Damages caused by inferior and low quality products are a chief concern of consumers in China. How does Chinese law protect them and what is the potential liability to manufacturers and vendors?
The major laws on liability for defective products are the General Principles of Civil Law and the Product Quality Law. A manufacturer is liable for any damage caused by a defect in a product. The problem lies in the proof that the product had a defect. If there is some kind of standard a product must comply with, then there is a defect if the product does not comply with the standard. If there is no standard, a defect is assumed if an excessive risk for persons or property derives from the product. For those who understand standard "negligence" and "strict liability", these two categories in Chinese law will sound familiar.
In the event of personal injury, medical costs, loss of income, invalidity benefits and, in the event of death, funeral expenses, as well as widow and orphan pensions, are payable. In the event of damage to property, the damaged object must be replaced or damages must be paid according to market value. A 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). The closest analog in China would be what translates roughly as spiritual or hardship damages. The cap on these damages is RMB 50,000, regardless of severity. Consumer awareness is on the rise and fewer and fewer Chinese consumers are willing to accept goods of inferior quality.