Protecting Your IP in China: Building Solid Relationships
A question we get asked a lot is how do we protect our IP in China? In the previous blog, we discussed the first prong of our three-pronged approach – making your contracts legally binding in China.
The second prong is equally important and focuses on creating strong and lasting relationships with Chinese manufacturers from the start. In Chinese, these relationships are called “guan xi,” and are extremely important.
Chinese manufacturers want you to have:
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- A successful business
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- Successful products that the market loves
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- A relationship where you can grow together
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- More consistent and larger orders over time
Their success is dependent upon your success. Unfortunately, many foreign companies hold onto a suspicion that Chinese factories are simply out to take advantage of them. This is wrong and will only weaken and complicate what should be an ongoing and mutually beneficial relationship.
You also need to show that you are serious and won’t expect Chinese manufacturers to put in a lot of up-front effort to set up your product, only to later shop around for a slightly cheaper manufacturer once manufacturing is up and running.
Demonstrating a longer-term commitment to growth also helps manufacturers stay loyal and not seek ways to sell designs or to market products in competition with yours.
Here are some ways to set up a strong relationship from the beginning:
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- Think long-term – years or even decades. Chinese manufacturers will feel if you are only thinking “How do we get this first sample made?” or “How do we get this first order made?” without longer-term planning. Many factories have hundreds or even thousands of people contacting them asking for samples and asking questions that go nowhere. It’s a waste of their time. Instead, go into your Chinese manufacturing journey with the intention of creating ongoing relationships. It will benefit you in the long run.
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- Demonstrate legitimacy in what you are doing and that you understand their position and what they are doing. You need to show manufacturers that you are serious, that you are not a one-off purchase, you expect high quality, and that you have expectations. However, you should also show that you are doing everything on your end to market, promote, and sell your product and that you want to grow together. Also, just as you may be gambling by working with them, they are also taking a gamble by committing their resources to work with you. Showing that you understand their risk, as well as yours, will help solidify a meaningful relationship. And, if it looks like things are going well, show that you intend for this relationship to be ongoing.
Plan to visit them in China (even if it can’t happen for a while). Relationships with Chinese manufacturers should have an element of personal connection. Having a face-to-face sit down with them on a business and social level to understand their factory, see their setup, praise their expertise, and observe what they have done will go a long way in creating a positive relationship. Having an opportunity to eat with them to discuss your future is an important cultural exchange. Even just showing your genuine intent to visit will help Chinese factories see that you are a genuine partner and that you are not looking to disappear three months after you place your first order.