Arbitration over Accounts Receivable Collection and Product Defects at a Chinese Subsidiary
First written in FY2016. 11 of 28 entries say "Worsened", first in FY2017-Q1. Latest entry: FY2026.
Oki Electric Industry moved to the "Worse" side of this theme in 2016, 8 years before the typical company in this theme (2024).
The whole theme swung hardest in 2025: 12 of 70 companies on the "Worse" side.
2 other companies' latest entry also says "Worsened".
- FY2026WorsenedAnnual report
「Based on outstanding trade receivables, OBSZ recognized ¥19,164 million as other assets under investments and other assets through discounting over the period estimated to be required for collection. After considering multiple scenarios, including collection through the sale or leasing of secured real estate, OBSZ recognized an allowance for doubtful accounts of 221,907 thousand yuan (¥5,130 million at the end of the fiscal year) for the amount estimated to be uncollectible, based on discounted cash flows deemed recoverable using a method that reflects unbiased probability weighting.」
For disputed receivables in China, long-term operating receivables of ¥19,164 million and an allowance for doubtful accounts of ¥5,130 million were recognized, with the estimated uncollectible amount increasing from the previous disclosure. - 2026-05-29WorsenedGeneral Meetings of Shareholders
「Other under investments and other assets ¥19,164 million Allowance for doubtful accounts △¥5,130 million」
For the disputed receivable in China, an allowance for doubtful accounts was recorded while collection remained incomplete, and the allowance increased from the previous disclosure. The original thread remains unchanged. - FY2026-H1WorsenedAnnual report
「Based on outstanding trade receivables, OBSZ recognized ¥16,954 million as other assets under investments and other assets through discounting over the period estimated to be required for collection (hereinafter, "discounting"). Based on discounted cash flows deemed recoverable after considering the outcome of compulsory enforcement against assets held by 怡化電脳等 and the fair value of secured real estate, OBSZ recognized an allowance for doubtful accounts of 193,683 thousand yuan (¥4,044 million at the end of the interim consolidated accounting period) for the amount estimated to be uncollectible.」
Collection remained incomplete after the Supreme People's Court dismissed the appeal, and long-term operating receivables of ¥16,954 million and an allowance for doubtful accounts of ¥4,044 million were recognized. The estimated uncollectible amount increased from the previous allowance. - FY2025-H1RestatedAnnual report
「Following this, 怡化電脳等 appealed Case B to the Supreme People's Court on 5 January 2022. On 1 June 2023, the Supreme People's Court handed down a judgment upholding the judgment of the Guangdong Provincial Higher People's Court (the court of first instance) and dismissing the appeal by 怡化電脳等. In light of the status of the above litigation, OBSZ recognized long-term operating receivables of 878,473 thousand yuan (¥17,982 million at the end of the interim consolidated accounting period), following, among other measures, a review of the future collection period taking into account compulsory enforcement against assets held by 怡化電脳等. An allowance for doubtful accounts of 16,042 thousand yuan (¥328 million at the end of the interim consolidated accounting period) was also recognized for the portion of these long-term operating receivables estimated to be uncollectible.」
The collection policy following the Supreme People's Court's dismissal of the appeal continued to be disclosed, and long-term operating receivables of ¥17,982 million and an allowance for doubtful accounts of ¥328 million were recognized. Uncertainty over the legal proceedings has decreased, but collection has not been completed. - FY2024-Q1MitigatedAnnual report
「Following this, 怡化電脳等 appealed Case B to the Supreme People's Court on 5 January 2022. On 1 June 2023, the Supreme People's Court handed down a judgment upholding the judgment of the Guangdong Provincial Higher People's Court (the court of first instance) and dismissing the appeal by 怡化電脳等.」
Regarding Case B concerning accounts receivable of a Chinese subsidiary, the Supreme People's Court upheld the judgment of the court of first instance and dismissed the appeal, reducing uncertainty over the legal proceedings. However, the collection period was revised and long-term operating receivables were recognized, so collection has not been completed. - FY2023-Q3MitigatedAnnual report
