China Product Liability Litigation: Defending Foreign Manufacturers and Importers

Introduction

When a product made in China injures someone, the claim usually does not stop at the factory gate. A foreign manufacturer, importer or brand owner can be pursued in China under a strict-liability regime that the Civil Code (民法典) and the Product Quality Law (产品质量法) set out in detail. This guide explains the liability framework a defendant faces, and where the defence is built.

The strict liability of the producer

Article 1202 of the Civil Code makes the producer strictly liable for damage caused by a defective product — the claimant does not have to prove fault, only the defect, the damage and the causal link between them. Article 41 of the Product Quality Law echoes this. For a foreign brand whose goods are made by a Chinese OEM, the practical question is who counts as the producer: the contract manufacturer, the brand owner that put its name on the product, or both — and both can be named.

The seller, the importer and the chain of recourse

Article 1203 of the Civil Code and Article 42 of the Product Quality Law govern the seller. The seller is liable if it is at fault, and also where it cannot identify the producer or supplier of the defective product. A party that has paid compensation first may recover from the party ultimately at fault — so a distributor that pays a consumer can pursue the importer, the brand owner or the manufacturer up the chain. Article 1204 adds that where a third party such as a transporter or warehouser caused the defect, the producer or seller that compensated the victim can seek recourse against that third party.

Remedies: prevention, recall and damages

Articles 1205 and 1206 of the Civil Code give the victim preventive remedies — ceasing the infringement, removing the obstruction, eliminating the danger — and impose a recall obligation where the defect is discovered after the product is on the market. Articles 43 and 44 of the Product Quality Law set out the victim's right to choose whom to claim against and the scope of compensation, which includes personal injury, property damage and, where death results, the supporting dependants. The compensation items mirror the general tort framework of the Civil Code.

Punitive damages

Article 1207 of the Civil Code is the provision that changes the arithmetic: where a producer or seller knowingly produces or sells a defective product and death or serious health damage results, the court may award punitive damages on top of compensatory damages. For a foreign brand, the exposure is not just the claimant's loss but a multiplier — which is why the question of what the defendant knew, and when, becomes the centre of the case.

Defences for foreign manufacturers and importers

• No defect — the product met the applicable standards and the harm had another cause; expert evidence on design and testing is the core of the case.
• No causation — the claimant cannot link the defect to the injury, or misuse or alteration broke the chain.
• Development risk — the defect was not discoverable at the state of scientific and technical knowledge at the time, where the applicable standard permits the defence.
• Contract allocation — the OEM agreement, quality agreement and product liability insurance place the exposure with the party that controlled the manufacturing.
• Contributory fault — the victim's own conduct reduced or eliminated the liability.

Practical checklist

• Map who is the producer under Article 1202 and who is exposed as seller, importer or brand owner.
• Secure the design, testing and quality-control records before the dispute forces them out.
• Check the OEM and quality agreements for defect, recall and insurance allocation.
• Verify that product liability insurance covers the Chinese market and the named entities.
• Treat any post-market defect notice as a recall obligation under Article 1206, and act before the exposure compounds.
• Confirm current article numbers against the Civil Code and Product Quality Law before citing them.