Complaint Review: Xi'an Yima Opto-electrical Technology Co. Ltd.

August 2, 2016

Mr. Joseph Zhou

Xian Opto-Electrical Technology Co., Ltd.

Room 1005, Building B, Western Electronic Community

Yanta District, Xi’an, Shananxi, China

Dear Zhou

In summary of our working relationship to date, please see the following.  This letter – including supporting documentation, emails and bank drafts will be provided to Alibaba and our contracted attorney in Xian.  We encourage you to talk to your management about any further actions so that there is no confusion when you and your firm are encumbered with legal fees, inquiries and potential penalties.

Initiating Business with YIMA

On, or about, December 5, 2016, ESS inquired to YIMA about their capabilities to provide some specialty environmental monitoring equipment.  We communicated via the Alibaba portal, WeChat and email.

Their response was adequate.  Their pricing was reasonable.  We arranged a face-to-face meeting in Xian on December 9, 2016.  Subsequently, we met in Xian on a monthly basis for the following seven (7) months.

First Purchase From YIMA – Ambient Particulate Analyzers – History of Transaction

On, or about, February 4, 2016, ESS inquired about your capability to access a manufacturer of specific ambient air monitoring equipment including one Beta Attenuation Monitor (BAM) and two (2) light scattering ambient PM analyzers. 

Due to a scheduling obligation, ESS required the fastest method of delivery and shipping of the goods.  We verified with an email and were provided the following detail:  The delivery will be made five (5) days after payment.

On, or about, February 17, 2016 you provided us with a price, a pro-forma invoice, and ESS paid the amount in full within twelve (12) hours of issuance.  The invoice number is 201602172 and the date is 17/2/2016.  A copy is attached to this letter.

ESS paid $26,145 usd for this invoice, in full.

On, or about February 24, 2016 YIMA sent another invoice for $1464 to account for OEM fee, shipping, consumables and round-trip airfare for YIMA authorized technician.  This invoice is also attached hereto and this was paid within twelve (12) hours of PI issuance.

ESS paid $1464 usd for this invoice, in full.

ESS contacted YIMA on many occasions to get the equipment (ESS had project deadline in USA for use BAM).  Ultimately, the equipment shipped more than three (3) weeks late and arrived in USA on March 23, 2016.  Due to the late delivery, ESS had to forward the equipment directly to our project site (without inspection).

Ultimately, the equipment was unpacked, set-up and began operation on March 28, 2016. 

After operating for approximately sixteen (16) hours, significant equipment deficiencies were noted.  All deficiencies were critical and rendered the equipment unusable.  Our technician in USA made the initial list of failures and we sent to your attention immediately.

You could not do anything to fix the equipment and provided us with no solutions for repair. 

ESS appealed to you to send a replacement immediately – but YIMA declined.  They instead tried to connect one of their Chinese factory representatives to one of our equipment engineers in the USA.  Our USA engineer remained on-site for more than eighteen (18) hours trying to decipher the inoperable equipment.  Further, our engineer went through every step and request of the Chinese factory representative to try to repair the poorly engineered device. 

Please note that the USA engineering report cites several specific instances of reasons why the equipment would not work in it’s current condition (which are highlighted in the email, attached).

After several weeks of dealing with this challenge, and the same number of days being unable to invoice our client for use of the equipment, Mr. Looney and Ms. Binh inquired directly to YIMA about the challenge.  YIMA said that they could not do anything because Chinese law required them to ask for a return within seven (7) business days.  And, per their agreement with the factory, this time had been surpassed.  To be clear and specific, ESS did not pay any other party nor did ESS enter into any contract except with YIMA (our only agreement is with YIMA – and per the paid PI, we understand that YIMA is the responsible party, hereto).

ESS continued the environmental project in the USA without the YIMA equipment.  ESS requested that YIMA pay the rental amount of a comparable piece of equipment for use on the project.  YIMA agreed to pay such and gave ESS the go-ahead to rent the equipment on May 12, 2016.  YIMA refused to pay the money for the rental and argued that ESS pay the shipping of the equipment (it was only responsibility of YIMA to rent the equipment and not to ship the equipment to the ESS job site). 

