We paid for the mold and cannot take it
Tooling ownership and amortization in China - where payment and title come apart, the amortization hidden in your unit price, mold hostage situations, transfer logistics and contract language

Hello, this is GreenFrog Seoul.

You have a factory you have worked with well for two years. Then the unit price starts creeping up, the defect rate is not what it used to be, and you go looking elsewhere. The new quote comes in 15% lower and the samples are fine. You tell your current factory you will be pulling the mold out, and the reply reads like this.

"The mold is our asset. If you want to take it, you will need to settle the remaining amortization of USD 8,000."

You wired USD 12,000 in tooling cost back during development and you still have the receipt. The factory is telling you that money did not buy ownership of the mold. Most people get angry first, and there is something worth checking before that. Having paid for a mold and owning that mold run as two separate facts in practice. What ties them together is not a wire transfer record but a line in your contract.

The technical side of molds — design, specification, cavity count — was covered in Episode 33. Today is about the money and the rights around that mold, which is to say the problem that surfaces the moment you try to move.

The point at which tooling comes up in our consultations is almost always the same. Not when the mold is being built, but when someone wants to change factories. Nobody asks about title while things are going well. A tooling clause is written when the relationship is good and read when it has gone bad. The person writing it feels it is unnecessary, and the person reading it feels it is already too late.

1. You paid for the mold. Why is it not yours?

The root of the problem is that the phrase "mold cost" carries several different meanings. The same two words point at different things from deal to deal.

The second row is where things go wrong. The buyer paid the whole amount and assumes the tool is theirs; the factory sees no title language in the contract and treats it as equipment sitting in their plant. The receipt says "Mold cost USD 12,000" and nothing anywhere records what that money bought.

It is worth looking at this from the Chinese factory's side for a moment. The factory books the mold on its own equipment register and depreciates it. Moving something booked as an asset out of the building means going through a disposal process, which for the person handling it is a nuisance. On top of that, when the mold leaves, the revenue from that item leaves with it. Even where there is no bad faith at all, that is why cooperation tends to be slow.

2. Work backwards to find the amortization in your price

Some factories do not charge for tooling at all. To a buyer that feels generous, because there is no upfront cost, when in fact it has been loaded into the unit price. That is amortization.

Numbers make it quicker to see. If the tool actually costs USD 10,000 to build and the factory plans to recover it across the first 30,000 pieces, that is USD 0.33 per piece in your price. At a unit price of USD 4.50, USD 0.33 of it is tooling recovery.

That last row is the whole point. Passing the recovery volume does not prompt a factory to lower your price. If recovery completes at 30,000 pieces and you keep ordering 50,000 or 100,000 at the same number, every piece beyond the target is pure factory margin — and title still sits with them.

So if you are going to use amortization, two things have to be in writing from the start: how many pieces the recovery target is, and what the unit price becomes once you pass it. A single line does it. "On completion of amortization the unit price adjusts to USD 4.17." Without that line, you end up in the position of having to prove amortization finished.

The trap in refundable tooling

Some factories take the full tooling cost up front and promise to return it once you hit a volume target. On paper that looks like the buyer-friendly option.

What causes trouble is the timing of the refund. The condition might be 50,000 pieces within two years, and if the market does not cooperate and you stop at 30,000, no refund comes. You also never received the lower unit price that a 50,000-piece commitment would have earned. The payment is certain and the refund is conditional, so the risk all sits on one side. If you are taking this arrangement, confirm whether partial achievement earns a proportional refund — 60% back at 30,000 pieces, for instance.

3. What actually happens when a factory sits on your mold

Start with the worst version: you give notice that you are moving and the factory refuses to release the tool.

The stated reason varies. A demand for the remaining amortization is the most common, followed by claims of unpaid invoices, charges for mold storage, and sometimes a flat assertion that title belongs to the factory. Which one you get changes the cards you can play.

There is one fact to be clear-eyed about here. The mold is physically inside a Chinese factory. Even with title written in your favour, turning that paper into possession takes a Chinese court's ruling and its enforcement. For a tool worth USD 10,000 to 20,000, the cost and the timeline usually do not add up.

Which means these get resolved at a table, not in a courtroom. What gives you leverage at that table is still the contract. A clear title clause stops a factory from pushing an unreasonable number for long. Without one, whatever the factory names becomes the market rate.

Building a new tool is cheaper more often than people expect

People spend months fighting without knowing this. Suppose the factory wants USD 8,000 in remaining amortization, and a new tool to the same specification quotes at USD 9,000 from your new supplier. That is a USD 1,000 gap. Add the wear on the existing tool, the freight to move it, and the work the new factory will do fitting an unfamiliar tool to its machines, and the order can flip.

