"Why can't Frank write down the terms and conditions for the sale and purchase of diesel?" Khin Khin asked me a few times today July 21, 2010. "He is the Seller's agent and should provide the info in writing."
Khin Khin wants to be a successful businesswoman doing big deals. She had stopped being an employee veterinary technician for the past two years. But the mega deals seem to be elusive. Meetings after meetings are a common occurrence in commerce. She would invite me to attend some meetings to help her close. But for the past two years, she had no mega deals in commodities. In business, performance counts. There must be a deal closed. Otherwise, time would have passed and there would be no income for the year.
"It is possible that Frank does not write or know how to write the terms and conditions," I said. "I will phone him and ask for the details." I don't get involved in this wheeling and dealing as it takes up too much of my time. But it seems that Khin Khin does not know how to close. The first thing is to know what is the problem.
The Buyer wants to buy diesel at the lowest price, far below market rates monthly at a fixed price every month.
The Buyer's wishes cannot be fulfilled. "Walk away from this deal," I advised Khin Khin. "It is a waste of time and I get fat when you order oily food for me to eat when I attend your meetings."
But Khin Khin would not give up. If the deal is closed, she gets commission. At least 40 times more than a veterinary technician earning $2,500 a month. That is for one deal.
I wrote the following sales procedures for Khin Khin's buyer after talking to Frank who was lamenting and cursing that Khin Khin's buyer keeps asking for old prices. "If the Buyer had bought 2 months ago, the prices were much lower and he could have made US$150,000!" I provided a listening ear as Frank who is around my age had 4 heart by-pass. I noted that the scar on his left hand where a vein was taken for his heart had healed almost 90%.
This is my e-mail to Khin Khin:
1. If you want to buy at a fixed price every month for 12 months, but pay only by monthly payments when you receive the diesel, the Seller does NOT do business this way.
2. The Seller wants a 12-month contract and a Letter of Credit (LC) which must be paid to the Seller's Bank in the full amount of 12 months. The Bank will only release the money to the Seller monthly when the Buyer takes delivery of the diesel.
3. If you want to buy diesel one month at a time, you will have to pay spot prices) depending on market prices. You will not get a fixed price as it is given only for a long-term contract such as 12 months with pre-approved LC.
4. When the LC is shown to the Seller, then the terms and conditions of the contract will be given to the Buyer. For example, how long the diesel will arrive at Yangon and any other questions will be answered.
5. The problem here is that diesel prices keep going up monthly but the Buyer's agent in Singapore wants to buy at old prices 2 or 3 months ago saying that they can get the price at such low prices in Myanmar.
6. If this problem can be resolved, then there will be business for both parties.
To: The Buyer
If you want to buy diesel at a fixed price for one year, the following procedure from the Seller is as follows:
1. Open a transferable LC with (XXX - Name of Company) in a Singapore Bank.
2. When the price of diesel is agreed by the Buyer, XXX will transfer the LC to a Singapore Bank of the Seller.
3. A contract of sale will be given to the Buyer only when the LC with XXX is shown. This is to make sure that the Buyer is serious.
4. The Seller's Bank will release the money monthly to the Seller only when the documents of sale are in order. If not, no money will be released.
5. The Seller's Bank holds the one-year amount for this one-year fixed price locked-in contract.
6. If the price is not agreed, XXX keeps the LC or returns the LC to the Buyer.
7. In this situation, the LC costs around $4,000 - $5,000. This will need to be paid by the Buyer and will be his loss if there is no transaction.
8. Without proof of the LC in XXX, no other paperwork will be prepared as the Seller considers that the Buyer is not serious in this purchase.
I hope the above will be easy to understand.
If the price is lower in Myanmar, the Seller is not agreeable to lower or to match the price in Myanmar. Therefore, it will be a waste of time negotiating for previous low prices. Diesel prices have gone up a lot and so the Seller will not be selling at old prices.
THE BEST SOLUTION
Direct oral communication with the real Buyer in Yangon to know what his worries are as the money to be given to the Seller is in large amounts. Writings can be mis-interpreted.
I was at the apartment of Khin Khin's friend and business partner to type the e-mail during lunch-time. The friend had adopted a Chihuahua given up by the first owner.
The Chihuahua had stayed in my Surgery for some time in 2009 when he was ill and was neutered. He kept barking at me with the full force of a lion, knowing that he had a big mama to protect him. Khin Khin's friend had to take the dog away from me but the dog persevered in barking at me.
As I left the apartment after writing the e-mail, the dog found his chance, sprang up and nipped my right leg trousers just as I stepped out from the main door.
"It is lucky that I wear long pants," I said to Khin Khin's friend. "Otherwise I will get a nasty bite." Both businesswomen had no sympathy for me nor do they reproach the dog. They simply laughed at this little dog who had exacted his revenge on a vet who had injected and neutered him when he was younger. It was no laughing matter for me. Such are the hazards of being a free lance unpaid consultant to Khin Khin and in going to a apartment of a Chihuahua who dislikes me. The image shown here is the Chihuahua with his first owner. It is good to know that he is well loved by Khin Khin's friend in Toa Payoh. To the extent that he is allowed to bite the vet!