My company had just started representing a machine manufacturer based in Mumbai as their dealer in our city. While this manufacturer had supplied machines to many customers in Maharashtra, they had not supplied any equipment outside Maharashtra.
Within a few weeks, we had generated many enquiries. One customer decided to buy one machine immediately, but he wanted to see a machine in running condition before he placed the order. Since no machine was available locally, the manufacturer offered to arrange our customer’s visit to their customer’s factory in Mumbai where their machines had been working for over five years.
The customer visited the Mumbai customer’s factory along with the manufacturer. He was satisfied with the performance of the machines and with the Mumbai customer’s feedback about the manufacturer’s after-sales service. The day after his visit to Mumbai, he released his Purchase Order and advance. Two weeks later, his machine was delivered at his factory.
Two days after our customer had transferred the payment to the manufacturer, our commission was transferred to our account by the manufacturer. I realized that the manufacturer had transferred an amount exactly 1.5 times the commission due to us. I telephoned him immediately and pointed this out.
He clarified, “Your customer bought one machine. But his friend in Mumbai also bought a machine based on his recommendation. Since his friend’s enquiry was generated by your customer, we’ve paid you the sales commission (50% of the total commission) for this sale as well. We’ve retained 50% of the total commission since we will provide the Warranty service. I hope that’s OK with you.”
I pointed out to the manufacturer that, as per the terms of our agreement, he was not obliged to pay us any commission on the sale to a Mumbai customer. He replied, “If we go by the letter of the agreement, we need not pay you the sales commission. But I am going not by the letter, but by the spirit of the agreement.”
I was stunned! For the first time, I had come across an Indian businessman paying somebody not because of a legal obligation, but because he felt he was morally obliged to do so.
How many people in India, or in the whole world, would do that?
(This post was originally published on Sep 24, 2013.)