「In light of the status of the above litigation, OBSZ estimated uncollectible amounts and recognized an allowance for doubtful accounts of 492,934 thousand yuan (¥9,375 million at the end of the third quarter of the current consolidated accounting period), based on discounted cash flows deemed recoverable after taking into account the probability that the 23 December 2021 judgment in Case B would be upheld and the litigation finalized, with discounting performed over the estimated period required for collection.」
The appeal against the judgment recognizing joint and several repayment liability remains pending, but the estimated uncollectible amount decreased from ¥10,242 million in the previous quarter to ¥9,375 million. - FY2023-Q2WorsenedAnnual report
「In light of the status of the above litigation, OBSZ estimated uncollectible amounts and recognized an allowance for doubtful accounts of 502,806 thousand yuan (¥10,242 million at the end of the second quarter of the current consolidated accounting period), based on discounted cash flows deemed recoverable after taking into account the probability that the 23 December 2021 judgment in Case B would be upheld and the litigation finalized, with discounting performed over the estimated period required for collection.」
The appeal against the judgment recognizing joint and several repayment liability remains pending, and the allowance for doubtful accounts amounted to ¥10,242 million. This increased from the previous quarter's estimate, and collection risk remains. - FY2022-Q3Joint and several liability judgment and appealAnnual report
「Furthermore, concerning Case B, which had been under review, the Guangdong Provincial High People's Court ruled on 23 December 2021 that 怡化電脳 and others were jointly and severally liable for 怡化実業's obligation to pay OBSZ. In response, 怡化電脳 and others appealed Case B to the Supreme People's Court on 5 January 2022, and the case is scheduled to be reviewed.」
A judgment was handed down recognizing the joint and several repayment liability of the parent company and others in connection with accounts receivable of a Chinese subsidiary, while the counterparty has appealed to the Supreme People's Court and the case is not yet final. - FY2022-Q2WorsenedAnnual report
「However, because fulfillment of the award by 深セン市怡化電脳実業有限公司 was expected to take a considerable period, a provision for doubtful accounts of ¥11,381 million was recorded at the end of the second-quarter consolidated accounting period.」
Even after the arbitral award, the expectation that fulfillment would take a considerable period continued, and the provision for doubtful accounts was ¥11,381 million. - FY2022-Q1WorsenedAnnual report
「However, because fulfillment of the award by 深セン市怡化電脳実業有限公司 was expected to take a considerable period, a provision for doubtful accounts of ¥11,358 million was recorded at the end of the first-quarter consolidated accounting period.」
Even after the arbitral award, the expectation that fulfillment would take a considerable period continued, and the provision for doubtful accounts was ¥11,358 million. - FY2021Collection period remains prolongedAnnual report
「Subsequently, concerning Case A, which had been under review, the South China International Economic and Trade Arbitration Commission issued an award on 16 December 2020 ordering 怡化実業 to pay OBSZ 1,096,866 thousand yuan in unpaid product purchase price, equivalent to ¥18,493 million at the end of the consolidated fiscal year, as well as late-payment interest, legal fees and other amounts. However, 怡化実業 lacks the ability to pay, and OBSZ must recover the receivable established by the award in Case A from the assets of 怡化電脳. For that purpose, it is essential that OBSZ's claim be upheld in Case B.」
Although the claim for payment was recognized by the arbitral award, collection remains prolonged because it depends on the counterparty's ability to pay and the outcome of a separate case. - FY2021-Q3Arbitration AwardAnnual report
「On 16 December 2020, the South China International Economic and Trade Arbitration Commission issued an award ordering 深セン市怡化電脳実業有限公司 to pay 沖電気金融設備（深セン）有限公司 1,096,866 thousand yuan in unpaid product purchase price, equivalent to ¥17,429 million at the exchange rate prevailing at the end of the third-quarter consolidated accounting period, as well as late-payment interest, legal fees and other amounts. However, because fulfillment of the award by 深セン市怡化電脳実業有限公司 was expected to take a considerable period, a provision for doubtful accounts of ¥10,703 million was recorded at the end of the third-quarter consolidated accounting period.」
