Intellectual property protection is perhaps the most challenging issue in China for almost all the distributor agreements. In order to protect the IP of our American clients, we have come up with a “no registration” provision in our distributor agreements. According to this provision, our clients exclusively hold all the rights for trademarks and other IP and the distributors can’t claim any of these rights. Distributors will not be allowed to register any IP in any way related to our client’s IP. You need to register your trademarks immediately in China, that’s why we have kept the “further protect” term in our contract.
Because of China’s strong Anti-Monopoly law, a distributor has to sell goods to third parties at a minimum resale price. For this reason, our China distribution agreements should not require your Chinese distributor to sell your goods at a certain price.
Tips on selling high-value equipment to China-
In spite of making rapid economic progress, the mindset of the Chinese companies towards the purchase of foreign equipment has not changed a great deal. Their thought process remains the same as it was twenty years ago. But if you have sharp knowledge about how they behave while purchasing high-value foreign equipment, you could easily sell your product to them and take home huge profits. The success lies in understanding their purchasing mentality and dealing with them properly.
Along with registering your trademark and design patent, take a look at the list of contacts 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 someday. Do keep in mind that while doing business in China, prevention is always better than cure.
Foreign companies doing business in China have to keep in mind that flight delays are the most common incident in China and you are definitely going to get affected by it. So you need to prepare yourself well in advance, schedule your meeting accordingly and be ready to face mass delays and flight cancellations in China.