[Congressional Record Volume 158, Number 150 (Wednesday, November 28, 2012)]
[House]
[Pages H6485-H6486]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             HEIDTMAN STEEL

  (Ms. KAPTUR asked and was given permission to address the House for 1 
minute.)
  Ms. KAPTUR. For decades, America's trade policy has been broken. When 
Congress granted permanent normal trade relations to China, those of us 
in Congress who opposed the deal were promised that U.S. businesses 
would be treated fairly in China. Well, that didn't happen. Instead, we 
see cases of corruption and outright theft with little or no justice 
for U.S. companies.
  In our Ohio district, one of our local manufacturing companies, 
Heidtman Steel, was the victim of corrupt business practices in China. 
Heidtman supplies steel to the U.S. auto industry. Heidtman took a 
chance by trying to do business in China. Do you know what? They 
essentially were robbed by a Chinese company. After 8 years of trying 
to get justice, Heidtman is still owed $7 million.
  I've asked the Chinese Ambassador and their government for answers to 
this case, and our Federal trade establishment needs to be more 
forceful on issues of business fraud. America and the Congress should 
not stand idly by as American companies are fleeced and as the promises 
of a level playing field are broken.

                 [From the Toledo Blade, Nov. 21, 2012]

      Heidtman Steel Products, Inc. Says Chinese Firm Owes It $7 M

                          (By Ignazio Messina)

       A Toledo company that has supplied steel for the Detroit 
     Three automakers and raw materials to steel mills says it was 
     duped eight years ago by a Chinese business that claimed to 
     have a great supply of coking coal for sale.
       After nearly a decade of legal wrangling overseas, Heidtman 
     Steel Products Inc. is still owed nearly $5.9 million, plus 5 
     percent interest from the Chinese company. The interest 
     brings the award to about $7 million.
       ``A simple business transaction. Well, it never shipped and 
     they never returned the money,'' said Mark Ridenour, chief 
     financial officer for Heidtman Steel. ``I think we got ripped 
     off, to be perfectly honest. I think we got shanghaied.''
       Toledo Mayor Mike Bell and about 20 local businessmen left 
     for China on Nov. 13 and are to fly back today.
       The mayor has been urging Toledo businesses to explore 
     doing business with Chinese investors and businessmen.
       The trip to China to seek investors is Mr. Bell's fourth. 
     His spokesman, Jen Sorgenfrei,

[[Page H6486]]

     reached in China on Tuesday morning, declined to make the 
     mayor available for comment about the problems Heidtman Steel 
     had in China.
       In December, 2010, an arbitrator in Geneva agreed with 
     Heidtman and ordered the Chinese company--Hebei Huiyuan Group 
     Tangshan Import & Export Co. Ltd.--to repay $3.5 million plus 
     other costs for 44,000 tons of coke it had promised to 
     deliver but did not. Two years later, Heidtman is still 
     without its money and never received the shipment.
       In 2004, when coke was difficult to obtain and the price of 
     steel was sky-high, John Bates, Heidtman's chief executive 
     officer, thought he had found a supply of coke to satisfy his 
     customers.
       ``We became aware that there was maybe some coking coal 
     available in China for export to the United States, so our 
     CEO went over and met with some individuals,'' Mr. Ridenour 
     said. ``We signed a contract [and] made a payment in order to 
     obtain this coking coal, which we would then turn around and 
     sell to a steel producer; in this case, it was SeverStal.''
       The deal with Hebei was signed on Nov. 13, 2004, and the 
     money was wired three days later. The coke was supposed to be 
     waiting on a dock in China north of Beijing on Dec. 5, 2004.
       After Hebei failed to deliver the coke, Heidtman agreed to 
     cover the difference between the contract price and the cost 
     of buying 44,000 tons of coke on the dock from another seller 
     to honor its commitment to SeverStal. In January, 2005, 
     SeverStal demanded $1.68 million from Heidtman for the 
     purchase price difference of that coke and extra shipping 
     costs.
       The arbitrator awarded Heidtman $3.51 million as 
     reimbursement and the $1.68 million it had to pay to 
     SeverStal. Heidtman was also awarded $440,000 plus $185,876 
     in legal fees, hearing costs, and arbitration fees.
       Xu Jianguo, chairman and legal representative of Hebei, 
     could not be reached for comment at his office in China. Mr. 
     Xu and the company are listed on a variety of Chinese-
     language Web sites. One site calls him ``the city of Tangshan 
     coke king'' and says that he has been chairman of the board 
     of the Entrepreneurs Association of Hebei Province, Tangshan 
     City Federation executive committee.
       Mr. Ridenour alleged Mr. Xu asked for an additional $10 
     million after the coke shipment didn't arrive at the docks.
       John Carey, a lawyer with Eastman & Smith Ltd. who is 
     working for Heidtman, said the arbitration award has been 
     ignored but there are legal options in China.
       ``We have a two-year window to do something with it in 
     China,'' Mr. Carey said. ``We have had a Chinese lawyer in 
     Beijing for about a year trying to help us. . . . We have 
     been told by everybody and their aunt that you can go through 
     the Chinese judicial process if you want to; it will take a 
     really long time; it will be really expensive, and really 
     there is no certainty for outcome.''
       Derek Scissors, an expert on China and an Asian scholar at 
     the Heritage Foundation in Washington, said he was not 
     surprised to hear about Heidtman's troubles with the Chinese 
     company. He said American companies should first check out 
     businesses in China before proceeding because recovering 
     money in a legal dispute is very difficult.
       ``No certainty for an outcome is an understatement,'' Mr. 
     Scissors said. ``The fundamental problem for the U.S. is that 
     it wants to encourage private Chinese companies, but private 
     does not mean ethical or well run. . . . It could be owned by 
     thieves and all of these companies have the shelter that they 
     are not going to be forced to pay unless they have other 
     overseas exposure.''
       Mr. Scissors said American companies in similar disputes 
     will not get a judgment on any basis of law. ``There is no 
     rule of law in China,'' he said. ``Decisions are made on a 
     political basis and the top one is keeping people employed, 
     so if the Chinese company says it would have to lay off 
     workers to pay this order, then forget it, you are not going 
     to get squat.''
       Mr. Ridenour admits Heidtman should have used an 
     international letter of credit rather than paying up front 
     for the coke.
       ``This was our first foray into China and maybe our last,'' 
     he said. ``It's a story about the perils of doing business in 
     China without having your behind protected.''
       Heidtman and its law firm have asked for help from U.S. 
     Sen. Rob Portman (R., Ohio), U.S. Rep. Marcy Kaptur (D., 
     Toledo), the U.S. Department of State, the U.S. Department of 
     Commerce, the American Embassy in Beijing, and the 
     International Chamber of Commerce.
       Miss Kaptur said she is trying to ``get justice'' for 
     Heidtman by going through official channels.
       ``I am seeking a personal meeting with the ambassador from 
     China to the United States and we have asked for that meeting 
     and we are waiting for a reply,'' she said. ``We are 
     operating with a country that does not have reciprocal trade 
     practices. They do not have a rule of law and they do not 
     abide by the normal practice of global trade.''
       She said Heidtman's situation is a cautionary tale.
       ``This is indicative of many American companies doing 
     business in China,'' Miss Kaptur said.

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