Charleston-based kayak company sues Chinese manufacturer
By Andy Owens
aowens@scbiznews.com
Published Dec. 10, 2008
Editor's note: Flying Eagle Boat Co. responded to a request for comment, which was made after this story was published. Their response is at the end of this story.
A Charleston-based company that sells kayaks around the world has filed a lawsuit against its Chinese manufacturer after the manufacturer refused to release Epic Kayaks’ proprietary kayak molds and threatened to put the company out of business in China.
Greg Barton, a two-time Olympic gold and bronze medalist and co-owner of Epic Kayaks, said several American companies doing business in China find themselves embroiled in similar conflicts when they try to end a business relationship with a Chinese manufacturer.
Now, he’s concerned about getting a fair hearing in a Chinese court. Barton and his partner hired attorneys overseas and hope, by taking a legal route, that Fuyang-based Flying Eagle will be pressured to come to an agreement.
“Can we get a fair trial in a Chinese court — an American company going against a Chinese company? Even if we do, are we going to be allowed to conduct business in the same area?” Barton said. “They’ve said they can put us out of business or make it impossible for us to do business in that area.”
The dispute began over project management and pricing in July, some three years after Epic moved its production to Fuyang, an industrial city south of Shanghai. Flying Eagle manufacturers the rowing shells that many national teams used at the 2008 Beijing Olympics.
The dispute led Epic to try to dissolve its business relationship with Flying Eagle and find a new factory in Fuyang. But four months after agreeing in principle to a separation agreement, Flying Eagle refused to release Epic’s molds and equipment unless it received “hugely inflated, ever-changing fees that, if paid, would sink the company,” Epic said in a statement.
Barton has spent the past three months in China trying to negotiate a settlement and has spent nearly half this year dealing with production in China. As the demands of Flying Eagle kept escalating, including clauses that could potentially leave Epic vulnerable to penalties up to $1 million, Barton said it became clear Flying Eagle officials thought they had Epic “over a barrel.”
Epic filed a lawsuit in the intermediate level court in Hangzhou rather than agree to pay a “ransom” for its proprietary property and equipment.
“It’s definitely going to have a significant impact on our cash flow and hurt us quite a bit,” Barton said. “It’s already hurt us for several months.”
Barton said Epic Kayaks has some inventory in the United States and in Europe, so the company is able to fill some orders. Epic produces high-performance paddles and kayaks and was born out of a desire to bring modern, well-designed racing technology to touring kayaks.
“It’s definitely costing some money but not nearly the value of what they’re holding on to,” Barton said. “Unless we’re able to secure, very quickly, the release of our molds and things, we’re going to be rebuilding some of those.”
Editor's note: Flying Eagle Boat Co. responded to a request for comment, which was made after this story was published. Frank Xiong, managing director for Flying Eagle, e-mailed the following statement to the Business Journal:
Dear Sirs,
By receiving many of notes from our overseas friends, other business partners etc.., Flying Eagle is now fully awared on the actions Epic is taking in the state, which is obviously unacceptable by Flying Eagle as these one-sided info are starting to damage our company's reputation ! Anyhow, we have today called our lawyer in and we will start to do something to defend ourself against Epic's slander !
Mr.Owen, I hope you would agree to this that by having the honorary title of "2-times Olympic Gold Medal Winner", it doesn't mean whatever Greg talked about Flying Eagle is correct ! I have already read several his articles and I can tell you now right away that alot of his info are not true ! Frankly speaking, the story between Epic & Flying Eagle is much longer and interesting than the short article he has published, why doesn't Greg try to expose the COMPLETE story ??? Nevertheless, if Greg is not willing to do that, then Flying Eagle will do it for him !
I'm positive that things will start to be clarified more clearly by the time everybody could read the fully & true story !
Thanks and Regards
Frank. Xiong
Managing Director
FuYang Flying Eagle Boat Co., Ltd.
Do you give this article a thumbs up?
Yes
Comments:
Added:
10 Dec 2008
Overseas ventures require extra attention and care. I don't think Mr. Z could have done anything differently, and we wish him well with his recourse. As we do a lot of contract manufacturing in China for US companies, we have seen many instances such as this. It is unfortunate as it increases the skepticism that offshore manufacturing is too risky to take with the benefits.
John Hurlbert
Added:
10 Dec 2008
Good piece Andy. The vast differences between the Chinese legal system and their regard (or lack thereof) for intellectual property rights and those of Americans are certainly at play here. It also would be interesting to find out if Mr. Barton engaged in any "ganbei" which usually cements a working relationship with the Chinese.
