Chinese manufacturers that produce OEM products for the European and American companies often make their own products for selling directly to consumers. The emergence and popularity of online marketplace, have made this practice even more easier.
The problem has reached to such an extent that every week China lawyers received emails from the foreign companies seeking advice as their Chinese counterpart has registered their trademark or patent in China and selling their product at an astonishingly low price. It is a common incident when it is noted that China manufacturer has become a direct competitor of the foreign company in the global market. But it is only the one aspect, there are also incidents reported where a foreign company put immense faith to their Chinese factory and can’t even think of spending money to resist them from competing with them. They don’t want to make their Chinese friends sign a contract that may prevent them duping them in future as it may harm their amicable relationship.
But this approach from the foreign company is entirely wrong. There is no way of breaching trust or losing friendliness if you ask your Chinese partner to sign such a contract as it has become a normal practice in China. Any shyness from your end will be considered as your ignorance and you would be viewed as suckers. Thing changes quite rapidly, and the relationship that started so graciously will take seconds to turn sour. Having a precaution in advance will only help you to strengthen your ties with the Chinese manufacturer. Signing out an agreement contract will prove fruitful to both of you in the long run. Along with registering your trademark and design patent, take a look at the list of contracts you can ask your Chinese partner to sign as a preventive measure:
- China Manufacturing Contracts: OEM, CM, and ODM Arrangements
- China NNN Agreements
- China Product Development Agreements
As selling products online have become so easier, there is a great chance that the manufacturer you have trusted with the technology, know-how and molds of your product, might betray and directly sell them to your target audience. After acquiring the complete knowledge of your product, it takes only seconds for your Chinese manufacturer to become your biggest challenger. As it is you who is giving your product idea to the Chinese farm, it is always a clever idea to impose some sort of restriction on them in case they betray you some day. Do keep in mind that while doing business in China, prevention is always better than cure.