Before paying for molds in China, agree four things in writing while the factory still wants your order: a separate, itemised mold fee; a sealed factory document confirming each mold is yours; a final payment tied to your written acceptance of production samples; and a clause that the factory may not hold the molds for any debt. The last matters most. A factory may otherwise keep property it lawfully holds while a debt is unpaid (Civil Code arts. 447 and 783), but an agreement excluding retention is effective (art. 449). If the deposit is due this week, have the factory seal a mold schedule before you pay.
Our earlier article on getting molds back from a factory deals with the dispute once it has started. This one is about the paperwork that keeps the dispute from starting, or makes it short when it does.
Separate fee or amortised into the unit price?
Pay it separately if you expect to stay with the product. Factories often offer to "absorb" the tooling cost into the unit price. It looks cheaper at the start. It is the arrangement we see cause the most trouble later, because ownership then depends on how many units you have bought, and that number is rarely written down.
Itemise the separate fee mold by mold. If cash flow makes amortisation necessary, the contract should state the amortisation quantity, the amount per unit, who owns the mold before that quantity is reached, and the buyout price at any point before it. Without a buyout formula you will be negotiating the price of your own tooling at the worst possible moment.
Treat the word "refundable" with care. A quotation saying a mold fee is refunded after a certain volume is usually read as the factory owning the mold and returning your contribution. If you want to own the mold, the document has to say so in words, not imply it through a refund.
What should the ownership document say?
It should list every mold and state, under the factory's seal, that each one is your property held by the factory in custody. A single sentence in a purchase order is better than nothing. A mold confirmation letter is better. We ask the factory to sign and seal a short schedule that lists each mold: part name and drawing number, number of cavities, material, the mold fee paid, and the factory's statement that the mold is the buyer's property held in custody. Write it in Chinese and English with both texts equally authentic, and check that the Chinese says exactly what the English says: a Chinese court reads the Chinese first, and the factory's own sealed Chinese document is hard for it to disown.
Ask the factory to fix a metal nameplate to each mold showing your company name and the mold number, and to photograph it. It sounds minor. It is the evidence that settles arguments about which of forty molds on a shelf are yours.
Pay for the tooling in stages
A common structure is part on signing, part on first samples (T1), and the balance after you approve production samples and the mold confirmation letter is signed. Holding the balance until the paperwork is complete is the one moment you have leverage over it.
Define acceptance. A mold is not accepted because samples arrived; it is accepted when samples meet the approved drawings and tolerances you list, and you confirm in writing. Otherwise a factory can argue that silence was acceptance.
The no-lien clause
PRC law lets a creditor that lawfully holds a debtor's property retain it if the debt is unpaid, and between companies the debt need not even arise from the same transaction, subject to the Supreme People's Court's limits. In practice, this is how factories keep molds when a dispute arises over an unrelated invoice.
The Civil Code also lets parties agree that property may not be retained, and that agreement is effective. We put the clause in plain terms: the factory waives any right of retention over the molds and any product made with them for any debt, and must release the molds within a stated number of days after a written request.
Expect the factory to ask for a carve-out for unpaid invoices. Our fallback is to accept a lien over finished goods for unpaid invoices relating to those goods, but never over the molds themselves. The molds are what lets you move to another factory; finished goods are only one batch.
Use, maintenance and the end of the mold's life
Three practical points belong in the same document. The factory may use the molds only for your orders, which is the clause that matters if it starts selling your product to others. The factory must maintain the molds at its own cost for normal wear, up to a stated shot count, and tell you before that count is reached. And the factory may not move, modify, lend or scrap a mold without your written consent.
Also agree who pays to pack and ship the molds when you take them back. A short line now avoids an argument over a few thousand dollars later.
What we would not do
We would not accept a proforma invoice that says "molds belong to the supplier" or "mold fee non-refundable" and rely on an email saying otherwise. Under a bilingual or mixed paper trail, the sealed Chinese document usually carries more weight. We also would not pay the tooling fee to a trading company without the factory itself signing the mold confirmation letter, because the molds sit in the factory, not with the trader.
Frequently asked questions
- Who owns the mold if nothing is written? Ownership will be argued from who paid and how the parties behaved. It can be proved, but it is slower and less certain than a signed schedule.
- Can a Chinese factory keep my mold if I owe money on another order? Possibly, unless your contract excludes the lien. That is why the no-lien clause matters more than any other term.
- Is a "mold fee refundable after X units" good for the buyer? Often not. It is usually read as the factory owning the mold. If you want ownership, state it.
- Do I need a separate tooling agreement? Not necessarily. A sealed mold schedule attached to the manufacturing agreement does the job if it covers ownership, custody, use, the no-lien waiver and return.
Related service: Mold & Design Ownership ↗, mold and design ownership agreement USD 1,500 · All fixed fees ↗
Before You Sign With a Chinese Factory. A free ten-point checklist for your first production run: five pages, with a tick sheet to print.
Get the checklistTooling quotation just landed on your desk?
Tell us in a few lines how many molds are being quoted and when the tooling deposit is due. We draft a standalone mold ownership agreement, or a sealed mold schedule for your manufacturing contract, in Chinese and English with both texts equally authentic, for USD 1,500.
Related reading
- Chinese Factory Won't Return Your Molds? Tooling Ownership and How to Get It Back
- NNN Agreements in China: How to Stop Your Chinese Factory from Copying or Selling Your Product
- English or Chinese: Which Version of Your China Contract Prevails?
This article is general information on PRC law as of 9 October 2026 and does not constitute legal advice. The answer in any matter depends on its documents and facts.