Faked in China -- Protection is Possible

A reader in Arkansas sent us this article from CSO Magazine ("The Resource for Security Executives) on 13 ways to protect your company in China.  This article does a very thorough job of both setting out the problems and putting forth a strong list of solutions.

The article notes that "security experts don't buy into the belief that copying is somehow inherent in Chinese culture. The simple fact is that counterfeit goods are cheaper than the genuine ones, and in developing nations like China, wages are low."  I completely agree.  Like everywhere else, those in China who can afford the real thing, prefer to buy the real thing.  As Chinese wealth increases,  and as more and more Chinese companies seek to protect their own brands, counterfeiting will decrease.  This is what happened in both Japan and Korea, both of which were at one time, notorious for counterfeiting. 

The article also correctly points out that China's National government actively seeks to end counterfeiting, but local officials oftentimes are reluctant to go hard after local companies.  In the legal sphere, this means foreign companies pursuing counterfeiting claims in the courts must be prepared to have to appeal local court decisions to a higher, more distant court. 

I also like how the article emphasizes the need to secure a Chinese trademark early: "If you do business in China, register your trademarks with the Trademark Office there. But even if you don't sell there today, it's a good idea to register trademarks there now if you might do business there in the future...."  I have said it before and I will say it again: it is absolutely essential to register your trademarks in China before exposing them in any way in China. 

The only thing we would add to this article's list is the need for a good written contract (in Chinese) with whomever one does business.  This contract should explicitly set forth your requirements regarding trade secrets, products, trademarks, and whatever else you wish protected.  Contracts in China do not provide 100% protection (nor do they anywhere else) but they are nearly always the critical component to a successful litigation.