Vietnamese firm sues Amazon for $280M
Vietnamese company Gilimex Inc. is suing e-commerce giant Amazon for $280 million for allegedly cutting back on orders, leaving it with an excess inventory.
Gilimex, a manufacturer of textile and other products based in Ho Chi Minh City, said in a filling in a New York state court on Monday that it has been partnering with Amazon from 2014 to 2022 and has invested tens of millions of dollars in manufacturing facilities to build the steel-and-cloth storage pods used to organize inventory in Amazon warehouses.
Gilimex said the partnership was built on “trust,” with Gilimex relying on the accuracy of Amazon forecasts to make adequate investments to meet demand, including procuring materials and arranging factory capacity and manpower to meet the American company’s needs.
But beginning in April, Amazon “immediately changed and reduced the projected demand” for the remainder of 2022 and 2023 to a small fraction of previous forecasts, according to the lawsuit.
“Thus, while Amazon enjoyed unprecedented increases in revenue during the pandemic due in large part to the explosion of online ordering by consumers from the safety and comfort of their homes,” said the legal complaint, “Gilimex management and laborers literally risked their lives on a daily basis to make such record growth a reality.”
The Vietnamese company said it employs 7,000 employees in multiple factories to produce more than 1 million warehouse storage units annually, adding that production for Amazon increased 20-fold during the eight-year relationship.
Gilimex was established in 1982. Its main products include fabric storage organization, home textiles, laundry baskets, duffel bags, backpacks, and outdoor textile products.
Around 85% of Gilimex’s export revenue has come from Amazon, which ordered $146.6 million worth of products from the company last year, according to Mirae Asset Vietnam Research.
Gilimex earned a record revenue of VND4 trillion ($170.03 million) last year, up nearly 16% from 2020.