Pack Tech, Dubai: Does trust exist in business relationships?
By: Kshitij Sinha, Salil Garg, Kamran Khan, Tania Adhikari
About Pack Tech
Pack Tech is a family-owned, medium-sized, flexible packaging material converting company based in Jebel Ali Free Zone, Dubai. The company was started in 1997 and has grown five fold over the last 10 years. Today, it exports 70% of its products to 20 countries and imports its raw material from five different countries.
The company produces 2 types of products, namely, 38 micron aluminum foil lids & 35 micron polypropylene film labels. 38 micron aluminum foil lids are used for sealing polystyrene, polypropylene & other kinds of plastic containers for yoghurt, fruit juice & water. 35 micron…show more content… Their relationship was based on an informal arrangement of mutual trust and commitment. In addition, Riyaz could not take any action against his technical manager who had helped Ali, because he could not find any concrete evidence to prove the manager’s involvement.
Sri Lankan Agent
Sri Lankan Agent Dhillon, a trader from Sri Lanka, met Riyaz at Pack Tech’s stand at a packaging exhibition in Dubai in 2001. Dhillon showed interest in promoting Pack Tech’s products in the Sri Lankan market. Since the Sri Lankan market was new to Riyaz, he agreed to cooperate with Dhillon and offered the best price and direct service to his customers without any credit facility. Until 2003, Dhillon bought an average of US$20,000 worth of material every month through letters of credit (L/C) and sold it in the Sri Lankan market.
In 2008, the business grew further, reaching an average of US$100,000 per month, and there were few incidents of payment delays on Dhillon’s part. As a result, the total outstanding was US$250,000, apart from orders executed against L/C. Upon realizing this, Riyaz interfered in the order execution process & instructed the sales manager to collect the outstanding amount before executing any new orders. As a result, Dhillon’s customers suffered material shortages. Though Dhillon was a trustworthy person, Riyaz never had complete confidence in him due