YIMA continued to avoid all questions and responsibility for the BAM.  Finally, on or about June 21, 2016, we received an email from YIMA that states that they accept some liability for the incident.  A copy of the email text is included herein (and a copy of the email chain is attached).

Dear Mark,

We are terribly sorry for happening of such things.  We won't try to get rid of our responsibility, we will harmonize and deal with manufacturer of SJPM-1025 positively.

We will refund you our profit (2440 USD).

Then we will negotiate with manufacturer and make them agree to refund. But I am afraid that it can't be done by this Friday.

Because:

1. Manufacturer haven't received SJPM-1025,please send it to below address:

(omitted for brevity)

2. Normally the after-sale service provided by manufacturer in china will be replacing goods when we encounter such situation.(because chinese legal provisions: buyer can return goods and refunded only in 7 days since the day they received goods).

We don't have 100% confidence that we can get refund from manufacturer.If manufacturer disagree to refund us, we will sued to the court and get money back, but it's time-consuming.

And we also considered refund you 100% with our money, then ask manufacturer to refund us.  But we are lack of fund for now, most of our income is invested into construction of our new website, the rest income is used to pay for our employees.

We sincerely hope you can understand that we are not able to refund you 100% by ourself.

Whatever happens, we will try our best to solve this problem.  If you can accept this solution, please provide your account, we will refund you our profit first, and then figure out rest things.

Even after writing the email, YIMA had no intention of refunding any money to ESS.  After many requests, YIMA continued to avoid the question and obligation.  

ESS purchased another piece of environmental testing equipment (see PI attached) – and therefore subtracted this very fractional amount of $2440 usd plus the cost of the BAM rental equipment ($900 usd) from the payment due.  YIMA resisted this deduction but after showing the email to Mr. Joseph Zhou, it was clear that they could not refuse.  ESS did not charge YIMA the shipping of the BAM because we blame the error on the ESS assistant who was unable to make clear to the novice YIMA staff. 

ESS made multiple efforts to ship the equipment back to China; however, YIMA refused on many occasions.  YIMA complained that our shipping company was too expensive;  they insisted that we repay them $2440 usd for their services; and ultimately said that we can keep the equipment and they will not repair.

Excerpted email below from latest dialog related to YIMA repair of inoperable equipment.

CEMS Equipment Purchase

On, or about, December 5, 2015, ESS inquired to YIMA about their availability to produce and provide OEM Continuous Emissions Monitoring Systems (CEMS).  During this meeting YIMA assured ESS that they were the manufacturer and could accomplish whatever we needed on an OEM basis.

Shortly thereafter, on December 9, 2015 ESS mad a visit to “YIMA factory” and it was less than impressive.   

Over the next couple weeks, we inquired about potential modifications and technical capabilities to improve the CEMS equipment.  We then arranged another trip to the Xian region on, or about, January 23, 2016, and you brought us to another factory – which clearly was more technically saavy and capable.  By this time, we learned that YIMA was not a manufacturer, simply a distributor of goods.

You introduced us to a manufacturer named Xa Dy Ding Yang during this trip.  We were wholly satisfied with the introduction and technical capabilities of the vendor.

On, or about, March 29, 2016, ESS entered into a verbal agreement with YIMA for the purchase of a CEMS.  YIMA issued ESS a pro-forma invoice on March 29, 2016 and the invoice was paid within twelve (12) hours of issuance (the approximate price was $41,760 usd).  A copy of this record is attached.

With special note, please see that “Vendor should ship goods out in 65 days after receipt of 50% of goods payment” and “Every delay-day, Vendor will lose 2% of the goods payment from this 10% deposit”.

The actual ship date was July 5, 2016 (a total of approximately ninety-six (96) days).  ESS made no assessment to YIMA for this contractually stipulated delay charge.

