The Flip Side of China's Economic Miracle

But the dealer from Mannheim noticed nothing that night. In fact, he was overjoyed as he raised a glass to his new business relationship with the Chinese. An enormous market seemed to be opening up for M.C.M., because the majority of used building machines are offered for sale in China, primarily through the Internet. "We Chinese wish to learn from you," the head of the company, which calls itself China Heavy Equipment, vowed solemnly. Mouazzen, who felt flattered at the time, says: "They treated me like a father."

Serious Doubts

And because everything seemed to be going so perfectly in China, the visitors from Germany agreed to the next deal: the purchase of another used crane, this one made by the Japanese company Tadano, also for shipment to Iran. Mouazzen gave the Chinese a 60-percent down payment for the €110,000 crane, which he characterizes as "a wonderful machine." For another €6,000, the Chinese promised to provide the crane with an air-conditioning system.

But when he returned to Germany, Mouazzen began receiving a flood of e-mails that raised serious doubts. China Heavy claimed that the crane's entire electrical system had burned out during installation of the air-conditioning unit. As the customer Mouazzen, the Chinese wrote from Shanghai, would be responsible for the added costs. The Chinese partners demanded more than $40,000 for the repair and claimed it would take three months. When Mouazzen insisted on inspecting the machine in person, the e-mails became increasingly hostile.

China Heavy eventually sent its German customer a "letter of urgency," in which it stated that if he did not react to the letter within eight hours, it would be "responsible for nothing." But the flight to Shanghai alone would have taken Mouazzen about 11 hours, and besides, most European airports were shut down at the time because of volcanic ash. The Chinese apparently did not seriously expect that they would ever see their business partner again.

The small Mannheim business, which consists of Mouazzen, his son and three employees, is now struggling to survive. In addition to the money he had already paid for the cranes, Mouazzen owes his Iranian customers a 30-percent contractual penalty for the incorrect shipment. Even worse, says Mouazzen: "My reputation with business partners of many years is ruined."

Now the Mouazzens are back in Shanghai. During their previous visits, they splurged on a suite, but now father and son are saving money by sharing a double bed. And instead of spending their time marveling at the glittering facades of this city of skyscrapers, they are struggling with the harsh realities of everyday business in China.

'Why Don't You Arrest These People?'

The Mouazzens have one of their first appointments with the police. The officers listen patiently to the foreigners' story, but they do not seem surprised. In light of the overwhelming evidence -- the photos of the cranes, the Chinese partners' shipping container, the manifests, the contracts --, the Chinese agree that a "crime" was committed. "Well, then why don't you arrest these people?" Mouazzen asks. The officers reply that they will conduct a thorough investigation of the matter, because their aim is to crack the entire ring of swindlers later on, in one fell swoop.

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