Yesterday’s post, How to Give Away your IP in China, drew such favorable reactions that I figured I’d reprise the theme today and explain how to ensure bad product from China without being able to get compensated. But rather than write a new post on it, I will just cite a recent email (taken from a template) I use to explain to people why we will not pursue their claims against their Chinese manufacturer. This email essentially recites all of the things that the recipient did to ensure that the product it would get from China would be substandard and why once it got that product, there was little or nothing it could do to secure compensation for the quality problems.
Sorry, but we would not be interested in taking this on a contingency fee basis and I cannot in good conscience ask you to pay us to pursue it.
Our lack of interest in your case stems from the following:
1. Your contract (even assuming that this qualifies as a contract under Chinese law) is in English. Many courts in China will not hear a case with an English language contract. This is even more likely to be the case in a place like _____. For more on the importance of your contract being in Chinese, check out China OEM Agreements. Why Ours Are in Chinese. Flat Out and How to Draft a Contract for China.
2. It looks like you did not pay the company with whom you have the contract. You instead paid some other company. This is a classic China ploy. If you sue the company with whom you have the contract, it will say that you never paid them because you didn’t. Not sure if it will win on this, but it is yet another hoop you will have to jump through.
3. The “contract” says that you will inspect the product before it ships. The Chinese manufacturer will contend that you either did inspect and were fine with it or you chose not to inspect. Either way, it should make for a pretty good defense because for whichever reason you allowed the product to be shipped to you without voicing any complaint. If you are not going to inspect product before it gets sent to you, you should not have this sort of provision.
4. China does not generally recognize samples as the standard that must be met. If you want your product to be of a particular quality, you had better lay out every single specification that will get it to that quality. As I alway say in my speeches, putting in a term like “good quality” in a contract with a China manufacturer is a waste of time because in China they have incredibly low quality levels that are just fine for Chinese commerce and for Chinese courts. It is not at all clear to me that your manufacturer failed to give you exactly what you ordered. You say that it is of bad quality, sure, but that is under US standards, not under any standards that I see in the contract and that is what is going to matter to a Chinese court. For more on why this matters and for how you should handle this the next time you have product manufactured in China, check out How To Get Good Product From China; Specificity is THE Key To Your OEM Agreement.
You might want to try to interest a Chinese lawyer in taking this case, but I have my doubts whether even that would be worth your time and money as you will almost certainly have to pay at least the out of pocket costs for pursuing this litigation. Suing in the United States would be a complete waste of time and money unless this Chinese manufacturer has assets in the United States, and incredibly few do. China courts do not enforce U.S. judgments so even if you win over here, it will be of no value in collecting money from your Chinese manufacturer in China. For more on this, check out Why Suing Chinese Companies In The US Is Usually A Waste Of Time.
If you are going to continue buying product from China, you should have a contract that will work. I suggest that you read the links within this email (now this post). What you want is a contract that the Chinese manufacturer believes will allow you to win in a Chinese Court if it provides you bad product, and win fast and win certain specified damages and be able to seize the manufacturer’s assets upon filing the lawsuit (before you even win). With that sort of contract, your chances of ever getting bad product go way way down and should you get bad product, your chances of winning at trial and getting your money go way way up.