So before you start negotiating, get the quote for a new tool first. That number becomes your ceiling. Once the factory's demand crosses it there is no reason to keep the conversation going. And holding that quote changes how you negotiate regardless. Someone whose business stops if the mold stays put and someone who can simply cut a new one are having different conversations in the same chair.

4. What to check when the mold actually moves

Agreeing on release is not the end of it. Molds often turn up in a condition that becomes its own problem.

Condition checks before you accept

Tools wear. A mold that has run tens of thousands of shots has erosion around the gate, slides that have gone stiff, and scale in the cooling lines. It can look fine and still fail to run properly once it is hung in a new press.

The last two are easy to miss. Taking a handful of parts run on that tool just before it moves gives you something to compare the new factory's first output against. Without them, if quality drops there is no way to tell whether the mold or the factory is responsible.

Tool marking is preventive. Engraving your company name and an asset number into the mold body cuts down on arguing about title later. When you commission a new tool, ask for the marking from the outset — it costs almost nothing and pays off.

Export clearance and customs valuation

Moving a mold out of China to Korea or to a third-country factory means clearing customs. A mold is cargo, it has an HS code, and it gets declared.

The part that confuses people in practice is when the mold does not physically move. The tool stays where it is and only title is transferred to you — and that can still raise a customs question, because where you own a mold, provide it to a factory free of charge, and import the goods made on it, the value of that tool is added to the customs value of what you import. Free-issue treatment and adding tooling cost to customs value were covered in detail in Episode 93, worth reading alongside this if that is your situation.

When the mold does move, the factory has to file the Chinese export declaration. An uncooperative factory can burn weeks at exactly that step, which is why a release agreement should name export filing and the provision of clearance documents as factory obligations. If all it says is "the factory shall deliver the mold," the factory can take the position that its responsibility ends at its own gate.

5. The clauses your contract needs

Nearly everything above can be shut down with a paragraph or two at contract stage. Purchase orders with the tooling section missing entirely are genuinely common.

Language that settles title

This is the baseline. What has to be recorded is not that tooling cost was paid, but that title transfers as a consequence of paying it.

Sample wording
Title to all molds, jigs, fixtures and related drawings produced under this agreement shall vest in the Buyer upon full payment of the tooling cost. The Supplier holds such tooling as bailee for the Buyer and shall deliver it within 30 days of the Buyer's written request.

The second sentence carries more weight than it looks. Title alone leaves "so when and how do I get it" unanswered. Spelling out the bailee relationship and a delivery deadline removes the grounds a factory uses to run the clock.

Language that fixes the amortization terms

This is what you need where the tool is recovered through the price.

Sample wording
The tooling cost of USD 10,000 shall be recovered at USD 0.33 per piece across the first 30,000 units. Upon cumulative production reaching 30,000 units the unit price shall adjust to USD 4.17, and title to the tooling shall transfer to the Buyer at that point.

Volume, per-piece recovery, the adjusted price, and the moment title moves are all in one sentence. Leave any of the four out and that is the thing you argue about later.

Worth adding while you are there

• An obligation to engrave owner identification on the tool
• Provision of 2D and 3D tool drawings and the specification sheet
• A prohibition on using the tool to produce for any third party
• Custody responsibility and an obligation to repair damage
• A statement that no storage charges apply, or the terms and amount if they do
• A delivery deadline on termination and an obligation to assist with export clearance
• How the tooling is dealt with if the factory closes or is acquired

The third line earns its keep more than people expect: it stops goods made on your tool from reaching another buyer. Title in your name is no help when the tool is physically out of sight, so attaching a damages figure for breach gives the clause some teeth.

6. Three cases from practice

Patterns we meet often, anonymised. Figures and timelines are illustrative.

Case 1 — A receipt but no contract

A kitchenware importer. They had wired USD 14,000 in tooling cost with the bank record to prove it, but the purchase order carried no title language. Two years later they went to move factories and the factory refused to release.

It settled through negotiation. A new tool quoted at USD 16,000 from the incoming factory, and on the strength of that number they offered the original factory USD 6,000 more for the mold and the drawings, which was accepted. The tool had run 40,000 shots but inspected out as serviceable. What moved the negotiation was not indignation but the number on the alternative quote.

Case 2 — Three extra years of paying for a tool already paid off

An electronics accessory business. They had started on a no-tooling-charge basis with the cost carried in the price, and the recovery volume was nowhere in writing. Over four years they ordered 120,000 pieces cumulatively at the original price throughout.

