To ensure quality of the products provided by Party B to Party A, Party A and Party B hereof reach this agreement:
1、验收规则及标准： Inspection rules and standard:
Party B shall ensure that the products supplied to Party A comply with the pertinent laws and regulations and has acquired the legal qualification to produce such kind of products. Otherwise, all the legal responsibilities therefore shall be undertaken by Party B.
1.2 甲方对乙方提供的产品验收时的抽样方案按国家标准GB/T2828.1-2003《逐批检查计数抽检程序及抽样表》中一次正常抽样方案进行抽样，检查水平II 级。特殊检验: S-3 抽样方案，（0，1）判定数组。
When Party A conducts inspection on the products provided by Party B, the sampling plan shall be subject to the single normal sampling plan specified in the national standard of GB/T2828.1-2003 Sampling Procedure for Lot-by-lot Inspection by Attributes and Sampling Plan at inspection AQL II. Special inspection: S-3 sampling plan (0, 1) determinant array.
Party A shall provide Party B with related inspection standards (including inspection standard, working instruction on reliability test, inspection parameters. Refer to attachment of the agreement for details.), and check and seal the samples from Party B as basis of incoming material inspection and test. Party B shall carefully check and clarify the inspection standard of Party A, and make sure that its product quality can fully satisfy the requirements of Party A. Signing this agreement of Party B is deeded that Party B agrees on the inspection standard/test standard of Party A.
In case of any objection to related inspection standards from either party during performing this agreement, the party shall submit the related information in writing to the counterparty for negotiation, and modification will not be made unless an agreement is reached. In case of upgrading of the inspection standard, the new version will come into force at signature and seal of the two parties on the upgraded inspection standard, and the old version is invalid at the same moment.
As a professional manufacturer, technology and test measures of Party B should be superior to those of Party A. Party B shall not entirely relies on the existing test measures of Party A to guarantee the quality of the products. Therefore, Party B has the responsibilities and obligations for the quality reliability and consistency of products provided to Party A. In case of quality problems of the products from Party A due to fault of Party B (including but not limited to products returned from market for maintenance and called back from market), Party B is required to undertake minimum 50% of the responsibility.
The products supplied by Party B to Party A must be attached with outgoing inspection report of each batch to quality department of Party A.
The first piece inspection report/full inspection report is required for the first shipment of products from Party B, and 15-20 pieces of corresponding samples are also required.
2、关键原材料质量控制 Quality control on key materials
To ensure a stable and consistent quality of the products supplied by Party B to Party A, Party B shall determine and appoint special supplier of the matching materials.
Party B shall perform strict inspection on the key incoming materials. In case of no incoming material inspection condition available, Party B shall set up a strict entrusted inspection system and quality record.
Party B shall perform strict management on batch of the raw materials, and the raw materials beyond shelf life shall be strict prohibited for use.
If Party B violates relevant provisions of 2.1~2.3 thereinbefore in “quality control on key materials”, Party B shall pay RMB5,000 as compensation for breach of contract for each breaking.
In case that Party B demands to change raw materials, main auxiliary materials or material suppliers, Party B shall notify Party A in advance, and submit the related samples for test to Party A. Party B is not allowed to change the scheme for production until receiving consent in writing from Party A.
If Party A proves with reliable evidences that the supplier of Party B is unqualified, Party A has the right to request Party B to replace the supplier, or appoint supplier for Party B. If Party B refuse to cooperate with Party A, Party A has the right to suspend the qualification of Party B as a supplier till Party B’s correction satisfies Party A. If Party B has the key process contracted to a third party that is uncertified by Party A without authorization, in case of the first time found, Party B shall pay RMB20,000 as compensation for breach of contract; in case of the second time found, Party A has the right to require Party B to pay RMB30,000 as compensation for breach of contract, refuse to refund the quality and white hands deposit of Party B and suspend the qualification of Party B as a supplier till Party B’s correction satisfies Party A; in case of a third time found, Party A has the right to make no payment for the unpaid balance, and cancel the qualification of Party B as a supplier.
3、生产过程工序控制 Process Control
Party B shall set up quality control points on certain key processes of forming the final product to supervise process quality and product quality for ensuring a consistent and stable quality of the products.
