07 September 2010 - Itasca (IL), USA
Fellowes has confirmed that its Chinese joint venture partner has blocked all shipments at its facility in Changzhou, China.
Affected products include many of Fellowes’ commercial, professional and SOHO shredders, although its personal shredder range is not affected for the most part, the company said.
Fellowes added that its Bankers Box products, office productivity ranges and nearly all of its binding and laminating products are also unaffected.
A contractual dispute with Chinese joint venture partner, Jiangsu Shinri Machinery Co, is at the heart of the current problem.
Fellowes gained 100 percent of the operation in 2006 when its previous third-party relationship transitioned to a cooperative joint venture. At this time, Shinri ceased to be involved in the operations, but is still entitled to an annual return on its investment. Fellowes says that it has met this obligation each year.
Problems began earlier in the year when a dispute broke out between the two brothers who run Shinri. This dispute resulted in Fellowes’ long standing partner leaving the business and his older brother taking over.
Apparently, tensions mounted over the ensuing months between Fellowes and its new partner which resulted in a unilateral shipment stoppage being made in August.
Fellowes says that this move – which came as a surprise to the company – was made to force it to change key provisions in the contract that will lead to shifting power, control and financial gain to the Chinese partner.
Fellowes also says that, in spite of its efforts to negotiate a settlement with the assistance of the government, the demands from the JV partner have continued to grow “with no willingness for compromise or common ground”.
Fellowes is continuing to work with Chinese government and party officials with the help of the US government, but so far all efforts have been unable to lift the blockage.
In the meantime, Fellowes says it is working to bring up alternate products and new supply chains to bring its affected machines back into the market.
“We first and foremost apologise to all Fellowes’ loyal customers who are affected by this shipment stoppage,” said James Fellowes, Chairman and CEO.
“We are working to do everything within our power to resolve this issue.”