Negotiating with Chinese product suppliers isn’t just about getting the best quote and optimal execution. You also have to make sure that the concept you’re sharing with the respective factory isn’t going to get ripped off.

 

Being copied is the most certain way to have your business ruined right from the start. One of the best tools to protect your concept is a trademark or a patent. When you’re just getting started, however, such legal protections may be way too costly to implement. Patent registration, including the legal fees, could cost you as much as 15,000 dollars – a massive sum for almost every new startup out there.

 

Non-disclosure agreements (NDAs), especially if they haven’t been tailored to the specific interaction, can be way too broad and generic to offer any reliable protection.

 

So, what can you do when working with Chinese product suppliers to keep your idea from being stolen? There are several effective ways to approach the issue.

 

Keep the Important Details to Yourself

Most product creators will talk to anywhere between five and 15 suppliers before identifying the factory worth partnering up with.

 

During these talks, you’ll have to share some information about your product so that the supplier could provide an adequate quote.

 

You don’t, however, have to highlight every single detail there is.

 

The little things that make your product different and unique should be kept to yourself. Once you have selected a manufacturer and you’ve signed an agreement for the production of the item, you can share all other important information on the concept.

 

When carrying out the initial talks, provide examples in the form of products that are already available on the market. They’ll give manufacturers a clear idea of what needs to happen, what the scope of the project is and what an adequate price would be.

 

Manufacture Components

Instead of thinking about what are the right factories to make my product, start with the components that you need.

 

This is probably the best approach to protecting your idea if you don’t have the financial means to put legal safeguards in place.

 

Instead of having a Chinese factory manufacture the entire thing, get different suppliers to make the different product components. Play to the strengths of each facility when determining who should be manufacturing what.

 

You can assemble the item in-house or have a company in your country putting the whole thing together.

 

By having each one of your partners responsible for a small part of product manufacturing, you’ll be protecting the design specifics. You’ll also be ensuring optimal quality by choosing parts manufacturers that have extensive experience in the specific field.

 

Think Carefully about Your Contract

The contract you sign with your overseas supplier is the one legal document that will offer you legal protection in the event of the idea being stolen or copies of your product being made without your permit.

 

Since you’re operating in an international environment, it’s essential to put a bulletproof agreement in place.

 

The guiding laws will be the ones in the country where the product is being manufactured. Thus, it’s a good idea to communicate with an attorney that has sufficient experience in international trademark and intellectual property protection laws. A local lawyer that specializes in the field is another good choice.

 

Also, understand the fact that a purchase order (PO) offers only limited protection. A formal contract that also contains a non-disclosure agreement clause (and maybe even a non-compete clause) would be a much better alternative.

 

For some additional information about Chinese trademark laws, please check out this Library of Congress entry on the topic.

 

Deprive Factories of a Chance to Copy the Product Altogether

If you can implement this approach, you’ll make it 100 percent impossible for a Chinese product supplier to steal your idea.

 

A good product concept often features one essential element that the finished item cannot function without.

 

It could be a mobile app. It could be a piece of software that you’ll be building in-house and pairing with the completed item to give it a full-range of functionalities.

 

Without this essential element, the finished product is just a shell.

 

Hence, your manufacturer will have nothing to replicate and sell in the absence of the product’s “heart.”

 

If you can conceptualize such a product, you’ll be altogether free from having to worry about the placement of legal protections that are in line with the local regulatory framework.

 

Bonus Tip: Build a Strong Brand

When you enter the world of international product manufacturing, replication will be inevitable. Sooner or later, someone will attempt recreating your winning concept (even if that’s not the product supplier you began partnering up with).

 

Seeking legal action against such entities can be a resource and time-intense process that may eventually produce mediocre results.

 

The best thing you can do in such scenarios is build your brand.

 

There are certain companies out there known for quality, innovation and unique features. Knock off products cost a portion of the original’s price but people go for the real thing because they know what it stands for.

 

When you build a strong brand, you’re selling more than just a product. You’re selling your vision, your customer service and your reputation. Once you establish a loyal clientele, these people will come back to you time and time again.

 

So, while communicating with overseas suppliers, work on brand establishment. Do your marketing, execute your online reputation strategy and focus on the provision of quality customer service.

 

The counterfeit goods market is currently worth 462 billion dollars per year. Over 63 percent of the replicas originate in China and the brands that are being copied the most include Cartier, Hermes, Levi’s, Ugg, Disney, Gucci and even Viagra.

 

These giants, however, are so well-established that counterfeit items can’t really tarnish their reputation.

 

This should be your number one priority, as well. If you can make your brand irreplaceable in the views of your clients, counterfeit goods aren’t going to be such a damaging thing for you.

 

… and if There’s Nothing You Can Do?

Even if you put all safeguards in place, there’s still some risk of having your idea stolen. If you pursue legal action, you’ll get production slowed down significantly. This can be the end of your business, especially if a competitor manages to launch your product ahead of time.

 

In these unfavorable scenarios, time is of essence.

 

The thing you should attempt doing is launching your product as fast as possible.

 

Being one step ahead of the competition will give you competitive advantage and a chance to rectify a situation that previously appeared to be unresolvable.

 

As you gain more experience, you’ll find yourself capable of identifying partners you can trust. Take your time, do your research and understand the potential risks. If you do all of these things, you will always have a contingency plan capable of resolving the toughest of problems.