Meaning
Specialized equipment owned by a foreign brand and deployed in a domestic Chinese assembly line secures production continuity without transferring ownership. Under this arrangement, consigned tooling remains on the balance sheet of the offshore buyer while the local manufacturer operates the machinery. Customs authorities treat these physical assets as temporary imports that must eventually be returned or cleared through payment of duty.
Property Protection
Foreign buyers must register the equipment with the local branch of the Ministry of Commerce to prevent seizure during insolvency proceedings of the supplier. This registration establishes that consigned tooling belongs to the external entity, shielding it from claims made by domestic creditors. Contracts must specify that the equipment cannot be mortgaged or moved without explicit written consent.
Liability Allocation
Responsibility for routine maintenance and operational damage sits with the active factory partner. When consigned tooling breaks down, the factory must document the wear to avoid claims of negligence from the foreign owner.
Valuation Standard
Customs appraisers assess the depreciated value of the equipment to calculate the required security deposit during its stay in China. If the consigned tooling remains beyond the permitted temporary import window, the foreign party must pay duties calculated against this valuation.
