CSL, Pelikan Cancel Sales Agreement

China Stationery Ltd. (CSL) announced it has cancelled its distribution deal with Pelikan International Corp Bhd (Pelikan) because of failure to reach an agreement on the prices of products to be sold in China. In December of 2012, Pelikan signed a two-year, non-exclusive, dealership agreement with CSL, in which CSL would distribute and sell office and school stationery products marketed by Pelikan under the “Pelikan” trademark. The agreement was limited to sales in China and Hong Kong.

According to CSL, the two key reasons for suspension of the relationship were cultural differences between the two companies and differences of opinion on pricing strategy.

A CSL official said, the company is accustomed to implementing plans at a fast pace, but European companies, such as Pelikan, do not share that corporate culture. He also pointed out that Pelikan, being a premium stationery brand, insists that CSL sell Pelikan’s products in China at a certain price level which is much higher than competitive domestic products.

A CSL official does not think the cancelation of the CSL-Pelikan partnership will have any impact on CSL’s income. “This partnership was just an extension to penetrate the European market. As for Pelikan, it was to expand the reach of their products into China. We expect CSL’s performance in FY13 to remain favorable, as consumers have become more affluent and with the increased level of literacy, demand for high quality stationery products will increase over time.”

CSL’s net profit reached RM227 million (USD $37.11million) for the financial year ended December 31, 2012 (FY12), up by 2.7% compared with RM221 million (USD $36.13 million) a year ago. Sales revenue increased from RM843 million (USD $138 million) to RM965 million (USD $158 million), up by 14.5%.