An award was issued in the arbitration concerning the Chinese subsidiary's trade receivables, recognizing the claim for payment. However, because fulfillment was expected to take a considerable period, a provision for doubtful accounts of ¥10,303 million was recorded. - FY2021-Q2MitigatedAnnual report
「After taking into account the status of the litigation and the expectation that the collection period would be prolonged, a provision for doubtful accounts of ¥10,441 million was recorded at the end of the second-quarter consolidated accounting period.」
The provision for doubtful accounts for the Chinese subsidiary's trade receivables declined from ¥10,664 million at the end of the previous consolidated fiscal year to ¥10,441 million. However, the arbitration proceedings and the expectation of prolonged collection continue. - FY2021-Q1MitigatedAnnual report
「After taking into account the status of the litigation and the expectation that the collection period would be prolonged, a provision for doubtful accounts of ¥10,232 million was recorded at the end of the first-quarter consolidated accounting period.」
The provision for doubtful accounts for the Chinese subsidiary's trade receivables declined from ¥10,664 million at the end of the previous consolidated fiscal year to ¥10,232 million. However, the arbitration proceedings and the expectation of prolonged collection continue. - FY2020-Q3MitigatedAnnual report
「After taking into account the status of the litigation and the expectation that the collection period would be prolonged, a provision for doubtful accounts of ¥10,535 million was recorded at the end of the third-quarter consolidated accounting period.」
The provision for doubtful accounts for the Chinese subsidiary's trade receivables declined from ¥10,977 million at the end of the previous quarter to ¥10,535 million. However, the arbitration proceedings and the expectation of prolonged collection continue. - FY2020-Q2MitigatedAnnual report
「After taking into account the status of the litigation and the expectation that the collection period would be prolonged, a provision for doubtful accounts of ¥10,222 million was recorded at the end of the second-quarter consolidated accounting period.」
The provision for doubtful accounts for the Chinese subsidiary's trade receivables declined from ¥10,664 million at the end of the previous quarter to ¥10,222 million. However, the expectation of prolonged collection and the arbitration proceedings continue. - FY2020-Q1MitigatedAnnual report
「After taking into account the status of the litigation and the expectation that the collection period would be prolonged, a provision for doubtful accounts of ¥10,664 million was recorded at the end of the first-quarter consolidated accounting period.」
The provision for doubtful accounts for the Chinese subsidiary's trade receivables declined from ¥10,977 million at the end of the previous quarter to ¥10,664 million. However, the arbitration proceedings and the expectation of prolonged collection continue. - FY2019-Q3MitigatedAnnual report
「After taking into account the status of the litigation and the expectation that the collection period would be prolonged, a provision for doubtful accounts of ¥10,977 million was recorded at the end of the third-quarter consolidated accounting period.」
The provision for doubtful accounts for the Chinese subsidiary's trade receivables declined from ¥11,222 million at the end of the previous quarter to ¥10,977 million. However, the expectation of prolonged collection and the arbitration proceedings continue. - FY2019-Q2MitigatedAnnual report
「After taking into account the status of the litigation and the expectation that the collection period would be prolonged, a provision for doubtful accounts of ¥11,222 million was recorded at the end of the second-quarter consolidated accounting period.」
The provision for doubtful accounts for the Chinese subsidiary's trade receivables was ¥11,222 million, down from ¥11,310 million at the end of the previous quarter. However, the expectation of prolonged collection continues. - FY2019-Q1MitigatedAnnual report
「After taking into account the status of the litigation and the expectation that the collection period would be prolonged, a provision for doubtful accounts of ¥11,310 million was recorded at the end of the first-quarter consolidated accounting period.」
