Importing Your China Product: Its Own Special Mess

About once a month my law firm gets a call from someone whose product is being held up at the U.S. border for one problem or another. At last half the time the problem stems from the products lack of compliance with U.S. laws or the packaging of the product failing to comply with U.S. laws. We rarely take on these matters because the companies that let themselves get into this sort of situation tend to be really small and the value of their incoming product is usually fairly small as well. It just does not make economic sense for our trade lawyers to research the compliance requirements for $15,000 product and then fight with customs or whomever to try to get it in. I am thinking that nine out of ten times the importer has to just walk away. 

We also frequently get contacted from importers who were promised by their Chinese manufacturers that such and such product would comply with such and such compliance requirement, but it did not. Many times the Chinese manufacturer has faked a certificate of compliance. These importers now realize they have been duped and they want us to sue their manufacturer in China. We have never seen such a case that warranted our involvement so we have never once pursued one. Our China Lawyers send out something along the lines of the following in response to these:

Thank you for contacting us. Unfortunately, it is usually relatively difficult to sue Chinese companies that have engaged in the sort of conduct you have described. Most of the time the companies that do this sort of thing are not actually manufacturers, but rather brokers. Therefore, even if we could sue and win, it would not be at all clear that the Chinese defendant would have any assets from which to pay the judgment or which we could try to seize to collect on the judgment. Also, unless you have a clearly written and signed (preferably in Chinese and preferably sealed) contract that calls for disputes to be resolved in China, we will likely face all sorts of problems in prevailing.

We do not take these sorts of cases on a contingency fee basis and it would be the really rare instance where it would make sense for you to pay us to figure out the value of your case and the value of pursuing it in China. If your purchase was for less than $100,000, I can tell you right off the bat that it would not be worth it for you to hire and pay us for this. If you wish to pursue your claims, I would suggest you retain Chinese counsel in China. If you think you want to do that, please feel free to email me the city in which the Chinese company you wish to sue is located and if I know of any good lawyers there, I will send you their name and contact information. I am sorry this happened to you.

If you wish to read more about sourcing product from China, I urge you to read Who Succeeds With China Product Sourcing? and click through the links within that post.

The other day The Delivering China Blog did a post entitled, CE marking when importing from China – Don’t forget this! This post talks about the need to make sure that your product being sent to Europe has the relevant and real (as opposed to fake) CE marking. It nicely highlights how often product buyers fail to conduct their due diligence and end up getting burned.

The post starts out by talking about the importance of confirming that the CE logo is the one Europe requires and not a symbol for China Export. It then discusses how it is also crucial for the European buyer to make sure that the CE marking is for the relevant directive:

One of our main products recently have been GPS trackers for motorbikes and cars. The relevant directive for this type of device is the R&TTE 1999/5/EC directive. This is a directive for radio and telecommunication equipment’s. This directive also include the essentials from other directives such as the 2006/95/EC Low Voltage directive and the 2004/108/EC Electromagnetic Compatibility directive, we therefore don’t need to follow any other directives than the R&TTE 1999/5/EC directive for reselling this unit on the European markets. We have almost only gotten CE certificates for the 2004/108/EC directive when sourcing GPS units, which is completely irrelevant for our product.

Lastly, the post talks about the need for making sure that the CE logo has been earned and is not just a fake:

Sometimes suppliers provide outright fake documents. These can be quite hard to spot. If the seller claims to be the manufacturer of the product, then the most obvious red-flag would be if the name of the company is not the same as the applicant for the certificate. You also need to verify the certification-number with the website of the third party who issued the DoC. These websites are usually in Chinese by default, so look out for the small “English” button. One extra step to take is to verify that the third party who made the certificate is a legit company.

None of this is easy, which probably explains all of the after the fact problems.

What do you think?

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.