Analysis

Oct
2013

Protecting Your Brand: A Focus on China

Outsourcing cost saving commercial relationships with third parties in South East Asia, specifically China, confirms that there is an upward trend in this jurisdiction. Most companies will be well versed in dealing with foreign third parties, such as the language barriers faced, understanding the local customs and identifying political and corruption risks.

But is protecting the brand, product and reputation ever considered? Do you really know who your third parties are?

China has an enormous domestic consumer market. Mix this with cheap labour, under-regulated legislation, lack of enforcement and ease of trans-border trade, will all increase the risk of a company’s product being copied and counterfeited. This will significantly affect customer loyalty, reputation and profitability.

Consider the impact of your product being counterfeited or subject to illegal factory overruns, or bypassing official distribution channels and imported criminally. The initial cost savings of doing business in these jurisdictions can quickly be outweighed by infringement and criminality.

Before entering into a contractual agreement, consider our ten point guide on brand protection in China (and can also be applied to other foreign jurisdictions).

  1. Establish whether your brand or product can be officially registered and trademarked in China before releasing information about your product to third parties.
  2. Register your brand or product in neighbouring jurisdictions such as Hong Kong, Taiwan, Indonesia and Macau. This will help prevent others registering your product that consumers may confuse with yours.
  3. Select a reputable law firm that specifically has a Chinese office or partner who has first-hand experience in protecting products in these jurisdictions. Ensure they have registered your IP rights, keep them up-to-date and renewed on a regular basis.
  4. If necessary, develop and register a Chinese-language version of your product.
  5. Make sure all contracts include specific confidentially and intellectual property agreements as well as brand protection, corporate security and enforcement policies.
  6. Conduct regular due diligence on your suppliers, manufacturers and distribution agents. Include anti-bribery evaluations as it is now an obligatory prevention measure under the Bribery Act 2010.
  7. Educate third parties in improving their security culture and brand protection awareness.
  8. Consider visiting trade shows to check that your vendors are not exhibiting counterfeit or surplus products.
  9. Verify the provenance of your goods by regularly performing on site visits, evaluations and factory audits.
  10. Identify potential outcomes to supply chain risks and test your contingency plans.

There will always be those seeking new ways of circumventing protection techniques. However, by remaining vigilant and by implementing the prevention measures as described above will assist you develop a brand protection strategy in areas like China.

If you think TenIntelligence can help with your brand protection strategy or due diligence, please give us a call. With an operational presence in Dubai in addition to our HQ in the United Kingdom, TenIntelligence is able to consistently deliver a professional investigations and due diligence services for our clients across multiple jurisdictions and industries.

Our ethos is based upon trust, integrity and building relationships, whilst offering a commitment to our clients by delivering an effective investigation service with consistent standards of excellence.




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