Epic Production Problems With Manufacturer

Charleston-based kayak company sues Chinese manufacturer By Andy Owens

aowens@scbiznews.com

Published Dec. 10, 2008

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."