China OEM Manufacturing Contracts: The Questions We Ask

China Manufacturing ContractsAs China and its guidelines adjust, the China attorneys at my organization need to continually modify, generally just ever so slightly. This adjustment can include things like even how we draft our contracts for China. And in many cases, with even small alterations in how we draft our contracts, we make alterations in the queries we talk to to acquire the facts we want to draft a contract that satisfies each their predicament and their objectives.

The pursuing is the preliminary email questionnaire our China manufacturing attorneys are now using with firms seeking to have interaction in OEM manufacturing in China. Our attorneys send this out and then review the responses, all as a prelude to drafting the  Production Agreement

 

 

The down below is pretty complete, but come to feel totally free to give any further facts that you come to feel may well be related. Please answer as substantially of the down below as you can and to the extent any of our queries are irrelevant, make sure you come to feel totally free to create N/A, but to the extent it may possibly make sense for you to reveal to us why a little something does not utilize to you. Please do so. We will possible have followup queries relying on your responses to the down below.

Note that the settlement we will be drafting for you will be intended for use inside mainland China with producers based mostly in mainland China. It is not intended to be applied with sourcing agents, nor is it intended for use in Hong Kong, Macau, Taiwan, or any other region or administrative area outdoors China.

1. Primary Details

  1. For just about every entity that will be executing the settlement, make sure you supply the total lawful identify, deal with, cell phone variety, fax variety, and URL, as effectively as the identify, title, and email deal with of the consultant who will be signing on behalf of that entity. (In each Chinese and English, as related.)
  2. Please discover the condition in which your organization is integrated.
  3. Will you be using this OEM settlement only with this precise company, or are you hoping to be capable to reuse it with other producers?
  4. Please give a duplicate of your Chinese counter-party’s business enterprise license.
  5. To the extent many entities will be involved in this settlement on the Chinese facet, make sure you discover just about every of these entities and describe their corporate composition. For occasion, several OEM contracts include one particular Chinese organization that owns a manufacturing facility and performs all manufacturing and a 2nd organization (generally based mostly in Hong Kong) that issues invoices and gets payment.

2. Style and design Fundamental principles

  1. Do you anticipate the Chinese facet will be carrying out any style operate or customization as component of the manufacturing approach?
  2. If not, are you buying “off the shelf” merchandise the Chinese facet by now producers?
  3. If so, have you by now entered into a style services settlement? What arrangements have you produced relating to ownership of the types, payment for the types, milestones, and buying obligations?

3. Production Fundamental principles

  1. Please describe just about every item the Chinese facet will be manufacturing. Do you anticipate these merchandise will adjust in excess of time?
  2. What sort of quantity are you expecting? Will the quantity adjust in excess of time? Have you have agreed to purchase a bare minimum variety of merchandise? If so, make sure you give facts.
  3. Do you would like to prohibit subcontracting? Are you informed of any 3rd events that will be involved in manufacturing, packaging, or shipping and delivery your item? This features any entities that may well be owned by or usually affiliated with the Chinese contract bash.

4. Pricing

  1. Have you decided the prices for the merchandise nevertheless? If so, make sure you include things like the related facts.
  2. How will pricing and relevant conditions be negotiated? On a obtain purchase basis? On an once-a-year basis? Some other way?
  3. Have you negotiated the payment conditions? For occasion, will you spend by letter of credit history? By installments? If by installments, what are the quantities/percentages of those installments, and when are they due?

5. Obtain Orders, Shipments, and Inspections

  1. Do you have an current obtain purchase you intend to use for your item orders from these company(s)? If so, make sure you give us with a duplicate.
  2. Following acquiring a obtain purchase, how extended does the company have to accept or reject it?
  3. If you submit a obtain purchase and it is not recognized by the Chinese facet, what takes place? In other words and phrases, is the Chinese facet certain for some interval to make a certain quantity of item at a certain value or only obligated to make item for you immediately after it accepts your obtain purchase?
  4. What have you negotiated relating to shipping and delivery conditions? For occasion, how extended immediately after acceptance of a obtain purchase will products be shipped? Will you be using a freight forwarder? From and to which ports will the products be shipped? Will the products be shipped FOB or CIF or a little something else?
  5. What arrangements will be produced for packaging prior to shipment?
  6. When your merchandise are shipped from China, what brand names, logos, and/or slogans will look on the merchandise and packaging? Please distinguish if attainable in between words and phrases and graphic logos.
  7. In which do you anticipate marketing your merchandise? In individual, will you be marketing them in China?
  8. If you are marketing any item in China, what brand names, logos, and/or slogans will look on the item and on its packaging?
  9. Will any item you manufacture in China have a Chinese identify? Does your organization have a Chinese identify? If so, make sure you give them.
  10. What sort of arrangements have you produced for inspection and top quality regulate in the course of the manufacturing and packaging approach (i.e., pre-shipment)? Particularly what should really be completed with any defective item found out in the course of the manufacturing approach?
  11. What sort of arrangements have you produced for inspection and top quality regulate on receipt (i.e., write-up-shipment)? Particularly what should really be completed with any defective item found out then?

6. IP and other concerns

  1. What are your major concerns in this offer? Are you anxious with making sure superior item top quality? Acquiring merchandise inside the agreed-on time?  Protecting your mental property (i.e., making sure the Chinese company does not promote your item guiding your back again and/or steal your types)? Pricing?
  2. Do you have any trademark registrations in China or any place else in the planet (pending or usually)? If certainly, make sure you record them.
  3. Do you have any patent or copyright registrations in China or any place else in the planet (pending or usually)? If certainly, make sure you lis them.
  4. Do you have a record of prospects, suppliers, or other 3rd events you want to avert the Chinese bash from making contact with

7. Tooling and Molds

  1. Will the Chinese company be using any tooling or tailor made molds to make your merchandise?
  2. If so, does the company by now have all of the tooling in issue? Which bash owns the tooling?

8. Warranty

  1. What sort of guarantee conditions have you negotiated or do you anticipate?

9. Expression

  1. Have you decided the duration of time this offer will be in place?

10. Other issues

  1. Has the Chinese company by now signed any sort of time period sheet, memorandum of comprehending, letter of intent, or other doc, even if only in English? If so, make sure you give this doc.
  2. Have you formerly bought any merchandise from this company? If so, make sure you give an case in point of the obtain purchase applied.
  3. Are there any unresolved issues involving any prior producers? For occasion: have you gotten all of the tooling back again from any prior factories? Are there any superb invoices or payments due?
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