I was reading a book this weekend, and it includes the following paragraph:
I studied economics in Beijing for six months and observed firsthand how the latest Nike sneaker or Callaway golf club could be duplicated and on eBay within a week of first appearing on shelves in the U.S. This is not exaggeration, and I am not talking about a look-alike product–I mean an exact duplicate for 1/20 the cost.
Is the author exaggerating? Maybe. Yes, the copies can be on eBay after one week of hitting the shelves. But no, they are not duplicated that fast. In these cases, I bet the copying process had started much earlier (and the suppliers to Nike and Calloway were certainly involved in one way or another).
The lesson is: every successful product that can be sold in mass-market channels and that can be made in China WILL be copied.
The real question is, what can you do to make this process more difficult?
1. Don’t produce in China
It sounds radical, but it will only delay the copying process by a few months.
I believe it is a good idea if your product requires a long and complicated development phase. At least you will not be teaching a Chinese factory how to do it.
Only the large Chinese manufacturers have good internal engineering capabilities and would be capable of developing a complex new product without external help. And they are not interested in copying a new product design that sells in the thousands (as opposed to millions) of units.
2. Don’t send requests for quotations to 20 potential suppliers
Obviously, the less people receive your designs, the better. It is often smarter to start by qualifying manufacturers before talking about pricing. Read more here about the drawbacks of asking for prices too early in the approach of a new supplier.
Even better, make some random changes to blur your product design, and then ask for pricing. The suppliers might not guess what the product’s intended use is, but they will probably be able to give a price if you give details for each component.
3. Have the supplier chop a non-disclose, non-use, and non-compete agreement
Sometimes, the source of the copies is the very manufacturer used by the brandname company in the first place. Contracts don’t eliminate risks, but they make it less interesting for suppliers to screw you.
You can read an article (written by a lawyer) about this type of contract here.
4. Constantly monitor the market
Before your product appears in shops in your country, it might be visible on trade shows in Guangzhou or Hong Kong. It only takes 1-3 hours to walk around the booths that sell products in your category.
5. Build your brand, and position your product at the high-end
Since your product will be copied, try to carve a niche on your market where consumers are less price-sensitive. Life is much easier for the high-end brand that started a category, than for the 4th brand that jumped on the opportunity and that tries to gain market share by decreasing prices.
One last related piece of advice: make sure you register your trademark in China before someone else does it. If companies use your brand to sell China-made copies of your product on your market, you will be able to bother them to no end.
What do you think?