Meaning
The unified legal framework in the People’s Republic of China governs civil relationships, contract disputes, and property rights over moveable assets. Under the PRC Civil Code, a multinational company can register its ownership of injection moulds placed at Chinese contract manufacturing facilities to prevent them from being seized or sold. This statute provides a modernized system for securing property rights and enforcing mercantile agreements in China.
Security Registration
Centralized online registries operated by the People’s Bank of China allow owners to file their title retention or security interests in moveable assets. When a brand owner registers their custom injection moulds, this public filing acts as legal notice to any potential lenders or buyers that the moulder does not own the tooling. If the Chinese manufacturer enters insolvency, this registration enables the brand owner to recover the tooling without it being included in the debtor’s liquidation pool.
This registration is a standard risk mitigation step for foreign buyers sourcing parts from China.
Mould Recovery
If a dispute arises, the code allows the owner to initiate a lawsuit to confirm ownership and request the return of the property. The court can issue a preservation order to prevent the manufacturer from moving or damaging the moulds while the lawsuit is pending. This protection is vital for maintaining the continuity of the supply chain.
Lien Priority
This legal framework clearly defines the priority of registered interests over unregistered ones. Registered owners have first claim on the assets, ensuring they can retrieve their tooling ahead of local suppliers or unpaid workers. This provides high legal certainty for foreign brands.
