A factory that keeps a buyer’s molds usually does it for one of two reasons. Either it says the buyer owes money, or it wants to keep the business. Chinese law gives it a right to hold the molds in the first case, within limits, and none in the second. These questions sort out which side of that line you are on. Your answers stay in your browser.
You have a document showing you paid for the molds: an invoice, a mold fee line on a PI, or a remittance slip that refers to the molds.
Where there is no tooling agreement, proof of payment is usually the strongest evidence that the molds are yours.
Something in writing says the molds belong to you: a tooling agreement, a clause in the PI or contract, or the factory’s own email.
You have a list of the molds with numbers, part names or photos, so you can say exactly which ones you want back.
A demand letter, and later a court, has to identify the items. “All our tooling” is not enough.
You owe the factory nothing, on this order or on any other order.
A creditor may hold a debtor’s movable property it lawfully possesses (Civil Code art. 447). Normally the debt must arise from the same legal relationship, but between companies it need not (art. 448). So an unpaid invoice on a different order can give the factory a basis to hold your molds.
If the factory says you owe money, it has given you the claim in writing with an amount, and you know whether you accept it.
Your agreement says the factory may not hold the molds for any debt.
Property that the parties have agreed may not be retained cannot be retained (art. 449). Few buyers have this clause.
You have asked for the molds back in writing, with a date, and kept the factory’s answer.
Even where the factory may lawfully hold the molds, it must give you at least 60 days to pay before it can sell them, unless you agreed otherwise (art. 453).
You know where the molds physically are: at this factory, or at a mold shop or other factory it uses.
You know how long a replacement set would take and roughly what it costs, so you know what each week of delay is worth.
What your answers mean
Items 1, 2 and 4 decide the case. If you paid for the molds, have something in writing that they are yours, and owe the factory nothing, the factory is holding your property without a legal basis and you can ask for it back (art. 235). While it holds them, it also has to keep them safe and answers for damage caused by poor storage (arts. 451 and 784). In that position the usual first step is a demand letter on law firm letterhead. If that fails, the claim for return goes to the court where the factory sits, and you can ask the court to preserve the molds so they are not moved or sold while the case runs.
If you do owe money, the picture changes. For processing work, a factory that has not been paid may hold the finished work (art. 783), and between companies it may hold your property for a debt on another order (art. 448). Then the question becomes how much you owe, and whether paying it, under a written reservation, is faster than a dispute.
Sources
- PRC Civil Code (中华人民共和国民法典, effective 1 January 2021), articles 235, 447, 448, 449, 451 and 453, text published in the Gazette of the Supreme People’s Court ↗
- PRC Civil Code (中华人民共和国民法典, effective 1 January 2021), articles 783 and 784, text published in the Gazette of the Supreme People’s Court ↗
- Translations are mine and unofficial.
The factory still won’t release the molds?
Send a few lines on what you paid, what you have in writing and what the factory says. The supplier dispute assessment is USD 590 for one supplier and one order, a written opinion in 5 business days. A demand letter on the firm’s letterhead, in Chinese and English, is USD 950, and the 590 is credited in full if you instruct within 30 days.