ESS made several visits to the CEMS factory during the CEMS “build” cycle – and met with Mr. Joseph Zhou during most of those visits.  The progress on the CEMS was “choppy” and mis-managed due to the lack of oversight by YIMA corporate staff.   In order to help YIMA have the resources to manage the project, ESS offered to pay ½ salary to one of the YIMA staff (Mr. Jack).  The contract for such is attached.

ESS arrived to do a “Factory Acceptance Test” and the completion was inadequate and did not meet the minimum requirements of the “CEMS build”.  The Factory Director agreed that the progress was not substantial and the product was not acceptable – and they made some modifications.

YIMA, during this time period, had a contract to spend twenty (20) man-hours at the CEMS plant every week.  However, whenever ESS was not at the plant, it was seldom (if ever) that YIMA maintained staffing at the factory.  ESS had to call the plant on many occasions to verify the YIMA staffing – and, without exception, YIMA staff did not do what they said they would do.  Further, they were in clear breach of their contract.

While in Xian – during that mobilization – our case with the BAM was still not resolved.  And we had another twelve (12) day project utilizing the BAM (which remained broken and YIMA still refused to send a repaired item).  We discussed with YIMA our dilemma and let them know we were going to have to rent equipment from the USA if we could not get resolved ASAP.  I sent YIMA a list of the pricing and the requirement that we would have to pay shipping (but I had no estimate of such).  YIMA agreed by email and we moved ahead with the ordering.  A copy of the rental and delivery invoice is attached.

Over this time period (on, or about May 13, 2016) ESS decided to order another three (3) CEMS from the factory and we told the Factory director that we were exceptionally displeased with YIMAs performance and their ability to act in a professional businesslike manner.  The factory Director encouraged ESS to stay with YIMA and run our business through them.  We tentatively agreed.

That same night (approximately May 15, 2016), ESS was issued a pro-forma invoice and it was paid in full for the sum of approximately 40,000 usd (less than 12 hours after issuance).  A copy of the invoice and payment detail from our corporate bank is attached hereto.  The pro-forma invoice was issued without contract and paid within twelve (12) hours of issuance.

Three (3) days later, ESS received a call from the factory Director and he was clearly upset.  He said that our YIMA representative had showed up at the plant that day.  The factory Director asked where the money was – and the YIMA representative stated, “ESS has not paid us, they have no money, and they will not complete the contract with the Factory”.  When the factory Director called ESS, we immediately provided him with the bank statements and all supporting documentation. 

One hour after our interaction with the factory Director, he confirmed with us through a “WeChat” message that we were correct and he had been provided misleading information.  He also agreed that YIMA was an unprofessional company to work with and he did not object to our termination of relationship.

On the following day, ESS personnel flew back to Xian and terminated our contract with YIMA personnel.  We also made it clear that we didn’t want this employee interacting with any of our potential suppliers. 

One day after terminating our contract with YIMA’s part-time project manager, he showed up back at our client site.  We were irritated and could not understand where the lack of communication started – and ceased.

At this time, ESS President asked for a meeting with YIMA senior level management but they declined.  In lieu of such meeting, we met with Mr. Joseph Zhou.  The points of our meeting were concise and definite.

ESS requires YIMA to be responsible for any agreements made verbally or in writing regarding any equipment transaction.  ESS reiterates that our contract is with YIMA and no other party.

            ESS requires YIMA to return payment to ESS for the inoperable BAM.

ESS requires YIMA to not allow the “lying and non-factual” employee to talk to or interact with any ESS vendor connected factory

Lastly, ESS discussed the delivery schedule, FAT and logistics of the delivery of their first CEMS to our project site in Philippines.

YIMA agreed to all except that item that regarding the BAM.  They said that they didn’t have any money and could not do this.  They insisted that if we returned it all to them, they would do their best to sell the equipment to another client in the next year, or so.  ESS reported back to them that we would discuss with USA management before deciding.

The next day (on, or about July 1, 2016), ESS and YIMA were on-site to do the final FAT and send the equipment to the Philippines.  At this time, YIMA issued ESS an additional invoice for approximately $15,000.  ESS was caught a bit off-guard by the high amount of the invoice because many of the numbers did not match our verbal agreement – but we paid the pro-forma invoice within twelve (12) hours of issuance.  With exception to the invoice, ESS had previously discussed the failure of YIMA to perform in the delivery of the BAM.  YIMA representatives sent an email that stated that their profit was $2500 usd and that we can deduct that from our remittance due YIMA in the future.  The copy of the email is attached.  The payment made that evening was reduced by this amount.

