《2004年那單烏干達匯票，我賠了錢也學了乖》The 2004 Uganda Bill of Exchange: I Paid, and I Learned

1. Rooms 1511 to 1514, Jiangwan Hotel

In 2004 my company was in rooms 1511 to 1514 of the Jiangwan Hotel, Yuexiu District, Guangzhou.

Business was very big then. There were bargains every day — and I mean bargains that came to us. Customers found their own way to our door, and some orders were placed before the goods had even reached the warehouse.

I was in my early thirties, hot-blooded, and I thought business was simply this: take the order, take the cheque.

Most of our customers were African. One Ugandan client had been trading with us a while, and he did not wire money. He posted cheques. One at a time.

We did not know any better. Not knowing any better, we did the most orthodox thing available: we took the cheque to the Bank of China for collection.

2. One or Two Months, and a Few Tens of Yuan a Cheque

The Bank of China charged us a few tens of yuan in collection fees. Then the cheque set off on a very long road.

The bank sent it back to the Bank of China head office. The head office passed it to Bank of America. Bank of America sent it on to the bank in Uganda. Once Uganda confirmed, the money came back to Bank of America; Bank of America paid the Bank of China; the Bank of China told us to come and collect.

The whole cycle took about one to two months.

Is one or two months a long time? In 2004, one to two months from order to payment was normal. Nobody thought anything of it.

We received a cheque, we sent it for collection. Every month we received a dozen or more.

Most of them were fake.

We did not know. We genuinely did not know. A bank will not ring you up and say "this one is no good" — it takes its few tens of yuan and it runs the one-to-two-month cycle for you. At the end of it, you get one line back: this cheque is no good.

A few tens of yuan each. A dozen or more a month. Is that a lot? Not really. But the money was never the problem. The problem was that we had no mechanism at all for telling a real cheque from a fake one.

That was the first tuition fee. It was not expensive. You just did not know you were paying it.

3. Then the Bank Rang the Office

Then one time the bank rang the office and said a cheque had cleared, and asked me to come in and complete the paperwork.

I went in and did it. About a week or two later, they released the money to me.

It was a Ugandan client. I got in touch with him and he confirmed it.

So we prepared the goods on our side and shipped them out. The shipment went off without a problem, and I kept the documents in good order.

I thought that was an entirely ordinary transaction. The money had arrived, the goods had gone out, the paperwork was filed.

Perfectly ordinary.

4. Two or Three Months Later, the Bank Came to the Office

Then, two or three months on, the bank turned up at our office and told me the cheque was bad. I had to return the money.

My first thought was: why on earth should I?

I put it to them plainly —

"You notified me. You reviewed it and told me the money was fine. The moment I receive money, I turn it into goods and ship them to the customer. That money went straight out again."

They said no.

They said: we only handled collection for you. We were not running your business for you. So if the cheque turns out to be bad, you have to return it.

I refused.

Eventually they instructed a lawyer, who came to the office to see me, back and forth, several times. That went on for three or four months.

After three or four months I could see it clearly: this was not going to be settled by talking. They were not moving, and neither was I.

I was hot-blooded in those days and I did not care who they were. Fine, I said. I will instruct a lawyer.

I laid the whole thing out for my lawyer, and we went to court.

That case was me against the Bank of China. Me against the institution.

5. Three Instances, Three Years, Two Losses

At the time I had two companies. I filed in Haizhu District, through the company we had started with, in Haizhu.

The Haizhu District primary court would not hear it. The intermediate court would not hear it either.

So it dragged, and in the third year it went up to the High Court, on Huangpu Avenue.

The High Court did sit. It heard the first instance and ruled against us.

After that ruling our lawyer travelled around the country making corrections and getting documents notarised. He came back with a stack of notarised papers and we prepared for the second instance.

The second instance was heard halfway, and then the court adjourned.

Three or four days after the adjournment, the court told us: you have lost.

I asked my lawyer: on what grounds have I lost?

