Feng Ping owners struggle with liquidating moldmaking, molding facility
When Feng Ping announced the closing of its moldmaking and molding factory in China, and its subsequent bankruptcy filing in the PRC Court of Dong Guan, China, it left a lot of the company's customers in a lurch. In a telephone interview with Jim Fiocchi, PlasticsToday learned that the company is advising customers and creditors to contact a Peoples Republic of China (RPC) certified lawyer to petition the PRC bankruptcy court for their molds or partially finished molds.
December 23, 2013
"The government doesn't liquidate our factory," Fiocchi said. "We appoint a liquidator and the liquidator has to pay the employees out of pocket first. After the sale, we pay the liquidator a percentage of the proceeds."
"I have first right of refusal to buy the molds at scrap value and we'll ship them all back to the companies that own the molds," he said. "The whole idea was to get the molds back to the customers who own them before all this happened. Now, they can't get them back because of the embezzlement that put us out of business."
Fiocchi said that the Mr. Loak, head manager of the plant, along with 18 other employee accomplices, devised and executed a devious plan to embezzle money from Feng Ping Tooling, which is estimated to be about $4.5 million between August 2012 and July 2013. The scheme involved kickbacks from the vendors. Feng Ping's vendors would charge 50% more than the actual cost of the materials, the vendor would then be paid kick back 40% to the purchasing people and keep 10% for themselves. "It was a hard scheme for us to figure out because they hid the purchases from us," Fiocchi said.
"They [the technical manager and the purchasing department] were in cahoots with the vendors," Fiocchi said. "When the vendors turned against us, the workers also turned against us. They wouldn't let anything in or out - they feared they wouldn't get paid. All the middle and upper management saw they wouldn't get paid so 60 mid-level workers looted the factory. They took everything they could carry out and the police stood by and watched them. Then they wanted to get paid after looting the factory."
"We couldn't sell the equipment to pay the vendors, which we intended to do. We offered a payment schedule and then paid them all the money we had - about 50% of what was owed," continued Fiocchi. "They signed the papers agreeing to that, then decided they didn't want to go along with that. After giving the vendors all the money we had, we couldn't pay the employees. They then told our customers we were going out of business. They took our purchase orders and told the customers that they were the new molder for them."
Given that there are 230 workers wanting to be paid for all of December and half of November, plus the one month's pay for each year they'd been with the company, an amount Fiocchi said came to about $450,000 in total salaries and compensation claims, there was no way the Fiocchi's could pay that.
At one point, Feng Ping had 855 workers in four buildings totaling 400,000-sf. In 2012, Jim Fiocchi said the company built 890 molds. "We built more molds in 2012 than any company on the planet," he stated. "In four years we went from $0 to $16 million. We were successful because we priced our molds well and were able to get a lot of business. Twenty-five percent of our customers bought from us because of the low risk."
Fiocchi said that this type of situation is very common in China. "Most successful companies don't last five year because [the Chinese workers] try to figure out how to take it from you. "
Fiocchi said he is bitter about the whole situation because "we treated them like family." He said that he and his brother, John, took them on cruises, took them to NPE and had beach parties, and many other "perks" to win their loyalty. "There's no sense of loyalty, no sense of honesty or trust - it doesn't exist in this culture. The Rats live on. If you're born in the year of the Rat you're not lying or untrustworthy, you're just tricky. That's what I was told. They're not dishonest people, they're just tricky. The people who took us are considered smart. Mr. Loak is smart - he got $5 million - he's respected among his peers. The [Chinese] cultural values are completely skewed from the U.S."
Despite his feelings, Jim Fiocchi is philosophical about it all. "We built it, but we didn't leave with anything less than what we started with," he said. "We came with nothing and left with nothing."
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