Leaving your Chinese manufacturer? Plan ahead! – Dan Harris

One day you close a deal with a Chinese manufacturer to produce your product. A few years later you may decide to move production elsewhere and leave the manufacturer. This may be a common practice in business life, but requires good planning in China.

In China Law Blog, China business lawyer Dan Harris explains why such major steps need to be taken carefully. The reason, says Harris, is that conflicts may arise when a Chinese manufacturer discovers that his international customer will soon stop buying products from him. Harris: “For this reason, we instruct our client to line up its new suppliers and have them ready to go, before even hinting that it might be ceasing production with its existing suppliers.”

Harris digs up a great number of events that required legal assistance after buyers decided to leave manufacturers. Some manufacturers keep all of the customer’s tooling and molds, claiming to own them. Another example, as described in Harris’ China Law Blog: “US company tells its China manufacturer that it will be ceasing to use China manufacturer for its production. US company then learns that someone in China has registered the US company’s brand names as trademarks in China. US company is convinced that its China manufacturer is the one that did these registrations, but has no solid evidence to prove this. US company is now facing not being able to have its product — at least with its own brand name — manufactured in China.” The bottom line, according to Harris: plan ahead.

Further reading on chinalawblog.com

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