So within your own country, you can take a production company to court if they fail to deliver on their contract. In the US, something of this price might even get the FTC involved. They production company could go bankrupt, and then you're still in the hole and your customers are in the hole, but at least there is some legal recourse that's reasonably accessible. You may also be able to get money to refund people depending on their current debts and the bankrupts process.

So if you outsource to China, what types of recourse or legal options are there. It sounds like they have a rep in China. What, if anything, can they do?