[yaix]

What you describe is a quite normal business relationship with a Chinese company.

There is always the "unreasonable counter offer" once they know there is almost no way back for you. There is always yelling (but not insulting!), that's a normal part of the negotiation process.

It sounds to me like your "manufacturer" is already the distrubutor of whatever-pen-you-invented in Asia. Its not uncommon that they produce for their client and then produce another batch for themselves and sell it in China. Kinda like Zuckerberg did when he made Facebook while "working for" some other dudes. Standard practise in China.

Anyway, producing something inovative in China usually means having somebody there to check up in person and each step of the way. And spell out the contract very precisely down to the last screw. Never expect "reasonableness", it is always seen as an opportunity to make a few extra bucks. And a mainland Chinese company boss will discuss for a whole day to gain 10 Kuai extra.

Ymmv, that's only my personal experience after some years in China.

[ktizo]

producing something inovative in China usually means having somebody there to check up in person and each step of the way

That sounds a lot like getting something innovative made anywhere in the world. If you are producing your first batch of any innovative product, make sure you hire a very very chilled out and friendly expert who can speak the same language as the manufacturer, and who can virtually camp next to the factory for the first three batches. If you don't do this, then you are either making something easy with large margins and don't care about wastage, or you just don't care.