Jack's Newswatch

It was a David and Goliath battle from the beginning: a small American photo paper distributor suing the largest national photosensitive materials manufacturer in China. Only this time, David may come up short.

In 2006, California-based Royal Marketing Inc. made a deal to distribute photographic paper made by China Lucky Film Corp. It wasn’t long before Royal Marketing’s customers started to complain that the paper was junk, and the company’s vice president, Farshid Ourian, learned it did not meet U.S. quality standards.

So Royal Marketing sued China Lucky for negligent misrepresentation, breach of warranty and breach of the implied covenant of good faith and fair dealing — seeking an award of over $135 million.

In March, China Lucky got lucky. Royal Marketing won its lawsuit, but a California jury awarded it only $3 million. And, so far, that’s $3 million more than China Lucky has paid.

Ourian’s 27-year-old business is now on the ropes — its reputation damaged, its staff shrunk from 26 employees to five.

Meanwhile, China Lucky, which is nearly 50 percent owned by the Chinese government, continues to thrive.

“These people have come here, totally ruined our company and get away with that? Where is the fairness in that?” Ourian asks.

And Royal Marketing is not alone. Even if an American company goes to court and beats a Chinese manufacturer, it’s virtually impossible to get the overseas company to make good on its legal debt.

“It’s a great accomplishment, but you’re not even half-way there. You have a piece of paper, what’s that worth? You’ve got to collect it,” says Stephen Ching, an attorney who represents both American and Chinese companies in lawsuits.

[More]

Popularity: 19% [?]