Q&A: manufacturing and distribution of fashion items in China

Manufacturing and distribution

Manufacturing and supply chain

What legal framework governs the development, manufacturing and supply chain of fashion items? What are the usual contractual terms of these relationships?

For fashion items, there is no specialized legal framework governing their development, manufacture or supply chain. The law, application and jurisdiction are therefore not significantly different from those applicable to other property, with a diverse mix of intellectual property including trademark, copyright, trade secret, contracts, distribution, franchising, advertising and marketing, labor and employment, dispute resolution, consumer protection, product liability and regulatory compliance (regarding labels, trademarks, customs, taxes, importation, export, etc). As a less regulated industry, most business relationships in the fashion industry are created and managed through contracts and agreements, based on the will and discretion of the parties, such as distribution and l agency in the field of sales.

Distribution and agency contracts

What legal framework governs distribution and agency contracts for fashion items?

In China, there is no specific distribution or agency law to govern the fashion industry. Instead, agency, distribution and other business relationships are established and regulated generally in accordance with the Civil Code of the People’s Republic of China (the Civil Code).

What are the most commonly used distribution and agency structures for fashion items, and what terms and contract terms typically apply?

For fashion brands using distribution or agency as a business model, distribution or agency is normally developed and managed according to provincial or municipal territory. Unlike 15 or 20 years ago, agency or distribution is no longer the most preferred business model – instead, omnichannel and multichannel retail is increasingly popular.

In a typical distribution agreement, important terms and conditions typically include: definitions; rights and obligations of the parties; sales targets; supply of goods; ordering, delivery and payment; pricing and invoicing; title and transfer; intellectual property rights; advertising and promotion; privacy; Term and Termination; data confidentiality; consumer complaints and protection; liability and damages; choice of law; and dispute resolution. In an agency contract, commission and limited liability are important in addition to these terms and conditions.

Import and export

Do special import and export rules and restrictions apply to fashion items?

No, the laws and regulations applicable to general products apply to fashion items and mainly include:

If food, cosmetics, gold, gold products or other regulated products are involved in the import or export of fashion items, the following legislation may also need to be observed:

Corporate social responsibility and sustainability

What are the corporate social responsibility and sustainability disclosure requirements and obligations for fashion and luxury brands in your jurisdiction? What due diligence in this regard is advised or required?

There are no legal requirements or obligations for fashion and luxury brands to disclose corporate social responsibility and sustainability. If a due diligence process is desired, we suggest the following: (1) provide the brand with a list of questions, as detailed as possible, requesting a detailed response with supporting documentation; (2) interview key people from the brand and its business partners (eg, suppliers and distributors); and (3) conduct research independently, if necessary engaging third-party experts to assist.

What occupational health and safety laws should fashion companies be aware of in their supply chains?

Occupational health and safety legislation that fashion companies must comply with in all supply chains is generally not that different from that of most other industries, and its requirements are mainly found in the following laws and regulations:

Given the unique characteristics of the fashion industry, special attention must be paid to the protection of employees, especially those who are pregnant, giving birth or breastfeeding. In addition, child labor, excessive overtime and other non-compliant high risks should be avoided.

Date declared by law

Correct the

Indicate the date the above information is accurate.

February 1, 2022.