Meaning
Asset management protocols define the storage, maintenance, and ultimate disposal of customer-owned molds, dies, and assembly fixtures held by a manufacturer after production ends. Implementing tooling retention protocols protects the valuable physical assets of a product developer from unauthorized use or premature destruction by the contract manufacturer. These agreements ensure that the equipment remains available for spare parts production or transfer to a different facility.
Trade Clearance
Local tax and customs rules in China impact the import and retention of foreign-owned equipment. When establishing tooling retention protocols, foreign companies must account for customs procedures governing equipment imported under duty-free processing trade schemes. While a contract may state the tooling belongs to the foreign party, local customs authorities may refuse to allow its export or transfer until all import duties and taxes are cleared.
A simple contract right of recovery is often held up by these administrative clearing procedures.
Mold Custody
Mold storage requires dedicated warehouse space and regular preventative maintenance to prevent rust and degradation. Subcontractors will typically demand storage fees after a pre-determined period of production inactivity.
Lien Avoidance
Securing the return of physical tooling is one of the most difficult challenges in offshore manufacturing. When a dispute arises, the local factory often exercises a lien over the molds as leverage, ignoring the tooling retention protocols. To execute a practical remedy, the contract must state that the tooling is leased to the factory under a registered custody agreement that allows the owner to reclaim the assets with the assistance of local law enforcement.
Without this specific registration, the foreign owner may be forced to litigate for months while their proprietary molds remain in the hands of a hostile manufacturer.
