How You Can Stop China Manufacturers From Counterfeiting Your Product

Technology has given China’s lightning-fast copycats the ability to make convincing fake products while the Internet has made it easier to sell counterfeit products. China remains the hub for counterfeits, manufacturing and exporting the vast majority of counterfeits that flood the U.S. and European markets.

The most frequent complaint that China lawyers receive from their clients is the problem a foreign company faces with its China manufacturer. The entire problem becomes even more severe when a China based manufacturer starts producing the product of the foreign company and giving them competition in their home market. The counterfeits and the risks they pose will ruin any company’s reputation, damage its goodwill, and cause potentially costly litigation.

How counterfeit products are produced in China?

It is an interesting fact that most of the fake products come from the entities and people you work with in China. Primarily in most cases it is the manufacturer but it could also be your retailer, distributor, your existing or previous employee or the company with whom you are doing business. Knock-offs tend to be made in either a registered factory that makes them on the “third shift” after the legitimate product is made, shipping the counterfeits out the back door when no one is looking. Or then there’s the purely clandestine factory that has no relation to the original product.

China lawyers suggest two possible remedies to tackle this situation-

Remedy 1- Make an arrangement in your manufacturing agreement that may prevent the China based manufacturing company from producing and selling your product and from using your trade name or your logos.

Remedy 2- Register your brand name as a trademark in China and wherever you sell your products. It will keep the China manufacturer away from counterfeiting your product and selling them anywhere.

When it comes to anti-counterfeiting actions, registration is much more than a check-the-box exercise. As a general rule, if a trademark, patent, or design has not been registered in China with the proper agency, any anti-counterfeiting program, no matter how sophisticated, will come to naught as there is very little chance that Chinese enforcement agencies will be willing to conduct raids or prosecutions. Qualify one factory before communicating your product information. Check their references if possible. Audit their production facilities. Check their design & engineering capabilities if you need custom development.

Because fakes are getting better sometimes even coming in lookalike packaging it’s a good idea to include secret features that distinguish your products from Knock-offs, especially if you’re worried about liability suits resulting from counterfeits.

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How to Harness the Limitless Business Opportunities that China Offers

The U.S.- based businesses can immensely get benefited by forming a partnership with the companies in China to improve their supply chain, given China’s highly sophisticated manufacturing industry. The country has become the epicenter of manufacturing of all types of goods. With more and more American companies looking to unlock investment opportunities in China, it is a good time to discuss the topic of doing business in this country.

Identify the market fit for you-

In terms of language, culture, developmental stage, demographics, local government, geography and multiple factors at a micro level, People’s Republic of China is a collection of many markets. Whether it is a second or third tier market, almost all the markets in China offer promising business prospects and unique opportunities. Business owners need to identify a target market from where they can expect a massive scope for their businesses. By conducting proper research, you can take the best business decision and design the best strategy in China.

Collaborate with long-term goals in mind-

U.S. companies need to be pragmatic and they should analyze the Chinese market separately to their home market. Collaborating with the Chinese companies with a long-term goal in mind is the strategy American business owners can adopt for a stable success. It has been noted that China is entering a period of more managed growth. American entrepreneurs need to come up with a well-planned business strategy to cash in the maximum out of the Chinese market.

Engage local partners-

In order to get a good foothold in China, hire local partners and learn from them. They could be the guide for you offer brilliant investment opportunities, perfectly describe you the logistical/political/ cultural hurdles and finally could work on behalf of you in forming a business relationship with the Chinese companies or manufacturers. You could utilize their long time experience for penetrating complex Chinese market. Selecting a reliable local partner could be tricky, but once you got one, you could be sure of making a hefty profit from your investment.

Try to understand the business culture and etiquette of the Chinese people-

American companies that are doing good business in China have taken a decent amount of time in understanding the Chinese culture and etiquette. Chinese business people will expect you to be well aware of their mode of doing business and their culture. Fostering good relationships with the right people is key to success in China. It can be disastrous if the officials of the Western companies frequently underestimate their China partners and counterparts. It is advised to pay genuine respect to protocol and tradition of this country.

Things to be aware of-

Although China is considered to be the most lucrative destination and an important market for majority of the American companies, but still there are so many things companies must be aware of such as-

  • Political and legal barriers
  • Quality control
  • Scams
  • Language and cultural barriers

Economically, China has a large effective market for an investor to develop. Harnessing the limitless business opportunities that China offers is only possible if the American business owners skilfully navigate the many linguistic, geographic, cultural and political differences present in Chinese culture.

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