Retention of title when you sell goods on credit to a Chinese customer

A Chinese sales contract may keep the goods yours until the buyer pays (所有权保留). Unregistered, it fails against good-faith third parties and gives no priority against attaching creditors or in the buyer’s bankruptcy. The seller registers it online with the People’s Bank of China. Once 75% is paid, the goods cannot be taken back.

You are about to ship a container of goods to a new distributor in China, with part of the price paid up front and the balance due 60 days after delivery. The contract says the goods stay yours until you are paid, which feels like security for the balance. It is security against the distributor. Against a creditor who has the goods attached, or in the distributor’s bankruptcy, an unregistered clause gives you no priority at all. Registration is an online form on a register run by the People’s Bank of China, and the seller fills it in.

Does a retention of title clause work in China?

Yes, between you and the buyer. A sales contract may provide that the goods remain the seller’s until the buyer pays the price or performs another obligation. Chinese law calls this retention of title (所有权保留, suǒyǒuquán bǎoliú). Unregistered, the retained title cannot be asserted against a third party acting in good faith (Civil Code, Article 641).^⁠[1] It works for goods only: a court will not apply it to land or buildings.^⁠[2]

The Supreme People’s Court treats the clause as security for the price, and its interpretation of the guarantee rules covers disputes over that function.^⁠[3] That is why the question that decides most cases is not what the clause says, but whether it was registered.

What happens if the clause is not registered?

The Supreme People’s Court answers by pointing to its rule for an unregistered mortgage over goods, and applies that rule to retained title.^⁠[3] The result depends on who is on the other side.

Who you are up against	What the court does
Someone the buyer transferred the goods to, who has taken possession	Does not support your claim, unless you prove they knew or should have known of your retained title
Someone the buyer leased the goods to, who has taken possession	The lease stands, unless you prove the lessee knew or should have known
The buyer’s other creditors, once a court has ordered the goods preserved or enforced against	Does not support your claim to be paid first
The buyer’s bankruptcy	Does not support your claim to be paid first

The last two rows carry no exception for what the creditor or the liquidator knew. A distributor in trouble is precisely when the clause is needed, and those are the two rows that apply.

In the buyer’s bankruptcy, plan on an unregistered clause leaving you an ordinary creditor. The Supreme People’s Court’s bankruptcy rules, in the version in force since 1 January 2021, still let a seller who retained title take the goods back through the liquidator, and do not mention registration.^⁠[4,5] Sun Chao of the Supreme People’s Court, writing in People’s Judicature in 2022, reads them with Article 67.^⁠[6]

On his reading, an unregistered seller can neither take the goods back nor be paid first, and is paid alongside the buyer’s ordinary creditors.^⁠[6] Zhang Jing, writing in The Jurist in 2023, also treats the bankruptcy rules as covering a registered clause only.^⁠[7] Sun records the opposite view too, that a seller who still owns the goods can take them back in bankruptcy whether or not it registered.^⁠[6] A registered clause does not depend on which view a court takes.

How do you register retention of title in China?

Online, on the Credit Reference Center’s unified registry, known as 中登网 (zhongdengwang.org.cn). Retention of title is one of the types it registers, and the seller is the one who registers.^⁠[8,9] On 14 October 2026 the Center said that it provides the registration and search only through that site, and that it has authorised no third party to offer them.^⁠[10]

1. Agree the content with the buyer first. The seller registers, but the measures require it to agree what is registered with the buyer beforehand.^⁠[8] The contract is the natural place for that agreement.
2. Register as a user of the system, then enter both parties’ details. For a Chinese company that means its legal registered name, address, legal representative and codes such as the unified social credit code.^⁠[8]
3. Describe the goods. A general description is allowed if it reasonably identifies them.^⁠[8]
4. Choose the term: at least one month and at most 30 years, set by reference to when the price falls due. It can be renewed before it expires, more than once.^⁠[8]
5. Keep it current. If the buyer’s legal name changes, amend the registration within 4 months. Once you are paid, cancel it within 10 working days.^⁠[8]

The registry does no prior approval and no substantive review, and a wrong name or a description that does not identify the goods is the parties’ own risk.^⁠[8] Searches run on the buyer’s legal registered name, so the Chinese name has to be exact. It is on the buyer’s business licence, and how a Chinese business licence is translated shows where the name and the 18-character code sit.