Looking forward to following this story as it develops,
LB
Lydia Dishman
Added:
11 Dec 2008
well..if he is charging good money for high end product like his kyaks. why not find a good reliable manufracturing company in a part of the world that will enjoy long term relationship.
it seems to me to many companies flock to china to seek deep discounts in manufracturing and now get cough up in one sided laws.
i hate to here this and hope that companies relise all that is cheep is not good and fair for them. look in places that laws and contracts are fair and equal.
me
Added:
12 Dec 2008
Move production to the US-we need the jobs. *I love the sticker at the bottom of my Hurricane: "Made in a little town on the east coast of the US." Alright now.
Tom
Added:
12 Dec 2008
Hope they saved a ton of money hiring that company. Wonder how much it would have cost them to just hire Americans? Perhaps it would have been a little less profit intially, but if you got money to burn on foreign ventures, have at it. I would like to see the cost benefit analysis of hiring dedicated made in America workers vs sueing to get your own property back. I would really love to feel sorry for them, but let me check my sorry meter... nope didn't move.
Greg
Added:
12 Dec 2008
Earlier this year I was considering purchasing a Current Designs Vision Series kevlar kayak until I saw that little label that said made in China plus the fact that they could customize it with the outfitting I wanted. I must say the price was good though.
Gary
Added:
12 Dec 2008
As they say, "pay me now, or pay me later".
Manufacturers and consumers need to realize that the cheap "China price" is a result of poorly paid labor and lax economic, environmental and legal regulation. The number on the initial price tag may be low, but in the end we all pay a premium. Let's try to get back on track and see if we can manufacture some products back home produced by fairly-paid workers and following modern USA business and environmental rules. The retail price may be a bit higher, but as they say, "pay me now....."
Christopher
Added:
12 Dec 2008
Wish him luck. Trouble seems to be most American consumers will not pay extra for locally produced products.
Chuck Freedman
Added:
12 Dec 2008
Are there no products imported from China
that are free of defects, problems, or major
annoyances? Dog food, baby toys and now, hea-
ven help us, kayaks. Is nothing sacred? Build
them here and I'll buy one.
Robin Pomerantz
Added:
13 Dec 2008
I hope they can realize a good solution, but I also think more effort should be made toward producing well-designed and long-lasting products targetted for the USA market in the USA. Some like companies seem to be doing fine manufacturing here, and we need to encourage others to look at those business models and consider the same. I think effectively educated American paddlers will pay a bit more for high quality USA produced products on either the new or used markets.
Rick Zablocki
Added:
13 Dec 2008
This is another example of the cost of seeking profit over social responsiblity. I bet Mr Barton moved his company to China to get around the environmental protection laws here in the U.S. in order to maximize profits. Look where it got him! I personally avoid buying products made in China due to such concerns. Maybe if consumers would boycott Chinese manufactured goods we could get more jobs back here in our country.
Christophe Cargile
Added:
13 Dec 2008
I like where my YELLOW AVATAR IS MADE!
Mr.Elmer Fudd
Added:
13 Dec 2008
So; you moved your production to China(presumably from the US as it lists a Charlestown Based manufacturer of kayaks)because you thought you'd get a great deal with far lower production costs and a foot in the door on Chinas market.
Foolish American.
It did not work for GM and it will not work for you.
No sympathy.
Richard McCarthy
Added:
14 Dec 2008
Some good comments here. Mr. Barton made a business decision that took his product to China like so many other U.S. businesses. The unfortunate happenstance is that China is not America and they can and will do pretty much what they want with smaller U.S. companies. Nike, Microsoft and Apple have the clout to deal with the Chinese, I'm certain Epic kayaks does not. It would take a concerted effort by many U.S. businesses to pull out of China and find a friendlier domain, perhaps making an impact. Perhaps not. I hope there's something else out there.
David R
Added:
15 Dec 2008
I have found that second hand American products are better than brand new Cinese.Looks like greed to the Charleston based kyak company came back to bite him in their aft section.My advise to the public, "Buy American, if not new, used." China is slowly taking over our country and our greed is letting it happen. Time to draw a line in the sand and support the workforce of our own country.
