filed for bankruptcy on January 19, which has also affected some Wenzhou exporters. BL Import and Export is a company mainly engaged in glasses manufacturing and export. Since 2005, the company has established cooperation with Peacock’s Stores with an annual turnover of one million US dollars, making Peacock a major customer of the company. Hearing the news of Peacock’s bankruptcy, Mr. Xu, a manager from BL Import and Export sighed, “We did not expect the falling of such a big company. Though we got the notice of its bankruptcy in advance, we still lose a big business.”

Another trading company also suffers the same misfortune. After getting in contact with Peacock’s Stores, the company thought Peacock would be a good buyer and even offered a 90-day credit. Unfortunately, the sudden bankruptcy of Peacock in January this year brought them a great loss, a debt of USD 300,000 not recoverable.

It still remains to be seen how much loss the bankruptcy trend in Europe and US will incur. However, the global deteriorating financial situation is irreversible in the short run, and exporters should be ready for possible defaults and bankruptcies.

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