Thursday, February 21, 2008

Bad Business Practice: "Trusting" Your Violin Out

If you ever read up my profile, I described the violin business as "cloak and dagger" or Byzantine in nature. This recent news article from the Ottawa Citizen is a good illustration of why the business gets the reputation it does for such bad practice.

Although the events of the article occurred a couple months back, the piece centers around Ottawan Peter Dawson. Fidder and violinmaker of 46 years, Dawson had established a seemingly good business relationship with a Ottawa-born musician and "buyer-seller" Joseph Hokai Tang. The last that Mr. Dawson saw of him was when he let him out the door to sell some Hill and Son bows and a couple of 19th-century French instruments. He went missing since with a loot to boot worth around $25,000. (click here for the full article).

Fast forward to November of 2007 (click here for the full article), Mr. Tang gets done playing from a concert in San Francisco and is arrested by the U.S. Dept of Justice. Dealers besides Mr. Dawson that had done transactions with Mr. Tang filed complaints to the postal service and soon lead a two and half year investigation lead by the USPS. The US DOJ lawyers allege that Mr. Tang intentionally misrepresented the condition and quality of instruments he sold and failed to pay for instruments he acquired from other dealers. You can read the DOJ press release here which details details 10 alleged offences -- two counts of wire fraud and eight counts of mail fraud -- related to the sale and consignment of fine violas, violins and bows that took place between April 1, 2002 and Dec. 31, 2006.

Now, let's keep this on a legal basis and also assume that the journalists got their facts right. Lot of circumstantial and anecdotal evidence that were gathered in the news pieces which points towards a crime but these are still allegations. This blog topic isn't about proving Mr. Tang's guilt- let the courts decide that.

Instead let's focus on the how and the why. After reading those articles, I kept scratching my head thinking how could they (the dealers) have let this happen? I couldn't believe that some of these dealers were so blindly trusting they didn't even bother checking up sooner on the sales status of their instrument after a few years went by. Why didn't the dealer take the customer's credit card information in case he ran off with the violin? Couldn't they have some sort of system of collateral in place?

Any business transaction involves a level of "trust" between two parties. The series of events that lead to the indictment of Mr. Tang shows that the violin industry is a highly unregulated business system that is steeped in this tradition "trust".

Now, believe it or not, I happen to think this old world tradition of "trust" that I hear so often in the industry is good. It establishes loyal business relationships which becomes more personal and meaningful. The dealer helps you access and guides you through the vast market of instruments out there. However, don't you think that this kind of relationship can be strengthened if it has an aspect of protection and security? Let's not forget, I'm also suggesting this applies to both parties.

This is why one of the things we strive to do at the shop is have transactions and policies in writing. Customers should ask for the details of their approval period, instrument maker's certificates, and copies of invoices or rental agreements. Consignors should approach the shop with a good idea of the terms in mind, negotiate, and if consigned should seek an official signed consignment letter. We also encourage other shops to their part as well. Whether it be backed up computerized invoices, signed rental agreements, or written purchase and trade-in policies, the more transparent your policies become, the better that level of trust is protected.

As for why dealers and customers don't adopt more of these kind of policies, I'm not too sure. Each side may keep their agendas hidden for exploitive purposes. Dealers may simply lack the knowledge or resources of the business and legal areas. Whatever is the case, make sure that the kind of trust that's established in this business goes above and beyond to protect you the client and you the dealer.

Links to the news articles:

1 comment:

Anonymous said...

The irony is- Mr Dawson has sold fakes for many years and has never made a violin.

Taking with other dealers, Peter Dawson reputation is well known.

Now the shop is owned and run by his assistant. It remains to be seen if the false labels etc stop.

So I guess what goes around comes around.


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