Dan Lugo
Added:
15 Dec 2008
How long will it take for american businesses to learn that the Chinese system of business is built on deceit and out right theft of products and design. Some of the aircraft manufacturers found this out several years ago, but the lesson went into the air like a puff of smoke, when the thought of cheap labor came into play. The real shame,is that we no longer make stuff in the U.S., so it is not possible to buy American for many items. American memory is very short lived.
Bob
Added:
15 Dec 2008
When I was in the government managing intellectual property issues for the U.S. Embassy, we would typically advise clients, if their business model supported it, to carefully consider the risk of transfering proprietary tools, molds or formulation information to Chinese partners. Not all business models support such an approach. The American Chamber of Commerce in Beijing conducts an annual survey on commercial isues, including intellectual property, which also shows a similar reluctance to manufacture certain proprietary products. Non-disclosure or material transfer agreements, design or other forms of patents, copyright protection for aesthetic elements or blueprints, and trademarks of various kinds as well as using Chinese Customs and other remedies against infringing exports, may be important tools to consider depending on the nature of the problem.
Contrary to popular assumptions however, IP litigation is quite common in China. China is probably the most litigious society for intellectual property in the world at this time. The Chinese trademark office has been the largest in the world for years, and the Chinese patent office is one of the most rapidly growing and one of the world's five largest. Most of the rights holders are Chinese, nor foreign.
It is also widely recognized that foreign litigation in Chinese courts carries unique challenges, which may explain why foreigners typically constitute less than 5% of the total litigants in Chinese courts - the majority of cases are Chinese companies suing Chinese. U.S. reluctance to litigate in China may also be responsible for the rapid increase in foreign (non-Chinese) litigation involving imports of Chinese goods into foreign countries, which can also be an important tool to deal with infringements.
Finally, American companies should not further weaken their position by failing to secure the basic intellectual property or contractual rights that protect them in the U.S. or other overseas markets. There are also certain unique forms of protection in China that are not commonly found in other parts of the world which can offer some relatively inexpensive tools, many of which can be cost-effective. Absent securing those rights, their is little that can be done by private lawyers, and even government officials may also be reluctant to inquire about the status of the case as well.
Obviously legal advice should be obtained from qualified counsel, these are simply some general observations. I don't know anything of the facts of this case.
Mark Cohen
Mark Cohen
Added:
15 Dec 2008
Greg, Brian, Hope to see this article expanded into the Paddler Magazine along with kayaking web sites. Good lesson for all of us in dealing with Red China. While I deeply respect Greg and Brian on their Kayaking prowess, I have little empathy for Epic's business plan.
Brian, you of all people should know better taking business out of America. As a partner with Epic did you raise concerns about manufacturing over to China? Where was the research on reliability in dealing with the country?
In your line of work Brian, respectfully recommend looking up the former Civil Servant and now contractor who goes by the name "Dice Man". His 30 minute presentation is independent of politics, but drives home the point that China looks solely out for China. I can forward his DVD upon request. Let the buyer beware.
Regards, Mark
Mark Woodside
Added:
16 Dec 2008
There is nothing more expensive than cheap labor...
Paul
Added:
17 Dec 2008
Lower the bottom line, export jobs to pay a lower wage, get around environmental issues, no health care expenses, no workman's comp insurance, lower quality products, for what! Profit of course. Do you really believe that the lower cost was passed on to us consumers or into the pockets of the CEO and share holders.
Jim
Added:
17 Dec 2008
Export jobs from America for cheap labor, no health benefits to pay for, no workers comp insurance payments, build a quality product cheaper? All of the savings from using unskilled Chinese prison labor were passed on to the consumer right? More than likely into the pockets of the company president and share holders. Nothing like free enterprise to allow skilled American workers the chance to earn a decent wage only to have jobs out sourced for greed. WAY TO GO WHITE COLLAR AMERICANS! WHERE'S YOUR SENSE OF PATRIOTISM?
Jim S
Added:
17 Dec 2008
would be interested in hearing from the China side and see what the story is from other side... have checked F.E's website and it looks like a great company also.... where & what is the TRUE story ?!
James.K
Added:
17 Dec 2008
I own two American made kayaks (Folbot) and six American made paddles (Bending Brnaches & Folbot). I also own a Canadian made paddle (Simon River).
I hope I'm setting a good example for all.
John
Added:
17 Dec 2008
I have some insight and there are two sides to this story. Mr Barton is well aware that his former Chinese partner does not read the US media coverage with his spin and has no chance of defending themselves to this one sided attack all accepted as facts by Charleston Business.
