Contract Manufacturing in China: Why Your Business Needs an Intellectual Property Strategy and How to Develop One

The contract manufacturing industry in China has grown by leaps and bounds over the past decade and will continue to do so in the years to come. With more and more overseas businesses looking for alternatives outside of their country, moving production projects to China can be a viable option.

Manufacturing your product overseas can help you cut down on production costs, but if you’re not careful, it could also put you at risk of losing control over your intellectual property.

Brands rely heavily on their intellectual property assets to be more successful in the marketplace, whether it’s a product idea or visual elements. This alone should be enough for every business owner wanting to understand the need for an effective IP strategy and how it can be executed successfully.

In this article, we will explore the importance of developing an IP-right protective strategy for your brand and give you helpful tips on how to develop an effective strategy that is perfect for your company. Let’s dive in.

What is an IP Strategy?

IP stands for intellectual property, which is an umbrella term describing the set of intangible assets that are legally protected by a company or person from unauthorized use. Intellectual property comprises different forms of assets, including trademarks, patents, and copyrights.

To be more specific, assets such as business data, product ideas, logos, software, programs, and websites created by your company can all be considered intellectual property if they are legally registered.

When it comes to an intellectual property strategy, it differs from company to company across different countries. However, even though there are some universal best practices for intellectual property management within certain industries, each company also has its own unique set of priorities and methods to protect its IPs.

Why is an Intellectual Property Strategy Important?

Outsourcing your production to China can often be a frightening undertaking, particularly if you are new to the industry or do not yet have established strong connections with factories there.

Fear of losing control over your intellectual property rights is often at the forefront when many business owners think about producing goods overseas. No matter how big or small your company may be, it is vital that you put together a sound IP strategy before you begin producing anything out of concern for having your IP stolen without permission.

1. Ensure Exclusive Rights

One of the main advantages of creating an effective IP strategy when outsourcing your production project to China is to safeguard the safety and confidentiality of sensitive information.

To ensure your brand will live on, an effective intellectual property strategy can protect it in the long term. Keep in mind that your IP protective strategy can be more than just projecting your logo or product idea. You can include other important information that has great relevance to the IP such as product design draft, modification record, product launch plan, financial records, and internal company communications. Creating a proper IP strategy can be a great way to protect business details from leaking publicly or being accessed by your competitors and their employees.

2. Increase Business Value

For starters, many owners have unrealistic expectations about their company’s value. To be straightforward, your brand has value because you work to maximize its commercial potential. Consequently, your intellectual property strategy should be tailored to align with your business objective.

Nowadays, many people buy products or services for more than just the functional or convenient aspects, they want something else like uniqueness and creativity that a company can provide.

To increase your business value, an IP strategy provides peace of mind knowing that other companies will not be able to come along and copy or use your IP for themselves. Therefore, others can’t profit from what is rightfully yours, which ultimately helps your business by directly contributing to the business’s financial goals and growth prospects.

Helpful Tips for Developing an Intellectual Property Strategy

Protecting your intellectual property is a means to secure an economic advantage for your business and make sure you can defend your unique ideas, products, and services. Typically, an effective IP strategy should include the following steps:

1. File and Register Your IP

In today’s age of high-tech and instant communication, information leaks happen all the time. Though it may seem terrifying there isn’t much that you can do about this issue.

For overseas businesses engaging in import-export like yours, it’s suggested to file your IP information, register for protection with the relevant authorities in both your home country or original business location and China, and enforce your ownership rights accordingly.

Staying vigilant and maintaining records of what you’ve invented. If someone else gets their hands on confidential information in a breach, they may try to copy or adapt some of your work, which you could prove if you have documented evidence about when you created it.

2. Use Strong Nondisclosure Agreements

NNN stands for non-disclosure, non-use, and non-circumvention. An NNN Agreement is a type of confidentiality agreement used in business dealings with Chinese companies, particularly Chinese manufacturers.

When working with a contract manufacturer in China, it’s important to have a well-drafted and properly executed strong NNN agreement to strengthen your defenses against IPR violations like trade secret misappropriation, where some of their employees could share sensitive IP-related information with outsiders.

Also, it will ensure the protection of your intellectual property rights and offer dispute resolution in case the manufacturing company fails to uphold its obligations in the contract.

3. Keep a Close Eye on Your Manufacturer

Before choosing a production partner in China, it’s always a good idea to do due diligence carefully and keep a close eye on their company updates by continuous monitoring.

Firstly, you should understand the tiers and backgrounds of different suppliers to avoid being taken advantage of by middlemen or low-quality facilities.

Next, you need to be aware of how transparent each production stage is so that from communicating with the manufacturer to receiving your product, you’ll never have major problems related to your IP.

Are You Looking for A Contract Manufacturer in China?

Many businesses are outsourcing their production to China because of cost savings. But before you dive into outsourcing your production, you need to make sure that your intellectual property is adequately protected. Finding such a reliable manufacturer in China that can safeguard your IP can be daunting and time-consuming. Shield Works would like to be your local manufacturing partner that protects your IP and meets all your production needs.

Shield Works Precision Manufacturing Co., Ltd is the subsidiary of the C2W Group that has 17 years of providing supply chain management, quality control, and product development services in Asia.

We are a British-owned and managed company that has an IP-protected facility that can handle the needs of contract manufacturing, precision assembly, quality inspection, and warehousing.

Over time, we have developed a list of IP protective methods at our custom manufacturing and precision assembly facility that has proven 100% effective at preventing IP infringements.

• We have state-of-the-art fingerprint scan access for all production zones so that you can be assured that no one other than those who are authorized has been near your product.
• We will have legally binding NDAs with every external body that we may work with during the process of your production line, so nothing leaks out about what’s being made – from here and all across town.
• We partner with Innopat, a leading Zhuhai-based IP industry expert, to provide our clients with clear, no-nonsense advice and IP protection services.

Start your journey by reaching out today for more information and see how we will be able to meet all your demands under the same roof without taking any risks!