Wool Trade

Australian Merino Exports rejects Chinese top maker claims

Terry Sim, November 25, 2020

AME director and wool exporter Chris Kelly.

WOOL exporter Australian Merino Exports is continuing to trade into China despite accusations being circulated by Chinese trade bodies on behalf of disgruntled top maker Redsun Wool.

Australian Merino Exports today defended itself against claims made in emails circulating in the Chinese and Australian wool trades following the breakdown of buying contract negotiations with Redsun earlier this year.

In an email seen by Sheep Central, influential Chinese trade representative and services company, the Nanjing Wool Market, has detailed the accusations by Redsun and said the exporter is now “blacklisted.”

Australian Merino Exports director Chris Kelly said the dispute with Redsun stemmed back to January this year when AME chose not to sign a contract formalising a new method of buying for the top maker.

“For the previous 12 years we had no contract.”

AME had previously bought wool for Redsun under a normal ‘indent’ or commission basis, but in January this year AME decided not to continue business under a new supply arrangement proposed by the Chinese top maker. After negotiations broke down, AME ceased buying wool for Redsun and the top maker subsequently complained to Nanjing Wool Market and other Chinese trade bodies.

Redsun’s representations to the Nanjing Wool Market led to the trade body stating: “AME is blacklisted in the default list of Nanjing Wool Market Integrity Platform and publicized in the wool industry.”

In the NJM email, AME is accused of “seriously violating the principle of good faith”.

“In their indent service for Redsun, AME raised the real auction prices for themselves, and not only earned the indent commission, but also received improper gains of the additional part of the real auction prices, and the amount is huge.”

The Nanjing Wool Market has also said AME and its two directors are not invited or welcome to attend any wool industry meeting in China, including the annual NWM Conference and if Chinese enterprises have any trade disputes with AME in the future, “NWM will no longer accept the relevant mediation and arbitration.”

The NWM said it had informed the Australian Secretariat of the China-Australia Joint Working Group on wool, and organized a meeting of the Chinese members to discuss the case. The Nanjing Wool Market said in the email to the Chinese trade that it had sent a letter to AME asking it to respond and explain the problems raised by Redsun.

“Unfortunately, until now, AME has not made any substantive reply,” the NWM email said.

“AME is welcome to return to the dispute investigation process.

“If AME reconciles with Redsun in any way, NWM will remove AME from the default list as the case may be.”

AME denies claims of ‘dishonesty’

AME told Sheep Central today that it was aware of statements by the Chinese trade bodies implying the company has been “dishonest” and stating that measures be taken to damage AME’s business and commercial interests.

However, AME director James Thomson said it is important to clarify that AME denied there was an agreement in the vague terms suggested by Redsun.

“There were, of course, written terms signed off for each transaction.

“These terms complied with the Green Book and each transaction complied with the written terms,” he said.

The Green Book is the contract template of terms and conditions for trading wool between Australia and China developed by the China-Australia Joint Working Group on wool.

“AME stands by its strong track record with multiple customers.

“Further, the statements issued are false in respect to AME’s response to the Redsun claims,” Mr Thomson said.

“Our lawyers have provided detailed letters to the joint working group setting out our position.

“The proper forum for determining this dispute is the courts.”

Mr Thomson said the statements circulating about AME are “offensive and defamatory and pretty clearly designed to inflict damage on AME”.

“AME is reserving its rights in respect to the publication of the statements and the actions taken by various parties.”

Mr Thomson said while AME did not think this matter is part of any broader issues in the Australian and Chinese relationship, “we obviously can’t say for sure”.

Mr Thomson said AME has responded to all claims made by Redsun and NWM directly to peak bodies like Wool Industries Australia and the Australian Council of Wool Exporters and Processors.

Mr Kelly said AME would continue to strongly defend the accusations against the company as “baseless” and has the support of the Australian industry.

“Our legal advice here is we have no case to answer,” Mr Kelly said.

Mr Kelly said the action by Redsun had otherwise not affected its wool exporting business into China and it continued to get good support from other Chinese customers.

Sheep Central has sought comment from the Nanjing Wool Market, Redsun and China-Australia Joint Working Group chairman David Michell.

Click here to read the full statement from Australian Merino Exports.

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