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China Law Blog China Law for Business

China Product Problems. Again.

Posted in Basics of China Business Law, Legal News

I’ve been deleting old emails today and in doing so I have deleted far too many that relate to China product quality problems.  Here’s the most recent such email, with all identifiers removed to protect the victim:

My company purchased hundreds of _____ from a company in China for about $65,000. Most of these _______ were defective when we received them. They [the Chinese manufacturer] told us that they would make up for this on our next order. We made another order and we got more defective _________.

We then upgraded the _________ to what was supposed to be a better quality ________. Again, we have received defective ________. We are
now getting many returns from our customers who bought these _______ and
this is costing us tens of thousands of dollars.

I would like to know if there is any way that we can get our money back for
all the bad ________. We have all invoices, communications, and videos and
pictures.

We also want to know if we can sue for attorney costs to resolve this matter
as well?

My response, which is pretty much pure template these days, was as follows:

I hate to have to tell you this, but you have probably set yourself up so that a good solution is very unlikely.
You say that you have all “invoices, communications, and videos and pictures,” but you fail to mention the most important thing of all, which is a signed AND sealed contract in Chinese that makes very clear exactly what the Chinese manufacturer was to provide you and the penalties it owes for having failed to do so.
Once you have the sort of problem that you had with a Chinese manufacturer, you run away.  Fast.  And you don’t go back for more and then back again.  Ever.
We typically charge a flat fee on these sorts of cases, along with a percentage of whatever we recover, with the fee and the percent based on how we access the case after reviewing all relevant documetns.
When we take on these cases, we review all the documents and try to get anything back for our clients by writing a letter in Chinese threatening to sue.  I don’t think that will work here and I would urge you not to retain us.
The other thing I would urge you to do is to not order anything from China again without a good contract in place. Good contracts usually work by driving away the bad Chinese companies and by forcing the good ones to toe the line.  China does not typically award attorneys’ fees unless that award is set forth in a signed contract. For more on what you can be doing to protect yourself by from China product problems, I urge you to read the following:

I am truly sorry this has happened to you and I am also sorry that I cannot be more positive about it, but the last thing I want to do is to add to your pain by taking more of your money on something that probably will not give you any value back.
Not surprisingly, I did not hear back.
  • http://twitter.com/theeastasiaco East Asia Co.

    All I have to do is read the first sentence and know that these guys did not inspect the order before it left China, what is really the GOLDEN RULE of China sourcing. It is mind boggling how many companies just don’t want to spend a few thousand dollars to travel to China to inspect their orders, instead foolishly relying on their vendors to do the inspections ( if they even do it.).

    And now these guys will probaly complain about China and how dishonest the vendors are and how bad the quality is. Yes, it is true that a lot of vendors cut corners when you don’t look and that accounts for a significant amount of bad product out of China. Thus the need to inspect. But at the same time many vendors just do not understand the sophisticated markets they are producing for and without the guidance of the buyer ( in the form of incessant communication and inspections during the main stages of production) they ship a lot of bad product, though it may not be their intention to. Thus, again, the need to inspect.

    The really outrageous thing about this is that the overseas company took the China vendor’s assurance that everything would be corrected in a second order. And even then they failed to inspect. And got another bad order. The Chinese saying that comes to mind when I read about this company is 擀面杖吹火 , 一窍不通. Blowing a fire with a rolling pin.

  • http://jacobyount.com/ Jacob Yount

    The odd part is the guy’s agreeing to a second order and expecting some sort of change. It’s very possible the factory doesn’t even understand what the problem is or why the customer is complaining.

    I agree to an extent with the comments of East Asia Co.. In my line of work, most factories have ZERO concept of the market/user for whom they are producing.

    If manufacturing in China was safer or easier, it wouldn’t be the “World’s Factory”. Cannot have it both ways…

  • http://twitter.com/allroads All Roads Lead to CN

    When you read ______ as “shit”, this post is pretty damn funny. Seriously, the fact htat he kept ordering more ______ ,and upgrading to different _____ , show he didn’t know his _______ at all.

    That’s a lot of tuition. Sad, but seriously… how many blog posts have been written? how many books?

    • http://www.chinalawblog.com/ Dan Harris

      I wish it were “a lot of tuitiion for me,” but as I state above, about the only way I earn tuition (for my two kids) is by writing the agreements to prevent this sort of “shit.” By the time they come to us with this “shit,” it’s usually too late and all I can do is say that there’s probably nothing we can do.