Test Kits from China to India- Buyer’s Satisfaction Paramount and Not That Of Seller

By N.S.Venkataraman

Facing COVID 19 crisis, several countries including India hurriedly placed orders for test kits from China for testing for antibodies to the coronavirus

Order from India :

India ordered from China more than half a million kits to boost it's screening.

After receiving the test kits, ICMR ( Indian Council of Medical Research) , the top agency dealing with Coronavirus outbreak in India, said that the performance of the test kits received from China are not reliable and therefore, asked all states in India not to use the Chinese test kits anymore.

Angry reaction from China :

This decision of ICMR not to use test kits from China has provoked angry reactions from China , which termed Indian decision as unfair and irresponsible. China gave itself self certification that Chinese authorities have validated the equipment produced by the two Chinese firms namely Guangzhou Wondfo Biotech and Zhuhai Livzon Diagnostics.

Like a typical seller who would like to save his skin after supplying bad quality products , China has virtually accused Indian medical practitioners of not having enough expertise to use the equipment. China said " the tests needed to be carried out in a professional manner to produce accurate results. There are strict requirements for the storage, transportation and use of COVID 19 antibody rapid test kits. Any operation which is not carried out by professionals in accordance with the product specifications will lead to the testing accuracy variations".

Obviously, with such statement, China has attempted to humiliate the Indian medical professionals by doubting their competence and knowledge level. This is a negative statement made with the intention of evading from the responsibility of a supplier, which needs to be strongly condemned.

Different reaction to the rejection in other countries :

Earlier, when countries like Spain rejected the test kits from China due to quality issues , China responded by offering to replace them. However, when India rejected test kits , China has termed it as irresponsible decision. Does this mean that China has different yardsticks for different countries and views India's decision with contempt ?

Lack of adherence to procurement procedure :

The fact is that neither India nor other countries which bought the Chinese test kits ,have inspected the shop floor practices and quality control measures in the producing units in China. The ground reality is that China exploited the anxiety of the buyers to procure test kits at any cost in view of the urgency and the buyers did not visit the units to inspect the shop floor practices and quality control procedures adopted. Obviously, the buyers waived such procurement procedures in view of the urgency and China also restricted the movement of international visitors .

It has been an improper buying procedure adopted by the purchasing countries including India, which seem to have just taken for granted the assurance of China that the Chinese authorities have validated the equipment produced in China by the supplying units.

Is there role for sub contractors for supply ?

It is usual practice for major producers to sub contract the production to small sub contractors , if there would be large order beyond the capacity of the producers to supply at stipulated schedule.

Many people now wonder, that faced with the huge order situation, many small Chinese producers could also have produced the test kits as sub contractors to the major suppliers from China and the quality of test kits supplied by such sub contractors might not have been subjected to strict quality check and control. This aspect needs to be instigated.

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In any case, the main producers and the government of China is accountable for the quality of the test kits, particularly when exported.

Satisfaction of buyer paramount :

All said and done, internationally in all buyer seller contract ,the satisfaction of the buyers are paramount and not that of sellers. In other words, sellers have the responsibility to satisfy the buyers in all respects.

Instead of merely explaining as to why the test kits have failed to give reliable results in India , Chinese producers should have demonstrated and proved the reliability of the test kits , China has merely called India's decision as irresponsible. On the other hand, one may not be wrong if he would conclude that only China has been irresponsible.

Today, China stands accused as an unrepentant seller , with least regard for the interest of the buyers.

India is certainly entitled to reject the test kits , if it would not be satisfied, which is the legitimate and internationally acceptable practice of buyers.

Payment for the test kits :

ICMR has said that it has not made any payment from government treasury to Chinese suppliers. This could be factually correct.

However, 13 Indian suppliers ( importers / distributors) have been licenced by Government of India to import the Chinese test kits.

It is most unlikely that Chinese companies would have supplied the test kits without receiving full or part payment in advance from the distributors.

It remains to be explained as to whether the distributors in India have opened firm and irrevocable Letter of Credit for supply to Chinese firms , probably with some credit period for payment. If this would be the case, then the Chinese firms would receive their sale proceedings from Indian distributors, though Government of India can say that it has not paid any money to Chinese firms from it's treasury. This aspect remains to be investigated and explained by Government of India.

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Will China take back the rejected test kits ?:

Finally, it is not clear how ICMR would handle the situation, if Chinese firms would refuse to accept the rejected and returned test kits. This doubt arises, since China has termed India's rejection of test kits as irresponsible and unfair.