U.S. Companies Outsourcing in China

The Epic questions that need asking

As a native of Charleston, S.C., I was particularly interested in the story about the Charleston-based Epic Kayak lawsuit against its Chinese manufacturer.

Apparently, Epic Kayaks outsourced the manufacturing of its kayaks to Flying Eagle Boat Co., Ltd. in Fuyang, China. Two-time Olympic gold and bronze medalist  is co-owner of of Epic Kayaks. Unsatisfied with the project management of the boats being manufactured at Flying Eagle, Barton ended their relationship. He then partnered with another factory in Fuyang.  According to Barton, Flying Eagle refused to release Epic’s molds and equipment unless it received fees and payments that would effectively put Epic Kayaks out of business.

Where it gets interesting

Epic Kayaks filed a lawsuit in the intermediate level court in Hangzhou, China. This is an attempt to gain control of their molds and equipment rather than pay the fees to Flying Eagle.

Here’s the million dollar question for every U.S. based company that is outsourcing or is considering the outsourcing of their products in China.  Is there a remote chance of a fair and impartial trial in the Chinese courts against a Chinese manufacturer?

And what role will politics play in the decision by the Chinese courts?  Will the Chinese court view a negative ruling against Epic Kayaks as bad publicity?  Chinese manufacturing businesses are struggling with an economic downturn. They’re already getting negative international press regarding overall product quality.

The impact to businesses and insurance carriers

What impact will this case have on U.S. businesses and insurance carriers that provide Product Liability Insurance for Chinese products?  Maybe confidence goes up for U.S. businesses. Maybe some bold insurance carrier will sue a Chinese manufacturer responsible for a large product liability claim or product recall to recover some of the money it had to pay out in claims.