Chinese Copycats: A Real Problem For Entrepreneurs?

IP protection is always a concern for businesses and entrepreneurs, especially when manufacturing an innovative new product. Chinese copycats, or fast followers, are a threat to your new product and business as these vendors may mobilize quickly to copy and produce it, and bury your online presence with a deluge of ads, pages, videos, etc.

Let’s explore how these Chinese copycats operate with a real example so you can be aware of the risk. We’ll also look at some ways to protect your IP, too…

 

The Chinese copycats are watching…

Even if you don’t manufacture it in China, it’s possible that a popular product idea might be seized upon, copied, and produced en masse there. What’s more, the Chinese vendors may launch numerous online stores and run mass social media advertising campaigns making it impossible for consumers to identify you, the ‘true’ manufacturer, therefore damaging your business and vacuuming up sales you might otherwise have expected to get.

The case of the ‘flip n slide’ mousetrap

Here’s an example of exactly this which happened to an American manufacturer of an innovative mousetrap where it only took two weeks for the copycats to overwhelm the original on YouTube, Amazon, eBay, etc:

This product was in danger for a couple of reasons.

First, it is a simple and clever product that is made from plastic parts. This makes it easy to copy and fabricate easily and quickly, especially in China where plastic injection molding factories are experienced and common.

Second, the product started to get a lot of buzz online after a popular review video gained over 1 million views. It’s clear that not only viewers from the USA or other Western countries are paying attention to popular product videos!

 

Should you be worried?

Yes, having your product copied is definitely a big concern. Some companies, many of them in Shenzhen, have gotten very good at “fast following”.

There are actually 2 separate types of threats:

  1. Someone involved in the development, for example, someone who makes samples, decides to make that product on their own. In some cases, the fake products are on the market before the real ones! A client of ours making toys has had to fight against that for years, it’s been quite annoying, but they have still been successful overall. Keep reading for some tips to help combat this.
  2. A “fast follower” copies a product they see on Indiegogo or Kickstarter. They know there is demand. A client of ours was the victim of such behavior, they found it very hard to fight back (no patent), and they went out of business! The “fast followers” created a cheaper copy by casting the main parts instead of using a lathe, by doing so they achieved a lower per-unit cost at the expense of a not-so-nice surface finish. Some people on Youtube compared the 2 products and many people decided to buy the cheaper imitation which fulfilled the same function.

 

How to protect your IP?

First, read this blog post: How To Protect Product IP When Working With Contractors & Factories In Different Locations? [6 tips]

Here are a few steps you can take to protect IP and reduce the risks of fast following by Chinese copycats if you are developing or manufacturing products either in Asia or at home:

File China trademarks and patents

The small American company in the video shared possibly didn’t register their patent and/or trademarks in China (assuming they even had them).  If possible this is a necessary step, but many foreign companies or individuals who hold a trademark or patent in their country don’t realize that they need to file them separately in China (even if you are not manufacturing there, to be safest).

In order to file your China trademark or patent, you will need to work with a lawyer or local business consultant (check our partners page) there who has the expertise you need to file them correctly. Only then will you be able to take legal action through this firm if a Chinese company copies your product.

Use enforceable development, manufacturing, and NNN agreements

An NDA may be commonly used in your country, but they usually have no teeth in China or elsewhere, which is why a Chinese supplier won’t have any issues with signing it!

Your agreements for Chinese suppliers and manufacturers need to be written in Chinese, use the supplier’s official Chinese company name, and be assessed to be enforceable there by a Chinese lawyer.

In addition, an NNN agreement will be preferable to an NDA as with an NDA a supplier might produce the product themselves, perhaps with a few small adjustments, and then resell it, later arguing that they haven’t disclosed your design to any other parties, for example.

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Keep sub-suppliers in the dark about your total product design

Perhaps you can drip feed product information on a ‘need-to-know’ basis to sub-suppliers. This gives them enough information to, say, manufacture a component, but not enough to know your product’s design and features.

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Work with a contract manufacturer if possible

OEMs and, particularly, ODMs are risky options as their business model is based around retaining product IP. There are many reasons to avoid working with them, and also benefits too, but in short, you should remember that if they offer to help you produce and develop your product this will rarely come ‘for free.’ If you’re creating a clever new product, such as the mousetrap you saw in the video, this won’t go unnoticed by some suppliers who may think they could make this a more successful and lucrative product than your custom is worth to them!

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What other tips and experiences do you have to share about preventing fast following and losing your products to Chinese copycats? Perhaps you have some questions or worries about your own product’s IP? Tell us in the comments, please.

Editor’s note: Featured image source https://knowyourmeme.com/memes/spider-man-pointing-at-spider-man

 

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