After discussion with USA management, it was decided that YIMA was nearly insolvent and that their intention was to steal the equipment, keep the money and never return to ESS.  Therefore, we requested that we only send the bare minimum equipment back and they repair the analyzer.  At this time, they refused to do so until we repaid them the “commission” on the sale.  

Two (2) days later – and after paying all the invoices (in full) for equipment – none of which is operable or delivered – it is discovered that there is another delay.  This delay (as with all delays) is never the fault of YIMA.  They blame it on other factors – especially the Factory.  I reminded them that our contract for delivery was with YIMA and not the factory.  Further, they would be liable for any fees and charges.  They refuse and will not deliberate any further.

Finally, the equipment ships four (4) days late.  YIMA was obligated to provide service and installation support for the project and to meet our installation deadline.   The day after the shipping of the equipment they call ESS and ask for ESS to pay another pro-forma invoice for the estimated time and per diem of the installation staff.  Although not a requirement of any contract, ESS agrees without fault and pays all expenses upfront and in advance of the delivery (within 12 hours of issuing a request).

Therefore, at this time, ESS has provided payments to YIMA of approximately 20,000 usd for the BAM, 40,000 usd for the first CEMS; 40,000 usd for the deposit on CEMS 2, 3, and 4; 15,000 usd for the upfit costing; 6000 usd for the transportation and time of installation engineers – all told approximately $121,000 usd.

On, or about, July 5, 2016, ESS Executive Assistant, Ms. Linh Thu Binh, gets information that we have a small order of tape that needs to ship to Xian.  It requires a domestic payment – and we are in the Philippines awaiting delivery of the CEMS.  Ms. Binh asks Mr. Zhou to please make payment and we will reimburse him on our return (the amount of payment was approximately $400 usd).  Mr. Zhou’s response was that the company did not have the funds to assist with such and that we would have to handle utilizing a different method.

After this time, the equipment was promised in Cebu, Philippines on July 9, 2016.  Such equipment arrived approximately 8 days late.  And, as normal for YIMA, they issued ESS an additional invoice to account for their late challenges.  YIMA insisted that ESS pay for the additional fees of shipping to Cebu Philipppines (instead of Manila).  The change in shipping location was necessitated by YIMAs late delivery.  Therefore, the freight forwarder told ESS that it would save almost five (5) days if we shipped to Cebu instead of Manila.  This change cost ESS an additional 1850 usd (invoice is attached).  Payment was made less than twelve (12) hours after receipt of the pro-forma request.

ESS awaits the notification that the technicans are available to install the CEMS equipment.  On August 1, 2016 – more than 20 days after the YIMA promise date, ESS receives an email that YIMA is aware that all technicans have received their visas for Philippines and that they can make travel plans now. 

On, or about August 2, 2016, ESS continues to have challenges with YIMA and we get emails that say that ESS will pay YIMA an additional $2500 usd in commission or YIMA will not repair the BAM equipment.  The most recent emails are attached.

Please note that we understand the challenges with starting a fledgling business and having minimal capital.  However, ESS feels that we provided a great deal of support all along the way.  This company acted in an unprofessional and illegal manner on several occasions. 

As a loyal and dedicated Alibaba purchaser, I will make the following statements:

YIMAs actions show poor judgement, illegal and unprofessional behavior

These actions not conducive nor representative of the Alibaba Platform

The actions, which indeed are detrimental to the ESS corporate health, will be turned over to the Chinese court system.

ESS would appreciate a meeting with Alibaba management to discuss further – and we will definitively request support from your fraud prevention team.

If we can provide additional clear documentation or written statements from those persons involved in the transaction(s), please advise.

Thank you kindly for your review and your advice moving forward.

Sincerely,

Environmental Source Samplers, Inc.