The contract vocabulary a buyer needs at a Chinese factory: which language governs, which seal binds, NNN agreements, patents and trademarks, tooling ownership, penalties, and arbitration.
合同 (hétong) is "join and match," from the old practice of writing an agreement twice and splitting the paper, so each side's half matched the other. A Chinese factory contract is usually short, and what is left out is decided later by whoever has the leverage. Three questions decide how much a contract protects you: which language version governs, whether it is sealed by the right legal entity, and where a dispute will be heard. This page covers the vocabulary for each. It is a vocabulary guide, not legal advice; have a lawyer who practises in China read anything that matters.
以中文版为准yǐ Zhōngwén bǎn wéi zhǔnthe Chinese version governs
A bilingual contract needs a clause saying which version prevails if they conflict (如有冲突 rú yǒu chōngtū). Chinese courts and arbitrators work in Chinese, so the Chinese text is the one that will be read. Have it translated back to you independently rather than trusting that the two versions match.
Běn hétong Zhōng-Yīngwén gè yí fèn, rú yǒu chōngtū, yǐ Zhōngwén bǎn wéi zhǔn.
This contract is in Chinese and English; in case of conflict, the Chinese version governs.
条款tiáokuǎnclause, term
第五条 (dì-wǔ tiáo) is Article 5. 补充协议 (bǔchōng xiéyì) is a supplementary agreement, the usual way to add terms later. 附件 (fùjiàn) is an annex, where specifications and drawings belong.
The technical requirements are in Annex 1, which has the same force as the contract.
公章gōngzhāngcompany seal
A Chinese company binds itself with its red seal more than with a signature. 合同专用章 (hétong zhuānyòngzhāng) is a seal used only for contracts and is equally valid. Check that the name on the seal matches the name on the 营业执照 (yíngyè zhízhào, business licence) and the 统一社会信用代码 (the 18-character company registration code). A seal of a different company, or a 部门章 (department seal), is a warning sign.
Could you send your business licence? We'd like to check the company name.
知识产权zhīshi chǎnquánIP and Confidentiality
先申请先得 xiān shēnqǐng xiān dé · First to File Wins
China awards patents and trademarks to whoever files first, not to whoever used the design first. A registration in your home country gives you nothing in China. The defensive steps are to register your trademark (商标 shāngbiāo) in China, in Chinese characters as well as Latin letters, before you show a design around, and to sign a confidentiality agreement written for Chinese law. A Western-style NDA alone is weak; the common form for China is the NNN agreement: 不使用、不泄露、不规避 (no use, no disclosure, no circumvention), in Chinese, governed by Chinese law, enforceable in a Chinese court.
保密协议bǎomì xiéyìconfidentiality agreement
The general term for an NDA. NNN协议 is the China-specific form. Ask for it to be signed and sealed before you send drawings, not after.
Before we send drawings, we need to sign a confidentiality agreement.
专利zhuānlìpatent
China has three kinds: 发明专利 (fāmíng zhuānlì) invention patents, 实用新型 (shíyòng xīnxíng) utility models for structural improvements, and 外观设计 (wàiguān shèjì) design patents for appearance. Design patents and utility models are faster and cheaper to obtain, and are the ones most often used against copies of consumer products.
We've already filed a design patent in China for this appearance.
模具归属mújù guīshǔtooling ownership
The clause that states who owns the mold, that it may only be used for your orders, and that the factory must release it on request. 归 is "belongs to," 所有权 (suǒyǒuquán) ownership.
If the partnership ends, the mold is to be returned to us unconditionally.
违约wéiyuēBreach and Disputes
违约金wéiyuējīnliquidated damages
A fixed sum payable on breach, such as late delivery. Under Chinese law a court or arbitrator can reduce it if it is far above the actual loss, so set it at a level you can justify. 赔偿 (péicháng) is compensation for actual loss.
For each day of delay, liquidated damages of 0.5% of the order value are payable.
质保期zhìbǎoqīwarranty period
How long the factory stands behind the goods. Pair it with 验收标准 (yànshōu biāozhǔn), the acceptance standard, normally the sealed sample and an AQL level.
质保期为出货后十二个月，验收标准以封样为准。
Zhìbǎoqī wéi chūhuò hòu shí'èr ge yuè, yànshōu biāozhǔn yǐ fēngyàng wéi zhǔn.
The warranty is twelve months from shipment; acceptance is judged against the sealed sample.
仲裁zhòngcáiarbitration
A foreign court judgment is hard to enforce in China, while an arbitration award can be enforced under the New York Convention. Many contracts name 中国国际经济贸易仲裁委员会 (CIETAC) or the Hong Kong (HKIAC) or Singapore (SIAC) centres. 管辖 (guǎnxiá) is jurisdiction; 适用法律 (shìyòng fǎlǜ) the governing law.