Where Has Business Ethics Gone?

As there have been no significant movements or notable events regarding prices on the CME in recent weeks, I will use this week’s report to provide a closer look at the way of doing business in Croatia and neighboring EU countries.

My company has been trading exclusively in soybean meal through the CME for the past 25 years. Our customers come from EU countries, while we have no customers in Croatia due to the uncontrolled opening of j.d.o.o. companies, which has become synonymous with "fraud" and tax evasion.

A similar situation is occurring in Hungary, where the VAT rate is as high as 28%, prompting many Hungarians to open companies in Slovakia and the Czech Republic. My business partners, with whom I have successfully operated for the past two years, opened a company in Slovakia, just a few kilometers from the Hungarian border. Goods were exclusively transported to Hungary. Everything was functioning excellently while they were making good profits from purchasing goods and consistently staying in the black. However, last year, the situation began to change drastically, and prices started to drop uncontrollably. It is worth noting that the price of soybean meal at FCA Koper parity fell by more than €100/T.

At the end of 2015, the customer decided that they would not bear the loss and canceled all contracts for the first half of 2016, justifying that the end user in Hungary had gone bankrupt, leaving their supplier, and my customer, with huge debts.

I have little choice or time left; the goods need to be disposed of as soon as possible, and I must accept the loss while trying to avoid storage costs. Currently, the best I can do is sell the goods and incur a minimum loss of €20/T; we are dealing with large quantities, and zeros are piling up.

At the same time, new potential business partners interested in purchasing soybean meal are emerging. They are all Hungarians with companies registered in Slovakia. We are signing contracts, they are paying in advance, and transporting the goods. Meanwhile, I am tallying the losses.

A Slovenian freight forwarder calls me to warn that truck drivers are saying they are loading goods for a customer who canceled all contracts instead of for a new partner. Everyone is beginning to suspect that the old partner has closed their company and opened a new one. The "own" goods that they canceled and left at my disposal with losses are being purchased through the new company at a price €20/T lower, and they continue to operate successfully.

What kind of business relationship is this, and what has happened to the business ethics that are taught at every reputable university? It seems that all of this has disappeared. Unfortunately, today no one hesitates at anything, and a word and a contract mean nothing anymore. The game is played solely by unilateral interests on which nothing can be built in the long term, especially not a fair business relationship.