When can you take the goods back, and when can you not?

Unless the contract says otherwise, you can take them back when one of three things happens and causes you loss. The buyer fails to pay as agreed and still has not paid within a reasonable period after a reminder. It fails to meet a condition the contract sets. Or it sells, pledges or otherwise improperly disposes of the goods.^⁠[1]

The buyer may then redeem them by putting right what caused you to take them back, within the agreed period or a reasonable one you set. If it does not, you may sell them at a reasonable price, keep what the buyer owes and your costs, and return any surplus. A shortfall stays owed by the buyer.^⁠[1]

Two limits cut the right short. Once the buyer has paid 75% or more of the total price, a court will not support taking the goods back. And where the buyer has sold the goods on to someone who acquired them in good faith, they cannot be recovered from that person.^⁠[2] For a distributor, whose business is reselling, the second limit means the clause mainly protects stock still on its shelves.

Say a Danish furniture brand sells RMB 800,000 of chairs to a Shanghai distributor, delivered on 3 November 2026. The distributor paid 30%, RMB 240,000, before shipping, and owes RMB 560,000 by 2 January 2027.

If the distributor already has a registered floating charge to its bank, the brand registers by 13 November to rank ahead of it on these chairs. On 2 January the distributor pays RMB 400,000 and stops. It has now paid RMB 640,000, 80% of the price, so the right to take the chairs back has gone.^⁠[2] The RMB 160,000 is still owed, but as an unsecured debt.

The up-front payment and the schedule therefore decide how long the clause is worth anything. A large up-front payment shortens the window in which retention of title protects you; a schedule that keeps more than a quarter of the price outstanding for longer widens it.

What should we check in the sales contract before signing?

The clause itself is a few lines. What makes it usable sits elsewhere in the contract, in both language versions.

Point	Why it matters
The clause in the Chinese version	If the Chinese text prevails, the retention of title has to be in it, in the same terms
The buyer’s agreement to registration	The seller may register only content agreed with the buyer
The buyer’s exact legal name and credit code	The registration is searched by that name; an error is the parties’ risk
A description of the goods	It must reasonably identify them, in the contract and on the register
Up-front payment and schedule	Retrieval ends once 75% of the price is paid
Reminder and conditions	Taking goods back for non-payment follows a reminder and a reasonable period; other triggers are the conditions the contract sets
Instalments	With at least three payments, if overdue instalments reach one fifth of the price and stay unpaid a reasonable time after a reminder, the seller may demand the whole price or terminate
Delivery date	Registration within 10 days after delivery ranks ahead of an earlier floating charge, and of a charge the buyer grants over the goods before paying

Where the two versions differ, which language version of a bilingual contract prevails sets out how that is decided. A contract commercial review reads the payment, title and delivery terms together, in English and Chinese, and lists what to ask the buyer for before you sign. How the money itself reaches you is covered in how Chinese customers pay foreign companies.

Our contract is under English law. Does any of this apply?

The law of the contract and the law of rights in the goods are separate choices. Chinese law lets the parties choose the law for rights in movable goods; without that choice, it applies the law of the place where the goods are when the relevant event happens. For goods in transit the default is the law of the destination (Choice of Law Act, Article 38).^⁠[11] Goods sitting in a Shanghai warehouse when the distributor fails are in China.

No provision read for this page says whether a foreign law chosen by seller and buyer would bind the buyer’s Chinese creditors or its liquidator, who chose nothing. Registration in China answers the question whichever way a court would decide it. The wider choice is set out in whether a contract with a Chinese company can be governed by English law.

Can a foreign seller register on the Chinese registry itself?

The measures say the seller registers as a user of the system and may appoint someone else to register on its behalf.^⁠[8] On 27 October 2026 we found no official page setting out which documents a company incorporated outside China provides to open a user account, and no published fee schedule. Both are worth confirming on zhongdengwang.org.cn before the contract fixes who registers and by when.

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