Case Study: Xiamen Foreign Trade Enterprises' Response to Product Liability Claims from U.S. Exports

An electronic technology company in Xiamen exported LED lighting equipment to a distributor in Florida, USA, with a contract value of approximately 150 USD million. One month after delivery, the US party claimed that certain products had safety hazards that caused a warehouse fire, resulting in property losses of about 280 USD million. They issued a claim notice and threatened to file a lawsuit in a US federal court. The Xiamen company maintains that the fire was caused by improper storage practices on the US side and that the agreed warranty period has expired. Significant disagreements have arisen between both parties regarding product defect determination, causation of losses, and jurisdictional issues.

1. Allocation of burden of proof and selection of inspection standards for product quality defects (Chinese National Standards vs. U.S. UL Standards); 2. Legal validity of the quality objection period in international trade contracts and consequences of expiration; 3. Long-arm jurisdiction by U.S. courts over Chinese exporters; 4. Timeliness requirements for preservation of cross-border evidence and notarization/authentication.

1. Retain a U.S. attorney immediately to prepare a motion challenging the U.S. court's jurisdiction; 2. Engage an internationally recognized SGS testing agency to independently analyze retained samples and residue from the accident site, obtaining an authoritative technical report; 3. Systematically review all correspondence, inspection records, and signed delivery confirmations from the U.S. party during contract performance to establish a complete chain of evidence; 4. Proactively initiate commercial mediation negotiations grounded in the technical report and legal basis.

SGS test reports confirm the product met the technical standards specified in the contract at the time of shipment. The fire was more likely caused by aging electrical wiring and poor ventilation in the U.S. warehouse. Based on strong technical evidence and legal analysis, the U.S. party dropped its plan to sue in the United States and agreed to enter mediation. Both parties eventually reached a settlement. Out of consideration for maintaining business relations, the Xiamen company voluntarily paid $0 million in compensation (only 6.4% of the initial claim), and the U.S. party signed a release confirming it waives all future rights to pursue further claims. The entire case took 7 months, effectively avoiding high litigation costs and reputational damage.