Many of these companies have attended seminars where someone has told them how easy it is to sell your products online to China. Many have attended Alibaba conferences where Alibaba puts 3-4 foreign companies on stage to have them explain how quickly and easily it was for them to make millions from selling their product on TMall or Taobao or wherever. These companies are almost certainly telling the truth and I know this because I have represented many American and European companies that make millions of dollars a month by selling their products into China. And it is in fact relatively easy to sell your product on one of the leading Chinese e-commerce platforms, particularly if you use one of the many companies that handles all of the logistics for you
The tough part though is actually making the sales and I have personally represented a number of American and European companies whose products barely sell or sell not at all to China. As lawyers, our best advice for determining whether your product will sell well into China and for making sure that it does is to get help from companies and people with actual track records in marketing and selling products to China.
Our job as lawyers when we represent foreign companies that want to sell their consumer products into China is relatively uncomplicated and usually consists of our doing the following:
1. Making sure the product is legal in China and can be legally sold to China by a foreign company without need for any special license or testing or certification. See this Forbes Magazine Article, Do This One Thing Before Doing Business in China.
2. Making sure the contract our client signs with the China e-commerce platform company actually works for and makes sense for our client.
3. Making sure our client’s intellectual property is protected such that a Chinese company cannot immediately start selling the exact same thing with the exact same brand name. In doing this, our China IP lawyers typically start out by explaining how our clients trademarks and patents in other countries will not protect them in China because China is a “first to file” country. By way of an example, this means that (with very few exceptions) whoever files for a particular trademark in a particular category gets it. So if your company’s name is Bill’s Clothing and you sell shirts and you have been doing so for the last five years and some other company (Chinese or foreign) registers the “Bill’s Clothing” trademark in China for shirts, that other company gets the trademark. If you allow some other company to register “your” trademark in China, that other company can stop you from selling your products in China using “your” trademark. This happens all the time and your starting to sell your products online in China is like a bell whistle for trademark trolls. If you want to protect your IP in Mainland China you must register the IP in Mainland China.
But before you just go off and registering a trademark in China you should think long and hard about what you should be registering. Do you register your English-language name? The answer to this is nearly always yes. Do you create a Chinese name and register that as well? The answer to this is that you usually should. Should your Chinese name be a translation of your English name, a transliteration, or something unrelated? This really just depends, and if oftentimes figuring this out requires both a China trademark lawyer and a China marketer. In Hermès’ China Trademark Case. Do You Know What Trademarks You Really Need? I talked about how my firm’s clients often handle these trademark issues:
In situations where our clients are making product in China for export only and their product has the trademark on it only in English, securing just an English language trademark is usually enough. In situations where a company intends to manufacture its product in China and eventually sell in China, the company must weigh the costs and benefits of securing a Mandarin (or other language) trademark now, or just wait. In situations where the company knows it will be selling its product in China right away, it needs to analyze the options set forth above. In almost all instances where our client’s trademark has actual meaning, they have chosen to trademark both the English and the Mandarin of the word. Rarely do our clients seek a China trademark in a language other than either English or Mandarin. Only around 25% of the time do our clients seek to secure the trademark for a transliterated or phonetic version of their English language trademark. Most of the time, they choose to wait and see how their product does in China and then, if it proves successful, they usually come back and register more on it. Waiting also allows them to see exactly what the Chinese will call their product. The downside to waiting is that someone else may register the name in the meantime.