If Party A thinks that it is necessary to dispatch personnel to Party B for review and supervision on production, Party B shall assists Party A in its performance.
Detailed Working Instruction if required for Party B to provide guidance on each process control during production, and it should include operation steps, method and conditions, precautions, equipment used, tool and fixture, measuring and testing devices, etc.
4、质量水平控制 Quality level control
4.1 为确保产品在使用过程中的一致性和可靠性，乙方必须实行严格的批次管理。同一批次交货产品的生产时间跨逾不能超过3 个月，否则甲方有权予以退货,甲方认可的特殊原因除外。乙方交货给甲方的产品在乙方的库存期不能超过 3 个月，否则甲方有权予以退货，甲方认可的特殊原因除外。
To ensure consistent and reliable quality of products during using, Party B is required to perform strict batch management. The production term of the products in the same shipment shall not exceed 3 months. Otherwise, Party A has the right to return the products, those caused by special reasons in the view point of Party A are excluded. The products delivered by Party B to Party A shall not be warehoused by Party B for over 3 months. Otherwise, Party A has the right to return the products, those caused by special reasons in the view point of Party A are excluded.
If Party A finds in use that nonconformance rate of the products supplied by Party B fails to satisfy industrial standard or AQL specified in the agreement, or even finds quality problems with products in batch, Party A has the right to return the products or make deduction of the payment at the highest unit price of purchase of this month when the last shipment is delivered. Furthermore , after receiving feedback information on quality from Party A, Party B shall take effective measures as improvement and remedy as soon as possible, and shall promise to submit a correction report in writing to Party A within a certain period.
Party B shall perform periodic test, reliability test and properly keep the original test record for future check by Party A strictly in compliance with the corresponding standards or requirements as per technical agreement. If Party A finds that Party B fails to provide the original test records, test data are false or no test is conducted following the requirements (Failing to present the sample of test before expiration will be deemed as no test made.), Party A has the right to return the products supplied by Party B, and claim RMB5, 000 from Party B for paying as compensation for breach of contract for each time.
When Party A finds that the raw materials supplied by Party B have quality problems, Party A shall timely notify Party B. Party B is required to organize analysis and make disposal as soon as possible after receiving the notification, and submit an analysis report within the period specified by Party A (in case of no clear requirements for time, Party B shall submit primary analysis result within 2 working days, and submit quality analysis and correction report in writing within 5 working days) to Party A. In case Party B fails in submitting the report or performing correction measures within the time promised, Party A has the right to request Party B to pay RMB200 as compensation for breach of contract. Before the quality problems are properly settled, Party A has the right to suspend payment to Party B for the unpaid balance and qualification of Party B as a supplier.
During on-site investigation made at Party B or communications between Party A and Party B hereof on quality, the correction measures promised by Party B shall be performed as scheduled. In case Party B fails to perform as scheduled, Party A has the right to request Party B to pay RMB200 for each unperformed measure of correction.
If Party B (as agent) changes the brand of supplied products without consent from Party A, Party A has the right to refuse to refund the quality and white hands deposit of Party B.
In case of OEM products supplied by Party B, approval from Party A is required. Otherwise, Party A has the right to refuse to refund the quality and white hands deposit of Party B.
If Party B sends returned products for inspection again without consent from quality engineer of Party A, Party B shall pay RMB2,000 each time as compensation for breach of contract; if the same kind of quality problems are found in other batches again after improvement of the defect material, incase of the first time, Party B shall pay RMB500 as compensation for breach of contract; in case of the second time, Party B shall pay RMB2,000 as compensation for breach of contract; in case of the third time, Party B shall pay RMB2,000 as compensation for breach of contract, and Party A has the right to suspend the qualification of Party B as a supplier; in case of any losses therefore caused to Party A, all the direct economic losses suffered by Party A shall be undertaken by Party B.
5、变更控制 Modification control
Modification level 1: If Party B requests to stop producing the raw materials to be supplied to Party A, Party B is required to notify Party A in writing 6 months in advance.
Modification level 2: In case of modification of production placse, designs, molds, key processes, materials or key auxiliary materials of Party B, Party B is required to notify Party A 3 months in advance; in case of emergent batch quality accident, Party B is required to notify Party A in writing within 2 working days after the accident takes place.
