I had a nice meeting with a potential client today, and we got to talk about liability insurance. What is liability insurance? According to Wikipedia, it "protects the purchaser (the "insured") from the risks of liabilities imposed by lawsuits and similar claims." It is particularly interesting for products that might hurt/kill consumers and be recalled. The purchaser explained to me that they buy large quantities of very cheap electrical products, such as watches or razors, for about US$1.00 … [Read more...]
Preventing Chinese suppliers from subcontracting: the bike lock theory
The China Law Blog just released an interesting post, introducing the "bike lock theory of Chinese law". Dan Harris makes the point that lawyers can help prevent quality issues by crafting a good contract. And he takes an example: how a contract can ensure that production is not subcontracted to another workshop. What is funny is that I touched on this point in a recent post entitled Chinese suppliers and subcontracting, with basically a very similar example. I reproduced below the most … [Read more...]
Are Chinese courts unreliable?
Most companies buying in China don't take the precaution to write a contract with their suppliers. Even when large sums are at stake. The common perception is that going to a Chinese court is a long and expensive process, for a highly unpredictable result. But are Chinese courts' judgments truly unpredictable? Or do they follow a logic on their own? The China Law Blog just wrote a very interesting post entitled China Sex, Mistresses, And Improper Payments, And What They Mean For Your China … [Read more...]
The importer’s dilemma: legal risks or higher costs?
Importers often play a delicate balancing act between reducing quality control expenses on the one hand, and minimizing product liability risks on the other. Many small importers are cornered in a situation where they have to sacrifice quality control. The results? Higher risks for the importer (if he gets caught) and for the final user (if the product is indeed unsafe). The question is, how to solve this dilemma? I just found an interesting post entitled Paying the cost of unsafe imports on the … [Read more...]