I know Chinese companies do not go to court easily and would not take this conflict without good cause. Flying Eagle is one of the largest composite manufacturers in the world and a highly respected company. They are in close connection with the International Federation of Rowing Associations etc. Just because they are Chinese does not automatically the bad guys!
Has Mr Andy Owens sought comment from Flying Eagle as is his journalistic responsibility? Is he interested in that side of the story? Making his Charlston based friends the bad guys? I guess not. It's easy enough Mr Owens. Just call Mr Frank Xiong, Managing Director at Flying Eagle. Phone 01186-571-63431801, e-mail: frank@wudiboat.com. Thats public information at www.wudiboat.com. I got that in 10 seconds by googling. Will be interesting to see if Charleston Business does a follow up on this. How about "Charleston Based kayak company leaves Chinese partner with a pile of unpaid bills" or similar!
If I represented Flying Eagle I would sue the Charleston Business for slander.
Respectfully Adam Wang, Columbia, S.C
Adam Wang
Added:
17 Dec 2008
Adam, You're right. I just sent e-mail to Frank Xiong and Fei Xiong at Flying Eagle requesting comment. Will update story.
Andy
Added:
17 Dec 2008
Thanks Andy. I appreciate that. It just feels like US media (and the public) can hammer the Chinese at will with an enthusiastic racist relish. And get away with it!
Adam Wang
Added:
17 Dec 2008
Quite frankly, i have tried for the past couple of years to buy North American made. There are just too many poor products coming out of China.
I remember a few decades ago when Japan put cheap (mediocer) products on the market...at least they learned to produce quality products, but quite frankly, i don't think China will ever learn.
Heinz Mayr
Added:
17 Dec 2008
Just because something is American made doesn't mean it is high quality. GM, Ford, and Chrysler are in big trouble right now because they have not kept pace with increasing quality from Japan and Korea. The US has it's share of shoddy workmanship and scams.
Buy quality. The manufacturers will get the message.
CanUCanoe
Added:
19 Dec 2008
The Business Journal has received comments from Flying Eagle's managing director. I'm going to put them at the end of the story. We're also working on a follow up and will ask some of the questions that have been posed here.
Andy
Added:
19 Dec 2008
On to Antarctica, the next outsource frontier!
Cheers,
Rob G
Rob G
Added:
21 Dec 2008
Folks, who have left comments, and the author. Please note that Epic moved manufacture of the kayaks from South Africa to China. Mr. Barton's partner, champion Oscar Chalupsky is from South Africa. (never manufactured in the U.S.) I do not know the manufacturing history of their kayak paddles.
I have no connection to Epic other than I know they make awesome kayaks and that I would love to own (one).
Bill Guiffre
Mt. Pleasant, SC
Bill Guiffre
Added:
21 Dec 2008
Bill,
Thanks for the information. I know that when I called Greg about this story, he told me that they did business all over the world and a lot of their sales came from Australia. I didn't ask him why he and his partner chose to do business with a Chinese company, but I think a statewide story about S.C. businesses doing business with Chinese companies and in other countries might have some interest. Certainly, not every company does business in China just to cut costs. As the original story noted, Flying Eagle made some of the shells used at the Beijing Olympics.
Thanks,
Andy
Added:
23 Dec 2008
I feel for the Epic guys on a personal level, cause I know they want to make good stuff but why to I still keep smiling ?
The Flying Eagle response sounds like Epic just kicked a Hornests nest.
Good luck from the little guys @ onnopaddles
Patrick Works
Added:
23 Dec 2008
Thanks Adam Wang.. we get a little carried away. You now have put some perspective on the subject.
China does make excellent product and at a price that a bussiness can not turn down. Epic made a huge profit with their dealings in China.. just a pity the comsumer didn't get a better deal...from Epic.
Still Epic has a great product.... and it is all about making a buck.
A word to Epic..quit while you are way ahead?
Aquaticmad
Added:
24 Dec 2008
"Ganbei!" = "Bottoms up!"
Pun intented for the watercraft crowd I 'spose.
Mike
Added:
26 Dec 2008
I wish people would inform themselves a bit more before posting the comment " you moved US jobs to China",, Epic never built their boats in the US, they used to build them in South Africa prior to moving to China,,, these "jobs" were never lost to the US employess, they were never here to start with. People just cast judgement on a subject they apparently have no knowledge about.
Will
Leave New Comment
