China Mold and Tooling Agreements: Keep Ownership of Your Tooling

A mold is the quiet hostage in most China supply relationships. You pay thousands to have a mold cut for your product, the factory keeps it on their floor, and one day the relationship sours — and you discover the factory now claims the mold is theirs, or simply will not hand it back. The outcome is decided not by who paid for the tooling, but by what the agreement says and how you enforce it. This guide explains how Chinese law treats tooling and the clauses that protect you.

What a mold agreement actually is under Chinese law

Tooling is movable property under the Civil Code (Article 115), and ownership of movables transfers by delivery unless the parties agree otherwise (Article 224). A mold-development agreement is a contract for work (Article 770) — the supplier builds a mold to your specification and delivers the result. When the supplier then uses that mold to produce parts for you, a sales relationship sits on top, and while the supplier holds the mold for you it is also in a custody (bailment) relationship (Article 888 onwards). In practice a mold deal is a mixed contract, and the single most important term is the ownership clause.

Own the tooling on paper

• State expressly that the mold, all its components and any modifications are the buyer's property from the date of payment — regardless of who holds physical possession.
• Require the supplier to affix a durable label, plate or serial number to the mold identifying it as your property.
• Keep the payment records, the mold specification, the drawing set and the acceptance record — they are the paper trail that proves the mold is yours.

Paid in full? You own it — the factory only possesses it

This distinction trips up a lot of buyers. Once you have paid for the mold in full, ownership belongs to you under the agreement; the factory merely holds possession. That is ownership separated from possession — and your remedy if the factory refuses to return it is a claim for return of the property (Article 235 of the Civil Code) or a breach claim (Articles 577 and 563), not a retention-of-title claim. Retention of title (Article 641) is a device for a seller who has not been paid for goods; it is the wrong tool when you have already paid and the factory is simply holding your property.

Retention of title is for unpaid goods — and it has limits

If you use retention of title at all — for example, where you have only partly paid for the mold — know its limits. Under Article 641, title retained by a seller is not effective against a good-faith third party unless registered, and it can be registered in the unified movable-property financing registration system run by the People's Bank of China. The Supreme People's Court's interpretation on sales contracts adds two more limits: retention of title does not apply to immovable property (Article 25), and a seller cannot reclaim the goods where the buyer has already paid 75% or more of the price, or where a third party has acquired them in good faith (Article 26). So do not lean on retention of title as your main protection for tooling you have effectively paid for.

Lock the practical terms that matter most

• Custody, maintenance and insurance — require the supplier to keep the mold in good condition, store it safely, and insure it with you as the beneficiary.
• Mold life — state the expected life in shots or cycles and who pays for refurbishment or replacement.
• Trials and acceptance — require a T0 (first-off) trial and a T1 (corrected) trial, with your written acceptance before production.
• Return on termination — a fixed deadline for the factory to return the mold, a penalty for delay, and a right to collect it yourself after that deadline.
• No lien — exclude or limit the supplier's statutory lien over the mold (Articles 447 and 449 of the Civil Code allow the parties to agree that certain movable property cannot be retained).

If the supplier refuses to return the mold

Your remedies are the property claim for return (Article 235) and breach liability (Article 577), supported by evidence preservation and interim measures. Under the 2023 revision of the Civil Procedure Law, you can apply for evidence preservation before or during proceedings (Article 84), and for property or conduct preservation, with pre-suit orders requiring you to bring the main action or arbitration within 30 days (Articles 103–104). The evidence that wins a tooling fight is the ownership clause, the payment record, the serial-number label and the correspondence — which is why they are worth getting right at the start.

This content is general information and does not constitute legal advice. Tooling disputes turn on the exact contract terms and the facts, and the law changes over time. For a specific mold or supply agreement, consult a licensed attorney.

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