Zespri International Ltd has been hit in a second key Asian market by problems with kiwifruit importers creating fraudulent invoices to reduce their duty payments.
A request late last month from Taiwan Customs for Zespri to authenticate import documents led to the discovery of significant discrepancies, chief executive Lain Jager told the Bay of Plenty Times Weekend.
After Zespri investigated the issue, Mr Jager flew to Taiwan last week to terminate the company's business relationship with its three importers in Taiwan, which is New Zealand's seventh largest market for kiwifruit.
"We recognise that on the back of the China invoicing issue this is unfortunate,'' said Mr Jager. ``But there is no connection between the two events. As soon as we became aware that there were discrepancies in Taiwan, we've taken strong and decisive action, because we don't condone or accept them.''
Zespri was not aware of it being subject to any investigation as a result of the importers' actions, he said.
Mike Chapman, chief executive of grower organisation New Zealand Kiwifruit Growers Inc (NZKGI), said he welcomed Zespri's prompt action on the Taiwan issue.
Mr Jager noted that, while it was not technically Zespri's role to ensure its importers paid the appropriate duties, its experience in China and now in Taiwan meant it would begin taking pro-active measures to audit the duty payments of its importers in key developing Asian markets.
The timing was unfortunate, with the season due to start soon, and Zespri was working to set up replacement import and distribution arrangements, said Mr Jager. Zespri, which maintains a small Taiwan office, is considering the option of becoming the importer of record, as it is in Europe, Japan and Korea.
The latest incident comes as Zespri continues to respond to a costly and wide-ranging New Zealand Serious Fraud Office inquiry into the China dual invoicing issues that resulted in the company paying a multimillion-dollar fine and penalties last year, and the jailing in China of its former local importer.
"Obviously we have to learn how to do business better in Asian countries,'' said kiwifruit grower representative Neil Trebilco, the NZKGI president.
Zespri, formed in 1997, is a global marketing organisation providing a single point of entry for the export of New Zealand kiwifruit, and is predominantly owned by growers. The Bay of Plenty Times Weekend understands that Mr Jager sent a letter yesterday to Zespri's grower and shareholder base about the issue and the decision to terminate the Taiwan importers.
Mr Jager said that the problem came to light when the company had received a request last month from the Taipei Economic Co-Operation Office in Wellington (the de facto Taiwan embassy) on behalf of Taiwan Customs to authenticate copies of invoices submitted to Taiwan importers.
"These invoices appeared on their face to be Zespri documentation, including the Zespri logo and details of Zespri personnel,'' Mr Jager said. "However, when reconciled against our genuine invoices, there were discrepancies between the documents.''
Mr Jager would not divulge details of the Taiwan duty fraud. But the Bay of Plenty Times Weekend understands that it involved the importers taking the original Zespri invoices and altering them in order to reduce their Taiwan import duty payments. It was unclear how long the practice had been going on.
Last year, Taiwan took about six million trays of kiwifruit. That is just under half the volume going into China, where imports have continued to grow steadily in response to strong local demand, despite the invoicing problems there. NZKGI, in a report on the impact of the China dual invoicing issue released in December, said that the Chinese prosecutions have had no tangible effect on the Zespri brand and continued trade with China. "The Zespri brand is strong in China and represents consistent high quality, taste and safety,'' said the report.
The industry is engaged in a year-long strategic review, the Kiwifruit Industry Strategy Project. The broad aims of the review include preparing the New Zealand industry to compete more effectively as part of a global supply chain, and an increased responsibility to act responsibly and ethically to the benefit of growers and the wider New Zealand community.
Mr Jager said that Zespri was confident that in the context of the global supply/demand balance it was unlikely there would be an impact on grower returns as a result of the Taiwan problems.
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