Working through the order history, the tool was worth roughly USD 8,000 to build and would have been recovered inside the first 30,000 pieces. The amortization component on the remaining 90,000 went straight to factory margin. That came to a gap of more than USD 20,000. The past was not recoverable, but the same analysis did get the unit price down 7% and title moved to the buyer. Using reorders as leverage to change terms also came up in Episode 106.

Case 3 — Got the mold, could not run it

The most frustrating version. The title clause was well drafted and the factory released the tool without argument. Hung at the new factory, the parts would not come out right.

Two causes had stacked. The tool was near the end of its life with heavy cavity wear, and the original factory had been compensating for that wear by fine-tuning the moulding conditions. That know-how does not travel with the tool. It took USD 3,000 in repairs and six weeks of re-establishing process conditions.

The lesson is that receiving a mold and moving production are two different jobs. Before committing to a transfer, check the tool's condition and ask for the process parameter sheets the original factory was using. Writing "the tooling together with all related production condition documentation" into the release agreement gives you the grounds to ask. The factory transfer process as a whole was covered in Episode 99.

7. Common mistakes

What comes up repeatedly in tooling consultations.

• Wiring the tooling cost, taking the receipt, and never checking for title language
• Agreeing to amortization with no recovery volume, so it runs indefinitely
• No price-adjustment clause on completion, so the same price continues after recovery
• Not tracking cumulative orders in-house, leaving no way to prove recovery finished
• Accepting refundable tooling without a proportional refund on partial achievement
• Never asking for owner marking, leaving the tool indistinguishable from factory equipment
• Not obtaining the tool drawings, so a re-tool or repair starts from a blank sheet
• Announcing the move first and only then opening tooling negotiations
• Entering negotiations with no alternative quote, making the factory's number the reference
• Omitting export clearance assistance from the release agreement, stranding the tool
• Shipping a mold without checking its condition, then spending on repairs and re-setup
• Failing to take samples before the transfer, leaving quality problems unattributable
• No third-party production ban, so goods off your tool circulate in the market
• No way to locate the tooling once the factory has closed
• Transferring title without moving the mold and overlooking the customs valuation addition

8. Tooling checklist

When you commission the tool

• Contract language links tooling payment to the transfer of title
• If amortized, the recovery volume and post-completion price are stated
• If refundable, proportional refund on partial achievement is confirmed
• Owner marking engraved on the tool body is required
• 2D and 3D drawings and the specification sheet are part of the terms
• A third-party production ban is included
• Custody responsibility and repair obligations are set
• A delivery deadline on termination is stated in days
• Assistance with export clearance is written in
• Chinese original, or translation plus governing-version clause, confirmed

While the relationship runs

• Order quantities are recorded cumulatively
• The point at which the recovery volume is reached is being tracked
• Cumulative shot count is checked periodically
• Photographs of the tool and its markings are on file
• Correspondence refers to the tool as your property

When you decide to move

• The tooling clauses were re-read before giving notice
• An alternative tool quote sets your ceiling
• Unpaid balances and claim offsets are reconciled
• A condition inspection is requested or third-party inspection arranged
• Samples from the final run before transfer are secured
• Process parameter sheets are on the list of things to demand
• Jigs, gauges and spare parts are itemised
• Export clearance assistance is in the release agreement
• Freight and new-factory setup are scheduled against your production plan

Closing - treat tooling as an asset, not as factory equipment

Think of a mold as a lump of steel sitting in someone's plant and it never becomes something you manage. What it actually is: an asset you paid to create, the thing that lets you keep making that product. The entire problem is that this asset is lying on somebody else's floor.

The failure mode is nearly always the same. During development all the attention goes to product specification and unit price, and the tool passes by on a "thank you for making it for us." The contract records the tooling amount and nothing else. Two years on, when you go to unwind the relationship, the sentence nobody wrote comes back as several thousand dollars and several months. Writing the tooling clause costs nothing; not writing it gets invoiced when you move.

If you are already trading without a contract, there is still work available today. Photograph the tool and record its asset number, reconcile your cumulative order volume, and put a line confirming ownership into your next purchase order for the factory to sign. While the relationship is good they will usually sign it without comment. That one signature changes where you start from when the negotiation eventually comes.

GreenFrog Seoul reviews tooling clauses in contracts with Chinese factories, works back through amortization terms, and supports transfer negotiations and incoming inspection. If release has already been refused, we start with securing an alternative quote and mapping the negotiation; if the tool has not been commissioned yet, we work with you from the contract language stage.