Many small and medium-sized OEMs
manufacturing / outsourcing in China does not take the necessary measures to
protect yourself. When problems arise, little or nothing can be done to
protect themselves because they have no legal basis to protect themselves. The fact is, outsourcing disputes must be resolved in China, under the Chinese legal system. The Chinese legal system has improved a lot in the last ten years and taking
A few basic legal steps can greatly reduce your risk. The cost of such
the protection is modest compared to the protection it will provide.
The following five basic steps will greatly reduce your problems with
Chinese manufacturers, while improving your chances of recovery in case of
problems arise.
1. Create and properly register your intellectual property rights in
the United States. If you do not have a firm basis for your intellectual property rights under
American law, you will have nothing to protect in China. Before going to
China, make sure your intellectual property is protected by US law.
Protect your brand identity by creating and registering your brand,
slogan and logo with the US Patent and Trademark Office.
Important copyrights with the U.S. Copyright Office. Identify and
protect your trade secrets, proprietary information and technical knowledge.
2. Register your trademarks in China. The registry can protect your
future access to the Chinese market, avoid the export of counterfeit products
from China and prevent a competitor from registering your trademark in China,
which would prohibit him from exporting his own product from China.
3. Use a written agreement to protect your technical knowledge and trade secrets.
in China. Small and medium-sized companies do not usually have a wide
patent portfolio. Your most valuable intangible assets are usually
your technical knowledge and trade secrets, which cannot be protected by
Registration. However, Chinese law allows companies to
protect your technical knowledge and trade secrets by contract. Such agreements can also address issues such as non-competition and confidentiality. Without such writing
agreed, such protection is not available.
4. Product quality and payment terms. The rule here is simple. No
Make the final payment to your Chinese manufacturer until you are sure that
you will receive a timely shipment of the correct items and quantities in
the quality standards you need. This generally means that you must incur
inspection costs in China and provide a clear procedure
to address these issues as they arise. You must take the initiative
is. You can’t depend on the OEM manufacturer to do it for you.
5. Use full OEM agreements with each manufacturer. Small and
Midsize companies often conduct OEM manufacturing transactions with
a simple purchase order. This is a mistake. The purchase order will protect
the Chinese manufacturer, not you. Your protection depends on your safety
a written OEM manufacturing agreement with each Chinese manufacturer with
what are you dealing with. The Ideal OEM Deal Will Address All Problems
discussed above while also addressing other basic legal issues such as
jurisdiction and dispute resolution. This agreement must be in Chinese
and English, as the Chinese version will control in China.