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Chinese Takeaway -- Protection From Bad Product

By Dan Harris and Steve Dickinson

Just read a clear and informative article on how to protect yourself from dangerous Chinese product. The article is by Hillel Parness and Derek Craig from the Lovells firm and it is entitled, "Chinese Takeaway." The article starts out talking about the high costs of recalls and litigation and notes that in "most US jurisdictions, retailers, wholesalers, distributors, private labelers and manufacturers are all fair game." It notes that suing and collecting from the Chinese manufacture typically ranges from difficult to impossible. Most importantly, it suggests US distributers do the following to minimize or avoid liability: 1. "Carefully investigate and continually re-evaluate Chinese suppliers. Unannounced visits and independent product testing should be conducted at multiple points in the production process." 2. "Require manufacturers to purchase product liability coverage from reputable insurance providers and insist that they be listed as additional insured parties. Distributors should be wary of fraudulent insurance certificates and manufacturers that cancel policies as soon as performance commences." 3. "Because of the difficulties of litigating against Chinese companies, agreements should require arbitration of any and all disputes arising out of the relationship." 4. "Conduct regular reviews of product instructions with their counsel and issue warnings to ensure that consumers are properly advised how to use, and are warned of any dangers associated with, products." 5. Know the "regulatory and reporting obligations to the US Food and Drug Administration, Consumer Product Safety Commission and other government agencies." 6. "Implement procedures and prepare a response plan to make sure that ... regulatory obligations are handled timely and efficiently, and that, in the event of recalls or litigation ... resources can be marshalled to retrieve products or respond to lawsuits in an organised and cost-effective way." The article concludes by stating that "as with most things, a modest amount of preparation can result in great savings in the long run." All good advice.

Full post as published by China Law Blog on January 08, 2008 (boomark / email).