China is known for its competitive pricing and well-established manufacturing infrastructure. These qualities make Chinese suppliers an attractive option for U.S. businesses that want to increase profit margins, speed up production and scale much faster.
However, Chinese-made goods are only sometimes perfect. In fact, the benefits that they offer – fast services and cheap prices – can be the exact reasons for defective products.
When you receive a faulty shipment, you can communicate with the supplier for a replacement and that can be the end of it. But what if that supplier refuses to comply? And, more pressingly, what if the product injures a customer?
Below are answers to some questions you might have.
Who is liable for defective products?
The primary party responsible for the defect is often the manufacturer. If the defect came from the manufacturing process, the manufacturer in China could be liable.
However, due to jurisdictional and enforcement issues, pursuing legal action against a foreign manufacturer can take time. For one, U.S. courts must establish that they have jurisdiction over a foreign entity, which often depends on the extent of the supplier’s business activities in the U.S.
Suppliers from China and other countries can also avoid responsibility in several ways. For example, they may establish an intermediary business in another country.
This way, they may be able to claim that they did not do direct business with the U.S. and, therefore, cannot be subject to personal jurisdiction here. It is also possible that Chinese courts will not carry out U.S. judgments.
Can we hold a Chinese supplier accountable from the U.S.?
Given the difficulties mentioned above, taking legal action against a Chinese supplier may be challenging. However, there are potential strategies you can try:
- Finding a U.S.-based affiliate of the supplier that you can hold accountable
- Showing the supplier’s significant business activity in the country such as regular shipments
- Proving that their subsidiary is not truly independent but rather an extension of the parent company
Each case is unique, so it’s important to consult a legal professional focusing on international trade and product liability to develop a strategy.
Will you be accountable for a product-related injury?
In California, manufacturers, distributors and retailers can be held responsible for injuries caused by defective products, even if they are not negligent.
Such an issue can be frustrating. But with proper knowledge, preparation and legal guidance, you have better chances of finding the best solution for your business.