A good China manufacturing agreement often includes a warranty, which stipulates that the customer can get the manufacturer to rework/reproduce the goods in case it turns out that many defects occur that are not related to the product design. But suppliers often push back on it. And sometimes customers don’t really understand the value of that clause. Do you need it in your agreement?
A China manufacturing agreement’s warranty
The wording will vary, and we are not lawyers, but here is the logic:
- Product defects that are related to the design are usually excluded.
- What the manufacturer warrants is that the finished products will not include defect(s) that come from poor materials/components or poor manufacturing.
- Final product inspections can’t always catch all issues, and sometimes the factory staff opens a few cartons and includes some rejected products just before shipment (without supervision from an inspector), so this is an important element to defend the customer’s interests.
- For most product categories, suppliers will not promise “zero defect”, so there is usually a tolerance of up to 2-5% of defective products (to be adjusted based on the specific expectations of the customer).
- If the proportion of defects is high and the warranty is activated, the customer can request the supplier to rework, or re-make (if needed), some products.
- This can only be activated if a lot of defective products are found within a short period after production since defects can also come from the way products were installed, used, maintained, and so on.
Why would such a warranty be useful?
Let’s say, for example, that you receive a container of goods and 10% have material or workmanship issues. That’s too large a proportion to just ‘let go,’ but also probably too large to ship them back to China without incurring prohibitive costs. Such a warranty protects you from such high shipping and repair costs.
Will a Chinese manufacturer honor a warranty like this?
A lot of Chinese suppliers will push back and reject the idea of any type of warranty. Once the products have left their factory, they don’t want to hear anything about them. However, this doesn’t mean that you should omit one. They are more and more commonly used and Chinese manufacturers increasingly agree to comply with them.
So, it’s worth trying. Keep communicating with the supplier and ensure that they understand that this is a key clause and requirement. If they want your business, and if you realistically adjust the percentage, they should be flexible enough to provide such a guarantee of their work, and it also gives you leverage over them to ensure that they produce goods that reach your quality standard and specifications.
Oh, and let’s not forget… make sure to document your quality standard. Otherwise, there will be no agreement on what constitutes a defect.
Can we rely simply on the China manufacturing agreement and its warranty clause?
Actually, the most important action buyers can take is to select the right supplier in the first place, define their requirements very clearly and specifically, get some samples if possible of what they are producing, and get inspections done.
Your China manufacturing agreement and its various stipulations are one weapon in your arsenal. However, first, before you authorize the supplier to ship we strongly suggest you do product quality inspections to reduce the risks of defective products being sent.
As we wrote above, there are ways for suppliers to play tricks after this which the warranty can help with. For example, if the inspector doesn’t stay until the products are loaded as it’d be highly impractical, in some cases the factory (a small minority of unscrupulous ones) will reopen the cartons and ‘salt’ some bad products inside them just before shipment.
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