Outsourcing in China: Five Basics for Reducing Risk

Many small and medium sized companies that engage in OEM
When issues arise, they are able to do nothing or little to
protect themselves because they have no legal foundation for security. The fact is that outsourcing disputes must be resolved in China, under the Chinese legal system. The Chinese legal system has improved significantly within the last ten years and taking
several basic legal steps can greatly reduce your risk. The expense of such
coverage is modest compared to protection it’ll provide.

The following five basic steps will considerably Lower Your issues with
Chinese manufacturers, while improving your odds of regaining should some
problems arise.

1. Create and correctly enroll how to manufacture a product in china your intellectual property rights
The usa. If you don’t need a firm basis for the IP rights under
U.S. law, then you will not have anything to protect in China. Prior to going to
China, be sure your intellectual property is protected under U.S. lawenforcement.
Shield your new identity by registering and creating your signature,
slogan and logo using the U.S. Patent and Trademark Office. Register your
major copyrights using all the U.S. Copyright Office.

2. Register your trademarks in China. Registration can protect your
Future access into the Chinese market, prevent the export of counterfeit goods
out of China, preventing a rival by registering your mark from China,
that would prohibit you by copying your product from China.

3. Work with a written arrangement to protect your understand how and trade secrets
in China. Small and medium companies typically don’t have an extensive
portfolio of patents. Their valuable intangible assets on average are
their knowhow and trade secrets, that can’t be protected by formal
registration. Chinese law, nevertheless, permits businesses to contractually
protect their know how and trade secrets by contract. Such arrangements may also address problems like non-competition and confidentiality. With this a written
agreement, no such protection is obtainable.

4. Product Quality and Payment Conditions. Do not
Get final payment into a Chinese manufacturer and soon you’re convinced you
is likely to soon be getting an promptly shipment of the correct items and amounts in
the quality standards you will need. This typically means you must incur
inspection costs from China and provide for a clear procedure
for working with these issues as they appear. You have to take the effect on
this. You cannot depend on the OEM manufacturer to get this done to you.

5. Utilize comprehensive OEM Agreements with each manufacturer. Small and
Medium sized companies frequently come right OEM manufacturing trades with
A very simple purchase order. This really is a mistake. The purchase order will shield
The Chinese maker, not you personally. Your protection Depends upon your securing
A written OEM manufacturing deal with each Chinese manufacturer !
Which you cope. The ideal OEM arrangement will address all of the problems
Discussed previously while also addressing other basic legal issues such as for example
Jurisdiction and dispute settlement. This agreement should be in both Oriental
And English, as the oriental version will control in China.

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