Your Mold Done Gone To China And It Ain't Never Coming Back
This post is on production, pre-production, and prototype molding used in manufacturing, not fungi.
I cannot tell you the number of times companies have contacted my firm seeking help in recovering their molds in China (Korea too). But I can tell you the number of times we have felt they had a case worth pursuing: not once. In most instances when a company is seeking to retain a lawyer to recover molds it has already failed.
If you do not take the right steps with your Chinese Original Equipment Manufacturer (OEM) before you ship over your mold, it is nearly certain you will never get it back. As soon as something goes wrong between you and your Chinese OEM manufacturer, the OEM manufacturer typically will use your mold for ransom. It is the very rare OEM relationship that lasts forever and if you do not take steps to protect your mold, it will be the even rarer relationship where your Chinese OEM company does not end up with either your mold your money that you had to expend to get your mold back.
So what are the right steps?
First, get your Chinese OEM manufacturer to agree in writing that the mold belongs to you. Make this clear and do it in Chinese. Second, if possible, get a deposit for your mold, which deposit you will return when the mold is returned to you. Third, and this becomes particularly important if you do not get a deposit (and you almost certainly will not), put in a liquidated damages provision (click here for a definition of liquidated damages) that applies if your mold is not returned when specified.
The right contract with your Chinese OEM manufacturer will not guarantee your mold will return, but the lack of one all but guarantees it will not.
Comments (4)
Read through and enter the discussion by using the form at the endTal - December 4, 2006 11:36 PM
hello
what you're saying and trying to do is wrong...U'RE TRYING TO CHEAT ON THE INNOCENT PEOPLE THAT YOU'RE VERY FAMILAR WITH...
China Law Blog - December 4, 2006 11:39 PM
Tal --
What are you even talking about? I truly have no clue.
Peter - January 28, 2007 3:31 AM
Firstly, let me say that what I have read in the article would relate to virtually any company in any country in the world that you do business with, it is common sense, contractual disputes of this kind happen between USA & European among other countries.
My experience in dealing with Chinese companies has been absolutley fantastic, I have done only a limited amount of business in Asia but my experiences up to now have been very good.
I am now looking to protect myself legally should any disputes arise in my trading.
What I do is slightly different, I have molds manufactured in Asia that are then exported out of China for production purposes abroad.
My question would be, what kind of contractual agreements would suffice in this instant?
The problems that I have in doing business this way is that 80/90% of the job needs to be paid for before the job leaves the Asian company, but how can I protect myself in a way that is quite simple and does not offend the supplier?
Kind Regards,
Peter.
China Law Blog - January 28, 2007 9:08 AM
Peter --
I am sure you are right that the advice here applies everywhere (or at least nearly everywhere in the world). I cannot give legal advice here, but I will say it sounds like you are right to distinguish your situation from that outlined in this post. I will e-mail so we can discuss this more.