You paid for it - but it is not yours

It is one of the strangest situations in overseas manufacturing: you paid tens of thousands of dollars for an injection mold, it sits physically on a factory floor on the other side of the world, and you have never seen it. While the relationship is good, none of that matters. It becomes a crisis the moment you want to change suppliers, prices climb unexpectedly, quality slips, or the factory closes. That is usually when founders discover that tooling ownership was never actually established - and the mold is, in practice, a hostage.

The short answer: you own the mold only if a separate document says so and you hold the evidence to back it up. Payment alone is not enough.

Scope note. Projects House is a product engineering firm, not a law firm. What follows is practical experience about how tooling ownership works in commercial reality, not legal advice. Have the actual agreements drafted and reviewed by counsel qualified in the relevant jurisdictions.

Why ownership is ambiguous by default

When you order production, tooling cost is often folded into the overall quotation without a distinct line item. Some factories go further and offer "subsidized" or amortized tooling - a low or even nominal mold price in exchange for a volume commitment or a higher piece price. Absent a document that says otherwise, the factory treats the mold as its own asset: it commissioned the tool, it carries it on its books, and it sits on its floor.

Even when you paid explicitly and separately, without a written bilingual agreement you may find the right very difficult to enforce in practice, at a distance, against a counterparty with physical possession. The broader contractual framework you should have in place is discussed in NNN agreements for China manufacturing.

Five steps that establish ownership

  • A separate invoice for the tooling. Buy the mold as its own transaction, invoiced to your company, paid on its own terms. This is the baseline evidence of ownership and it costs nothing to insist on.
  • A dedicated mold agreement. Not a line in a purchase order - a standalone document stating that the tooling is the customer's property; that the factory holds it as custodian for production purposes only; that it must be released on demand, including to a carrier you nominate; and that it may not be used to produce parts for any third party. Execute it in both English and Chinese, with the factory's official company seal, and specify which language controls.
  • An identification plate on the tool. Standard practice is a metal plate fastened to the mold with your company name and a serial number. Ask for photographs of the tool with the plate installed - they serve as both documentation and a visible ownership statement on the production floor.
  • The technical package in your hands. Mold drawings, steel specification, cavity count, gate and runner layout, cooling design, and maintenance records stay with you. Without them, even a mold you physically recover is difficult to commission at another shop. Insist on this as a contractual deliverable, the same way you would for any other part of the manufacturing data package.
  • Periodic verification. Confirm that the tool exists, is being maintained, and is used only for you. A local inspection body can do this as part of a routine visit - the process is described in a China factory audit.

Check who you actually signed with

If you contracted through a trading company rather than directly with the molder, your agreement may be with an entity that does not hold the tool at all - and the factory that does may have no record of you. Know exactly who your counterparty is before you sign anything, a distinction covered in factory vs trading company.

Tooling you do not control is also an intellectual property exposure. Whoever holds the mold can run parts without your knowledge, which is one of the concrete mechanisms behind the concern discussed in will a Chinese factory copy my product.

Be careful with "subsidized" tooling

A common offer: the factory discounts the mold heavily, sometimes to nearly nothing, in exchange for a volume commitment or a higher per-part price. The deal can make genuine sense for cash flow, particularly for a startup with a tight launch budget. Just understand what it is - a mold the factory financed is a mold the factory owns, and the cheap tooling price is a lock-in mechanism. If you want to leave, you may find there is nothing to take with you.

If you take that route, go in with your eyes open and negotiate at minimum a buyout option at a price fixed in advance, declining as your cumulative order volume grows. Also understand what you are buying: tool cost and expected life differ substantially by tooling material, as explained in aluminum vs steel injection molds, and the full cost structure is broken down in injection molding cost.

Moving a mold in practice

Even with a clean agreement, transferring tooling is delicate - a factory losing a customer is not motivated to help. Four things make it work:

  • A zero balance. No factory releases tooling while invoices are open. Clear the account first.
  • A release procedure written in advance. Notice period, condition on handover, who pays for crating, and which carrier collects. Negotiated at the start, this is routine; negotiated at the end, it is leverage.
  • A calm, business-like tone. Accusations extend the timeline. Frame it as a commercial decision.
  • Inventory cover and a refurbishment budget. Time the transfer after you have enough finished stock to absorb a production gap, and expect the receiving shop to want to inspect, clean, re-polish, and re-qualify the tool before running it. Tool transfer, refurbishment, and re-qualification are real line items, and requalification takes time - see injection mold lead time for realistic expectations.

Settle it on the order date, not the exit date

For most hardware companies, the mold is the single most valuable physical asset of the production phase - commonly tens of thousands of dollars and sometimes far more. Establish ownership on the day you place the order, in documents and on the shop floor, rather than on the day you want to leave. Projects House manages tooling programs for clients including the documentation that keeps the tool yours, and more guidance on working with overseas suppliers is collected on our overseas manufacturing hub. Get in touch through our contact form if you want your tooling arrangement reviewed before you commit.