Nokia trades barbs with supplier, denies wrongdoing

Nokia denied acting unfairly towards a Taiwanese parts supplier when it cancelled a contract at short notice.

Nokia on Tuesday denied acting unfairly towards Taiwanese supplier of DSL (digital subscriber line) products that took out front-page newspaper advertisements berating the mobile phone giant's contract practices. Nokia cited quality problems with some equipment supplied by YCL Electronics.

The Taiwanese company's ads, which appeared Monday in the Europe and Asia editions of The Wall Street Journal, blasted Nokia for cancelling a product order in a manner that YCL claimed would put it out of business, and posted several e-mails between YCL and Nokia executives on its Web site:

YCL also admitted that, despite its position that its contract with Nokia over the products is unfair, it did indeed sign the contract.

"It's a signed agreement ... and there were performance problems with the products they supplied to us," said Thomas Jonsson, director of communications for Nokia in Beijing. YCL has supplied Nokia with DSL products for "quite some time" and Nokia is "evaluating our next step in this unusual situation," he said.

Nokia believes the contract in question is a standard one and that it acted properly, he said. He confirmed that the Nokia e-mails posted on YCL's Web site are genuine, but said they reveal "only part of the conversation."

YCL cried foul over the product quality charge. It said it resolved a quality problem with Nokia months ago.

"YCL settled the so-called quality issue with Nokia on April 21, 2005," said Andy Lu, vice president of sales at YCL. Nokia wants to mingle the quality issue with the current contract dispute to "mislead the public," he said.

In a YCL document dated April 21 and viewed by IDG News Service, YCL apologized to Nokia for problems in more than 2000 DSL splitters and pledged to pay Euro 180,000 (US$211,007) to cover replacement and handling costs.

Jonsson said the quality problem was in only one product supplied to Nokia.

YCL maintained that the main issue is a contract that it believes is unfair because it allows Nokia to cancel any order without liability two weeks prior to the delivery date, leaving the Taiwanese company vulnerable because it has to pay for the product materials far ahead of time.

YCL and Nokia have not been in contact with each other since the Taiwanese company placed the advertisements in The Wall Street Journal, Lu said.

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