Factory Due Diligence I

Dan Harris put up a blog post last week on a factory inspection checklist that can certainly begin a discussion

I want to note what he has on many occasions and so did not in this case.

Before you tell anything to a China supplier, have you made a plan to protect your trademark, product idea, technology, and other IP from the China contact’s cousin?

When you think you might someday go to China, that is the day to start registering your trademark and possibly patenting your product in China as well. The process takes about a year.  It is not very difficult or expensive and so worth your effort.  Refer to Apple for a famous case or results of not doing this the valid Chinese way. Proview Shenzhen registered the Ipad trademark first in China and owns it even though its headquarters in Taiwan sold the trademark to Apple.  No Chinese court will back a case from outside China like this. What was Apple thinking?   I would guess that Apple is offering $50,000 and Proview is asking for $100 M.  Apple will be forced to settle or stop selling Ipad’s in China.  Ultimately, it could be forced to stop producing them in China if they do not settle with Proview.

So if you were Chinese, and knew about a US company that had interest in production or sale in China, what would you do? Handle the simple legal steps before you come through a reputable agency who can find you an honest local lawyer.  If you have already started, then fill this gap as fast as you can.

If you come to China, then use Chinese thinking and the Chinese system to protect yourself.  Using your Bloomington thinking will not help you.

Once you have acted on your IP plan, and know how to safely talk to any Chinese organization,  then you or your agent can start to talk to suppliers, distributors, and other China stakeholders. Do your planning on IP before you talk to any Chinese group. It will save you from a lot of unpleasant and potentially ruinous results.


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Posted in: China, Chinese Culture, Market Entry, Quality, Sourcing

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