The provision for doubtful accounts for the Chinese subsidiary's trade receivables was ¥11,310 million, down from ¥11,738 million at the end of the previous quarter. However, the expectation of prolonged collection continues. - FY2018-Q3WorsenedAnnual report
「After taking into account the status of the litigation and the expectation that the collection period would be prolonged, a provision for doubtful accounts of ¥11,738 million was recorded at the end of the third-quarter consolidated accounting period.」
The provision for doubtful accounts for the Chinese subsidiary's trade receivables was ¥11,738 million, up from ¥11,590 million at the end of the previous quarter. - FY2018-Q2WorsenedAnnual report
「After taking into account the status of the litigation and the expectation that the collection period would be prolonged, a provision for doubtful accounts of ¥11,590 million was recorded at the end of the second-quarter consolidated accounting period.」
The provision for doubtful accounts for the Chinese subsidiary's trade receivables was ¥11,590 million, as the expectation of prolonged collection continued. - FY2018-Q1WorsenedAnnual report
「After taking into account the status of the litigation and the expectation that the collection period would be prolonged, a provision for doubtful accounts of ¥11,348 million was recorded at the end of the first-quarter consolidated accounting period.」
A provision for doubtful accounts of ¥11,348 million was recorded for the Chinese subsidiary's trade receivables because collection was expected to take longer. - FY2017WorsenedAnnual report
「After taking into account the status of the litigation and the expectation that the collection period would be prolonged, a provision for doubtful accounts of ¥10,893 million was recorded in the consolidated fiscal year.」
As collection of the Chinese subsidiary's receivables subject to arbitration was expected to take longer, a provision for doubtful accounts of ¥10,893 million was recorded. - FY2017-Q3Counterclaim dismissedAnnual report
「The application was dismissed by the South China International Economic and Trade Arbitration Commission on 17 November 2016.」
While the Chinese subsidiary's claim for collection of trade receivables continues to be heard, the counterclaim brought by the other party concerning product defects and other matters was dismissed. - FY2017-Q2RestatedAnnual report
「Consolidated subsidiary 沖電気金融設備（深セン）有限公司 filed for arbitration on 10 October 2015, seeking payment from 深セン市怡化電脳実業有限公司 of trade receivables of 1,115,463 thousand yuan that remained uncollected, equivalent to ¥16,899 million at the exchange rate prevailing at the end of the second-quarter consolidated accounting period, as well as damages. The case is currently being heard by the South China International Economic and Trade Arbitration Commission.」
The arbitration brought by the Chinese subsidiary concerning collection of trade receivables was disclosed as continuing to be heard. The yen-equivalent amount has fluctuated due to foreign exchange movements, but no material change in the status of the case was indicated. - FY2017-Q1WorsenedAnnual report
「OKI Financial Equipment (Shenzhen) Co., Ltd., a consolidated subsidiary, received on 17 December 2015 service of an application for arbitration filed by Shenzhen Yihua Computer Industry Co., Ltd. The claimant seeks payment of RMB 221.143 million, equivalent to approximately ¥3.4 billion at the exchange rate at the end of the first quarter of the current consolidated fiscal year, alleging that it suffered losses because products provided by the Chinese subsidiary were defective and the subsidiary failed to address their measurement and upgrades, among other matters.」
In addition to its existing claim for collection of trade receivables, the Chinese subsidiary was subject to a counterclaim of approximately ¥3.4 billion concerning product defects and other matters, and the arbitration proceedings were disclosed as ongoing. - FY2016MaterialisedAnnual report
「Consolidated subsidiary 沖電気金融設備（深セン）有限公司 filed for arbitration on 10 October 2015, seeking payment from 深セン市怡化電脳実業有限公司 of trade receivables of 1,115,463 thousand yuan that remained uncollected, equivalent to ¥19,397 million at the exchange rate prevailing at the end of the consolidated fiscal year, as well as damages.」
The filing for arbitration concerning receivables equivalent to ¥19,397 million was disclosed.