Overview of Product Liability in China
- Janet Yong, Lehman, Lee & Xu (Beijing)
does not have a specific law or statute on product liability.
Whenever an issue arises in respect of product liability, various
laws, rules and regulations may be relied upon. The main laws
on liability for defective products in China are the Product Quality
Law and the General Principles of the Civil Law of the People’s
Republic of China. Other laws where provisions on product liability
are found include the Law of the People’s Republic of China
on Protection of the Rights and Interests of the Consumers, the
Criminal Law and specific industry regulations such as the Food
Product Quality Law of the People’s Republic of China first
came into effect on September 1, 1993. On July 8, 2000, China
amended its product quality law, which became effective on September
1, 2000. The amendments have 4 goals, namely, (i) to further improve
the quality of products, (ii) reduce illegal activities currently
found in manufacturing operations, (iii) prevent the marketing
of fake or shoddy/poor quality products, and (iv) increase the
strength of the supervising authorities so they may more effectively
monitor products and impose severe sanctions where serious offences
essence, this law has broad application and applies to all products
sold or manufactured in China, and covers both product quality
and product liability issues.
under this law means “the product which is processed or
manufactured for sale. Under this law, products should:
• comply with national and industry standards;
• be free from “unreasonable danger” to people
• possess the properties and functions for use that they
ought to have, except where the defects in the functions of the
products are stated; and
• conform with standards marked on the product or its packaging
and with the quality indicated by way of product directions and
are also subject to a number of labeling and packaging requirements.
The identification on the product or on the product package must
• the product quality inspection certification;
• the product name, manufacturer name and address (in Chinese);
• the primary ingredients;
• the date of production and period of safe use or validity
• the warnings in Chinese if the product may be potentially
dangerous if used improperly.
the Chinese law, injured consumers can recover medical expenses,
lost income and cost of living if they are unable to return to
work. In case of death, the liable party must pay funeral expenses
as well as pensions and living expenses of the dependents of the
deceased. If the defect of a product causes damage to the property
of the injured person, the liable party shall restore the damaged
property to its original state or pay compensation in accordance
with the market price. The law also contains a potentially broad
provision that requires the liable party to compensate the injured
person for “other substantial damages”.
addition to damage payments, stiff penalties may be imposed for
failure to comply with national or industry standards. Authorities
will order manufacturers or sellers not in compliance to stop
production or sale and will seize illegal products and income
derived from their sale. Moreover, the offender will be fined
and his business license revoked. In serious cases, it may constitute
a criminal liability.
are strictly liable for non-compliance with national and industry
standards, while sellers may have leniency if they have sufficient
evidence proving that they have no knowledge of the illegal product
and could name the source of the product.
law provides defenses. A manufacturer will not be held liable
if it can establish that: (i) it did not put the product on the
commercial market, (ii) the alleged defect causing the damage
did not exist at the time the product was put on the market, or
(iii) the level of scientific or technological knowledge at the
time the product was put on the market could not detect the existence
of the alleged defect. However, the law does not further explain
what is meant by “level of science and technology”.
This exemption from liability is open to interpretation by the
testimony of expert witnesses.
respect of a seller or distributor, the defense would be to show
that another party, for example the manufacturer, was responsible
for the defect. However, if the seller or distributor cannot locate
the manufacturer, the seller is legally liable for the injured
consumer. If the manufacturer can be identified, the product distributor
has a recovery right against that manufacturer.
Chinese law also has a statue of limitations. Under the Product
Quality Law, a claim may be brought within two years of the date
the defect was or should have been discovered.
it may take time for the damage caused by the defects in the product
to be revealed and to give the consumer/victim sufficient time
to observe the extent and consequences of his suffering, the Product
Quality Law also specifies the time when the right of claim for
compensation for loss of the victim expires. A consumer may not
bring a claim more than ten years after the product was delivered
to the first consumer unless, except where it is clearly indicated
that the ten-year “period of safe use” has not yet
the time when the product is in the hands of the producer or the
seller is excluded from the period of limitation of action. This
is favorable for consumer/end user protection than if the period
started from the date of production of the product or from the
time when the product was placed on the market.
the General Principles of the Civil Law of the People’s
Republic of China, the manufacturer or seller has civil liability
in a case where a substandard product causes property damage or
physical injury to others. The manufacturer or seller will however
have the right to demand compensation for losses if he can successfully
argue that the transporter or storekeeper is responsible for the
damage or injury.
the limitation period set forth in the Civil Law is inconsistent
with the two-year limitation period in the Product Quality Law.
Pursuant to the General Principles of the Civil Law, the limitation
of action shall be one year in cases concerning claims for compensation
for bodily injuries and sale of substandard goods without proper
notice to that effect. The Product Quality Law, on the other hand,
provides that "the limitation of action shall be two years
in cases of claims for compensation for damages arising from defects
in products, starting from the time when the party concerned knows
or should know that his rights are prejudiced". Applying
the principle of the prevalence of special law over general law,
where the provisions of special laws are different from those
of the civil law, the provisions of the special laws shall prevail.
or manufacturers are liable for personal injury or property damage
caused by a defective product. The problem lies in the proof that
the product had a defect. If there is some kind of standard for
compliance, then there is a defect if the product does not comply
with the standard. But what if there are no set standards?
the law defines “defect” as an “unreasonable
danger” that “threatens personal safety or another’s
property”, we do not know the definition of the phrase “unreasonable
issue of causation is the principal factor in determining liability
under the Chinese law because both the seller and the manufacturer
have specific statutory obligations. As a defendant, a manufacturer
may disclaim liability if he can prove that the product was not
defective when he put it on the market, which means the liability
lies with the retailer or the consumer. The more a manufacturer
is able to prove the quality of his process (for example by showing
that he has complied with all the requisite requirements of production
and quality), the better his chances of success.
manufacturer may also face criminal liability, for instance, if
a manufacturer produces goods that do not comply with required
standards. However, unlike in countries such as the United States,
Chinese law does not provide for punitive damages (damages intended
to punish the manufacturer), instead it would provide for spiritual
or hardship damages.
principle of liability without fault (i.e. strict liability) can
only be applied in a restricted sense due to the limited development
in the Chinese economic, technological and legal systems. As a
result, the principle of liability without fault cannot be as
comprehensively applied to product liability as it is in developed
countries and can only be applied in a restricted sense.