Q&A on China Sourcing and IP at the Australia International Sourcing Fair
For the past few years, I have had the pleasure of being invited to Australia to speak at the International Sourcing Expo in Melbourne and Sydney. You can find information on the Australia International Sourcing Fair and seminars (past, present and future at http://www.internationalsourcingexpo.com/seminars/.
Sourcing in Asia Today at the Australia International Sourcing Fair
My most resent presentation at the Australia International Sourcing Fair was entitled “Sourcing in Asia Today: Effective and affordable strategies for overcoming challenges old and new”. You can watch the recording on my YouTube Channel. The audience asked a bunch of great questions during the Q&A so I decided to share them in this blog post.
Below you will find 5 of the questions they asked here at the Australia International Sourcing Fair and my responses to each.
Topic: Intellectual Property Registration in China
Question: Can I register my IP in China on my own?
In China you can’t register the IP on your own online, but it is pretty easy. You just need to engage a Chinese patent attorney. Someone that you authorize to submit these documents in Beijing on your behalf. They’re pretty easy to find and affordable- a couple hundred Australian dollars to register a brand. A bit more if we’re talking about a utility patent or other types of intellectual property.
Question: I have been buying from China for many years. But I never got around to registering my brand. I want to change suppliers, but now I learned that the supplier registered my brand without telling me! What can I do?
Yeah, now you have your hands full. You’re in an uphill battle. Especially if it was predatory where a supplier, and this happens a lot, registers your brand as a means of manipulating you. For example, Australian company does not register their brand because they say “hey we got the brand registered in Australia, we don’t sell anywhere else in the world, who cares about China”. Then your Chinese supplier registers that brand a couple years later. One day you want to switch suppliers and now you can’t export your product out of China with your brand on it because the supplier owns the IP. So if you are in that situation, then it might be best to go to dispute resolution. Manage your expectations. The law is clearly on the supplier’s side as China is a first to register rather than first to market system.
Question: I know somebody else owns the right in China for the brand for the item I want to buy, but I also know that the brand is not in control by that party in Australia and I want to produce an item under my brand in China to sell in Australia.
Know that the Chinese party could stop you if they knew that you were doing it. Maybe they are not savvy enough to tell the customs authority that they own that brand. But if it is in the marketplace and they see that “hey, you’re doing a good job, making a lot of money, going to trade shows”. Eventually they are going to figure it out and try to stop you. Maybe you’d want to sort this out in advanced, either by changing your brand if you are a startup maybe or negotiating a solution. Lesson learned, it is a lot easier to trademark first and then the system is working for you.
Topic: Buyer Protection when sourcing from China
Question: Why doesn’t everybody use Alipay and similar services to protect the buyer?
Good points, let’s take Alipay, I’m pretty sure there’s caps to how big of an amount you can transfer at any given time. In my experience, it is mostly for buyers who are purchasing orders under ten thousand dollars. Once you get larger than that then you’re dealing with bank transfers and maybe even letters of credit. So while that service seems pretty good at protecting your money on small orders it’s not available for normal and large orders.
If you are going to use those payment process facilities. It is still good to have a contract because it validates that the supplier understands your key terms. You might have a non-compete clause, you don’t want this supplier to sell to your competitor in New Zealand. So that payment processing is not going to have any protection for that. So the payment services you talked about, protect your money from disappearing but they don’t really help with the relationship with the supplier. It can’t hurt.
Topic: Strategies for protecting IP and business secrets.
Question: I’m pretty sure my competitors back home are trying to reverse engineer my product and have it made in China.
Maybe you have got a great Australian brand. You are worried that this American with a lot of money is going to knock off your products in China or India.
One way to stop them is, you’re going to register your product in the location where production is going to take place. After you register your brand you own the intellectual property. You can actually go to Chinese customs authorities at the ports and say “this is my authorized supplier”. All other exporters are unauthorized products that should be confiscated and destroyed.
If you want to shut down a knockoff artist who is cannibalizing your business. The best way is to hit them in the pocket book. So I would wait until your competitor places a purchase order in China and has paid deposits. That way they have money in the pipeline. Then work with the customs authority to grab the container at the port before it leaves China. It will mess up the competitors supply chain big time. No one gets paid when they confiscate the goods or at least hold them up at the port. It really hits them hard and destroys their relationship with the suppliers. Especially if their supplier did not even know that it was a counterfeit product that it was infringing upon.
Keep in mind that it costs less than a 1000 USD to register your brand. The cooperation of the custom’s authority is free of charge if you know how to go about it!
I had a great time at the Australia International Sourcing Fair. If you would like to reach out to me and AsiaBridge Law, click on the link below.
About the author/speaker: Mike Bellamy ABL advisory board member
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Originally from Upstate New York, Mike moved to Asia in 1993 and is a China business advisor to both Fortune 500 companies and small businesses. Recognized as an expert on doing business in China, he has been interviewed by WSJ, CNBC, FT & Bloomberg.
A featured presenter on China issues at seminars, trade shows and corporate events across the globe.
Learn more about Mike and AsiaBridge Law at
https://www.asiabridgelaw.com/business-advisory-services/
Mike is the author of “The Essential Reference Guide to China Sourcing”
(available on Amazon).