- Published on Monday, 20 August 2012 16:46
by Dan Harris in 'China Law Blog'
My law firm is right now defending a large Chinese company in a big United States litigation matter. Our client is being sued, for among other things, having provided a product that failed to meet U.S. environmental standards. Our defense to this claim is that the American plaintiff had the responsibility to make sure that its imported product met those U.S. standards, not a company in China that ships its product around the world.
Earlier this year, my firm was consulted by an insurance company that had provided coverage for a U.S. company that had sold a product in an East Coast state that had caused a death. Though legal in most states, it was not legal in the state in which the death occurred. We were brought in to help figure out whether it made sense to go after the Chinese manufacturer, but one of the key questions was whether anyone other than the American company that sold the product in the East Coast state had an obligation to make sure the product was legal there or not.
A few years ago, a U.S. company called me regarding a product it had been required to recall because it had not met U.S. consumer product safety standards. This U.S. company was interested in suing its Chinese manufacturer over this shortcoming. The U.S. company told me that it had just assumed that the product it was buying from the Chinese manufacturer had met all safety standards because they knew this Chinese manufacturer was selling a similar product to one of its leading competitors and it “just knew” that competitor would never sell a non-complying product. So when the US company learned that its competitor’s product was in compliance, they were sure that meant they would have a great lawsuit against the Chinese manufacturer. I have since heard of a number of other cases where the U.S. buyer/importer “just assumed” that the Chinese manufacturer was aware of U.S. safety (or other standards) because the manufacturer was so big/so competent/so experienced in selling to U.S. companies.
I make the above examples to try to drive home a fairly basic point. When buying product from China (or from anywhere else for that matter), it is your job to make sure that the product you are buying complies with the laws of the city, state, province, or country in which you are selling it. Even if the Chinese manufacturer insists that your product complies with your jurisdictions standards, you need to verify. Merely assuming your product is in compliance could prove costly.
Dan Harris is founder of the Harris & Moure law firm, a boutique international law firm focusing on small and medium sized businesses that operate internationally. China is the fastest growing area for the firm. Dan writes ChinaLawBlog.com as a source of China legal and business information.