Every few months we get a frantic call from someone wanting our “immediate” help in getting them their molds back. These situations usually present themselves as follows:
Small to mid-sized company (“SME”) has spent $25,000 to $250,000 building a mold(s) for manufacturing their product in China. SME provided this mold to its one Chinese supplier so that their Chinese supplier can make product for the SME. The Chinese supplier provided bad product to the SME and now there is a dispute between the SME and the Chinese supplier and the SME wants its mold(s) back right away so that it can move on to a new supplier, without their being any interuption in product supply.
The SME wants us to sue “right away” in China to get their mold(s) back.
I then ask to see the SME’s written contract with their Chinese supplier and then I tell them how difficult their case will be because of their contract, or lack thereof.
Without going into too much detail, the bottom line is that if you want to have a good chance of getting your molds back quickly, you need to lay the groundwork for this in your written and sealed. For more on this, check out “How To Write A Chinese Contract That Works.” That contract must state very clearly that the molds belong to you and it must set out very clearly the molds to which it is referring. If you do not do this, the Chinese manufacturer will (just about every time) claim that its deal with you involved them taking over ownership of the molds.
This contract should be in Chinese and it should also very clearly set out the damages the manufacturer will be required to pay you if it fails to promptly (which will also be defined in the contract) returned. These provisions are called liquidated damages provisions and to find out more on why they are so critical to Chinese manufacturing contracts, check out “China Manufacturing Agreements. Make Liquidated Damages Your Friend.“
If you want to read more on Original Equipment Manufacturing (OEM) Agreements and on what they should be comprised, check out the following:
- China Supplier Agreements. With Apologies To Kansas.
- China OEM Agreements. Ten Things To Consider.
- China OEM Agreements. You Are Naked Without A Good Bill Of Materials.
- China OEM Agreements. Yet Another Reason To Have One.
- China Supply Agreements. Why The “Perfect” OEM Agreement Should Cost Less.
- OEM Agreements With Your China Supplier. Not Just For The Big Boys.
- China OEM Agreements. Why Ours Are In Chinese. Flat Out.
Bottom Line: Plan for getting your China-based molds back before you need them back.