Factories close. Some fail, some are bought, some lose a landlord or an environmental permit and stop within weeks. For an importer this is not an exotic risk — it is a normal one, and the companies that come through it are the ones that prepared when nothing was wrong.
The warning signs, in the order they appear
- Lead times stretch without explanation, then stretch again.
- Requests to change payment terms — a larger deposit, earlier balance, payment to a different entity.
- Your usual contact leaves and is replaced by someone vague, then that person leaves too.
- Quality drifts on components you cannot see from the outside — a cheaper grade, a thinner section.
- The factory stops inviting you to visit.
Any one of these is ordinary. Three together, over a quarter, is a signal to move — not to confront. A supplier in difficulty who feels accused accelerates rather than explains.
Tooling: the thing that is hardest to recover
You paid for the mould. That does not mean it is yours in a way anyone in China will recognise unless three things are true: the contract states you own it, the mould is physically marked with your name and an asset number, and the factory has signed a document acknowledging it holds your property. Without those, a liquidator treats it as a factory asset and your invoice is just evidence that you are a creditor.
Photograph your tooling on every visit, with the marking visible. It costs nothing and it is the evidence that makes the difference.
What to do in the first week
- Stop all payments immediately, including any balance due. Recovering money already sent is far harder than withholding it.
- Get someone physically to the site. Remote enquiries produce reassurance; a visit produces facts.
- Secure your tooling and any finished goods you have paid for, in writing and if possible physically.
- Collect your technical file: drawings, specifications, bill of materials, component sources. Rebuilding this elsewhere is the longest part of a transfer, and it disappears when a company does.
The real protection is having qualified a second supplier before you needed one — not necessarily producing there, but qualified, sampled and reachable. The cost of keeping a second source warm is small against a season lost.