My lawyer told me: this is administrative pressure. There is nothing to be done.

That is what my lawyer said to me at the time. I have set it down in his words, without adding to it or taking from it.

I do not know law, and I will not pretend to. But I do know that this case was not a simple one.

I have been told that a copy of the judgment is on file somewhere, and that a good many foreign-related law firms later used our case as a reference and as a case study. That part is beyond me. I heard it, and I am reporting only that I heard it.

6. The Bank Had Moved; I Repaid in Three Instalments

The court said we had lost, so we took the loss like men.

We went back to the bank to negotiate. But by then we had been in litigation for three or four years. The branch manager we had dealt with had been at the Yanjiang branch, and he had left. He had moved to another bank.

That bank was gone from where it had been. So we went looking, and we found it had moved to the Guangzhou Avenue North area.

We went to them to negotiate: this money, how do we repay it?

In the end I repaid it in three instalments. Three payments and it was cleared.

In truth the bank had already written that account off as a bad debt. It had been written down; nobody expected to recover it. We still moved the money over and paid it back.

My thinking was very simple. Legally I had lost, and I accepted that. In business you take your losses. I would pay.

But I have carried a splinter in me ever since —

Why does the law on negotiable instruments, the law on bills of exchange, treat merchants this way?

I had received the money. The money was real, the goods were real, the documents were real, the customer was real. And two or three months later I could be told that none of it counted. The money in your hand is not your money. It is a loan you have not agreed to.

I do not understand it. To this day I do not fully understand it.

7. From That Day On, Letters of Credit Only

After that business I moved to letters of credit and stayed there. I did not dare use bills of exchange again.

The reason is simple: a bill of exchange has a look-back period, and it is very, very long.

A letter of credit is different. It is an undertaking issued by a bank, the terms are fixed in writing, and if the documents match, payment follows. Nobody comes back two or three months later and says it does not count.

The second problem is this. If you fight a bank as an individual, you are far too small. If you fight a bank as a company, you are still far too small. There is no matching that kind of force.

In those years, in that courtroom, someone told me this case counted as foreign-related and was the second such case in the country since Liberation. What I actually heard was "either Guangdong Province or the whole country, the second case" — I have forgotten which, and I will not write it down as certain.

One thing I remember perfectly clearly: we lost. And I was willing to pay.

That Ugandan client used a bill of exchange to cheat us. I can say that today because I am the one who paid for it.

8. The Advice: How to Take Payment From Now On

We drew our conclusions out of that whole business.

First, no more bills of exchange. That line does not move.

Second, cashier's cheques are the exception. A local cashier's cheque, or a Hong Kong cashier's cheque, I will accept.

Third, leave yourself a margin between receiving payment and shipping goods. Keep your documents in order — not so that you can litigate, but so that you know what you actually did.

So I tell young people this all the time: in export trade, it is not how much you earn that matters. It is how much you actually collect.

Ship the goods and fail to collect, and you have not just lost the goods. You have lost the time, the energy and the confidence. On this one I lost the money, I lost the goods and I wore myself out.

But I also took a kind of experience out of it.

9. Experience Grows Out of Trial and Error

I have been in business for twenty-six years. In those years I have made money and I have lost money.

But ask me which taught me more, and I will tell you: the ones where I lost.

On a profitable deal you remember how much you made. On a losing deal you remember every detail — when they called, when you went soft, which step you left uncovered.

So my advice comes down to one line:

Experience grows out of trial and error.

If you have never been through it, if you have never made the mistake yourself, you cannot grasp the idea in any deep way.

However many books you read, however many people you listen to, it stays one layer away. You have to have paid for it once yourself before the lesson gets into the bone.

I would not tell anyone to go out and make mistakes on purpose, but you cannot avoid them. The only thing you control is what you do afterwards: do not run from it, take the lesson back, and change.

The Uganda bill of exchange in 2004 cost me money. It also taught me sense.