Modification level 3: In case of adjustment of production line, change of label and change of model material code, Party B is required to notify Party A in writing 1 month in advance.
Modification level 4: in case of change of principal in charge of quality or technology of Party B, change of business personnel responsible of business of Party A and change of main equipment, Party B is required to notify Party A in writing 1 week in advance; in case of restart up the products after stopping production for over 3 months, Party B is required to notify Party A in writing 1 week in advance.
If Party B fails in notifying Party A of the changes abovementioned within the specified term, Party A has the right to request Party B to pay RMB20,000 as compensation for breach of contract. In case of quality problems and losses caused to Party A, Party B shall undertake all the losses of Party A.
5.6 乙方生产甲方所需产品的模具在甲方量产后（数量2500套以上）如需改模, 乙方须持甲方供应部采购员签字的《改模通知书》方可执行。若乙方擅自改模造成的甲方损失，由乙方全额承担，同时甲方有权要求乙方支付违约金人民币贰万圆。
In case the molds of Party B for producing the products to be supplied to Party A need mold modification after mass production of Party A (with a quantity of over 2,500 sets), Party B is required to perform the modification only by Mold Modification Notice signed by purchase personnel from purchase department of Party A. In case of mold modification without authorization, all the losses therefore caused to Party A shall be undertaken by Party B. Furthermore, Party A has the right to request Party B to pay RMB20,000 as compensation for breach of contract.
6、质量责任赔偿 Quality responsibility compensation
6.1 来料批次性不良 Spoiled incoming materials based in batch
If Party A finds spoiled materials supplied by Party B during production, and nonconformance rate confirmed by Party A and Party B hereof is beyond “maximum allowable nonconformance rate for single batch (A)”, Party A has the right to require Party B to pay compensation for breach of contract. Compensation for breach of contract shall be calculated using the following formula:
Compensation for breach of contract= (actual nonconformance rate of the material － maximum allowable nonconformance rate for single batch (A)) × coefficient (B) Yuan, the upper limit of compensation for breach of contract is “upper limit of deduction for spoiled materials in batch (D)”
(Refer to the attached Control on Upper Limit of Nonconformance Rate of Material for the values of A, B and D)
If nonconformance rate is above the maximum allowable nonconformance rate for single batch, it is deemed as a defect batch. For the defect batch, Party B shall undertake expenses of Party B for rework besides the compensation for breach of contract. In case of losses caused therefore to Party A, Party B shall undertake all the direct economic losses to Party A.
6.2 严重的单个不良 Serious individual defect product
In case of serious individual defect product found by Party A during inspection and production from the materials supplied by Party B, after being confirmed by Party A and Party B hereof, Party B shall accept the returned products and pay Party A the compensation for breach of contract calculated by “deducted amount for serious individual defect product (C) × quantity of serious defect incoming material”, and make compensation to Party A for direct losses including charge of rework and selection therefore.
6.3 重工费用处理 Rework Expense Disposal
Both parties acknowledges that if products of Party A need reworking for quality problems of incoming materials supplied by Party B, Party B is required to pay Party A the rework expenses calculated as follows:
Rework expenses = unit labor cost × total man-hour spent for rework + unit drive cost × operating hour of equipment for rework + actual wastage of material + management fee
B.In case quantity of reworked devices is more than 10,000, Party B shall pay RMB50,000 as compensation for breach of contract;
Disposal of material mixing, material shortage and material excessiveness
In case of delivery made by Party B in China, the disposal will be as follows:
In case of material mixing of incoming material for a whole carton, Party B shall make compensation at ratio of 10:1 for breach of contract, meaning compensation for breach of contract = unit price × quantity of mixed materials ×10
In case of sporadic mixing of incoming materials in a carton, Party B shall make compensation at ratio of 20:1 for breach of contract, i.e. compensation for breach of contract = unit price × quantity of mixed materials ×20
In case of material mixing in batch, Party B shall make a one-off payment of RMB1,000 as compensation for breach of contract.
