Contract Dispute With a Chinese Manufacturer

Identify the seller and the actual manufacturer

Confirm whether your agreement is with the factory, a trading company or an agent. Compare the company stamp, Chinese registered name, invoice and payment beneficiary. Record any subcontracting arrangement that is known. The site where products are made may not be the company responsible for the buyer’s sales contract.

If several companies are involved, explain their roles rather than treating them as a single supplier. Keep representations about who would manufacture, inspect and export the goods. These records can help identify the relevant obligations, evidence sources and possible defendants. A factory address alone does not establish every participant’s liability.

Reconstruct the approved specification

Gather drawings, dimensions, tolerances, materials, colour references, packaging and testing requirements. Identify the version accepted for the disputed batch and who approved it. Keep a change log distinguishing the buyer’s requested changes from changes proposed or made by the manufacturer. An unapproved latest file does not automatically supersede an earlier agreement.

For samples, record when they were supplied, inspected and accepted, and what acceptance was intended to establish. A cosmetic approval may not demonstrate acceptance of performance under load. Explain whether the sample, pre-production unit and mass-production batch differ. This helps avoid arguments based on the vague statement that the products were ‘not like the sample’.

Check production milestones and buyer dependencies

Map deposit, design approval, sample acceptance, tooling completion, production, inspection and shipment milestones. Note which dates were fixed and which depended on an approval or payment. Keep records of agreed extensions and reasons for delay. A missed shipment may have several causes, and the buyer’s own instructions or late approvals need to be included.

Distinguish goods that were never produced from goods completed but withheld over a balance. The commercial objective may be different in each case. If the factory says work is complete, request verifiable batch or inspection information. Avoid accepting a revised schedule without documenting whether it changes the parties’ other obligations or the response to existing delay.

Preserve a technical evidence file

A reviewer needs to connect the complaint to identifiable goods and an agreed standard. Record batch numbers, receipt dates, storage conditions and the testing method. Ask whether representative samples or independent inspection are appropriate before repairing or disposing of products. Defects, transport damage and misuse can require different evidence.

• Contract and purchase orders with specifications, attachments and accepted version history.
• Sample records, approvals, production updates and communications about changes.
• Inspection reports, test results, photographs, batch identifiers and sample custody details.
• Payment records, shipment documents, receipt records and relevant invoices.
• Tooling or mould agreement, ownership records, inventory and location information where relevant.
• Customer complaints and a documented schedule of repair, replacement or other claimed loss.

Treat tooling and moulds as a distinct issue

Check whether the agreement addresses ownership, storage, maintenance, access and return of tooling. Paying a tooling invoice may not answer every question about title, possession or design rights. Obtain the agreed inventory and identify the items by drawings, serial numbers or other records. Clarify whether another party is holding them.

If production is to move, discuss inspection, physical transfer, transport responsibility and protection of confidential designs. Do not assume the tools can be collected without the holder’s cooperation or a lawful process. A demand for repayment and a request for tooling return may need different evidence and different practical arrangements.

Decide whether correction, replacement or exit is workable

The Civil Code provides a framework for contractual performance and remedies. The available response depends on the agreement and facts; a manufacturer’s failure does not automatically justify every requested remedy. Consider whether a corrective batch would actually meet the requirement and whether the relationship can still support reliable production.

Define the business objective before negotiation. Correction requires an agreed method, inspection and timetable. Replacement requires logistics and cost allocation. Exit may involve repayment, tooling and unused materials. Prepare an evidence-based loss calculation and preserve records of mitigation rather than adding an unsupported amount for the inconvenience of finding another factory.

• Source: PRC Civil Code — contract obligations, remedies and limitation rules

Turn a technical discussion into measurable settlement terms

Negotiation may be useful if the factory acknowledges the defect or delay and can propose a verifiable solution. Specify the drawing version, materials, inspection criteria, completion date and who pays each cost. Identify what happens if the correction fails. A promise to use a ‘better process’ without a measurable acceptance standard can repeat the original dispute.

Keep technical approval separate from a release of legal claims. Check any new order, acceptance certificate or settlement wording before signing. If you accept repaired goods to keep your business operating, record the circumstances and unresolved issues accurately. Do not assume an informal reservation has the same legal effect in every situation.

When China-side legal action should be assessed

Seek review when the factory disputes the agreed specification, refuses access to tooling, stops communication or threatens disposal of relevant goods. Include the dates and documents behind the urgency. A lawyer can assess the contract, technical evidence, company identity and procedural route, including whether evidence or asset preservation is appropriate.

Check arbitration and jurisdiction clauses before preparing a filing. China’s revised Arbitration Law has applied since March 2026, and the selected institution’s rules also matter. Technical disputes may require specialist evidence and translation. Discuss enforcement prospects and the commercial value of proceedings alongside any further correction proposal.

• Source: PRC Arbitration Law — revised law effective 1 March 2026

Avoid the common manufacturing-dispute mistakes

Do not overwrite drawings, discard every defective unit or approve a revised specification through an undocumented call. Keep the factory’s explanation and evidence even if you disagree. Avoid confusing a product-safety concern with a routine commercial adjustment; where safety is involved, obtain appropriate specialist advice before continued use or sale.

For HAIYU’s initial assessment, send the accepted specification, production chronology, inspection evidence and desired outcome. Explain whether usable goods, tooling access or repayment is most urgent. China-side legal review can clarify the evidence and options before the scope of further work is agreed. A particular production or litigation result cannot be promised.