188.8.131.52 来料少料，若甲方在来料检验时发现少料，则A类料乙方按2：1承担违约金，B/C类料乙方按10：1承担违约金 ；若甲方在生产过程发现乙方来料少，则乙方需按1：1补料给甲方。
Shortage of incoming materials: in case of shortage of incoming materials found by Party A during inspection, Party B shall make compensation at ratio of 2:1 for Class A materials and 10:1 for Class B/C materials for breach of contract; in case of shortage of incoming materials found by Party A during production, Party B shall make supplementary supply to Party A at ratio of 1:1.
The minimum amount of compensation for breach of contract by Party B due to mixed material is RMB200 (Less than RMB200 shall be counted as RMB200.), and the maximum amount is RMB10,000.
In case of material mixing due to discordance of incoming material barcode of earphone, data cable, battery and adapter with actual products, Party B shall pay RMB1,000 as compensation for breach of contract for each case.
If materials not for Party A found in the incoming materials supplied by Party B, Party B shall pay RMB5,000 for each case as compensation for breach of contract.
In case of losses caused to Party A by mixed materials supplied by Party B, all the direct economic losses of Party A shall be undertaken by Party B.
If the actually supplied materials are more than what is stated in purchase order in quantity, Party A will dispose as inventory overage, and make no receipt or payment.
Note: Besides mixing of various materials, material mixing also refers to mixing of materials before and after technical change.
In case of delivery made by Party B offshore, the disposal method is as follows:
If the actually supplied materials are more than what is stated in purchase order in quantity, Party A will dispose as inventory overage, and make no receipt or payment; in case of shortage of incoming material supplied by Party B, Party B shall make supplementary supply to Party A to meet the purchase order.
In case of mixed material supplied by Party B, Party A shall receive the shipment by quantity actually counted for products required to deliver. For difference between the actually counted quantity and the quantity required to deliver, it shall be disposed under the provision of 184.108.40.206.
In case of losses caused to Party A due to nonconformance of quantity of material and mixed materials supplied by Party B (including but not limited to customs fine and confiscation and quality accident), Party B shall undertake all the direct economic losses of Party A.
Note: Besides mixing of various materials, material mixing also refers to mixing of materials before and after technical change.
6.5 实验不合格的处理 Disposal of materials failing in test
If the products supplied by Party B to Party A fail to pass the type test of Party A, Party A has the right to return the whole batch of products; in case of the same kind of problem existing after improvement of Party B, Party B shall pay RMB500 for the first time as compensation for breach of contract, RMB1,000 for the second time and RMB2,000 for the third time, meanwhile, Party A has the right to suspend the qualification of Party B as a supplier; in case of losses therefore caused to Party A, Party B shall undertake all the direct economic losses suffered by Party A therefore.
6.6安规及认证要求 Requirements for safety and certification
If the materials demanded to satisfy requirements for safety fail to pass the inspection conducted by a third party testing institute approved by both parties, Party B shall undertake all the economic losses therefore to Party A, and shall also pay RMB100,000 each time as compensation for breach of contract.
In case that certification by related departments of the state is required for the material supplied by Party B to Party A, Party B shall submit all the certification information in compliance with the national standards; in case of change or abnormality of product certificate of Party B, Party B shall timely notify Party A. In case of losses caused to Party A due to fault of Party B, Party B is required to undertake all the losses therefore to Party A, and pay RMB100,000 for each time as compensation for breach of contract. Before Party B makes compensation to Party A for the abovementioned losses and performs specified obligations, Party A has the right to suspend the qualification of Party B as a supplier and payment of all the unpaid balance and deduct the quality and white hands deposit of Party B.
7、一般条款 General Provisions
I In case of any upgraded agreement, the old version of agreement shall be automatically terminated as long as the new version of agreement signed.
Provided any article in this agreement is adjudged as unenforceable in certain aspects by judicial authority while the unenforceability has no material influences on responsibilities and obligations of both parties, the balance of this agreement shall remain valid and enforceable.
This agreement is made in duplicate. Party A and Party B shall hold one original each. The agreement will come into force at signature and seal of both parties.
This agreement is construed in accordance with, enforced pursuant to and governed by laws of the People’s Republic of China. Any dispute arising from this agreement shall be settled through consultations. In case no agreement reached by the two parties, the case in dispute shall then be submitted to the local people’s court in the location of Party A.