By Kirwin Lee, Haseltine Lake
Thanks to the abundant supply of cheap labour and the vast scale of manufacturing facilities, shanzhai culture has become a widespread phenomenon in China. Originally describing bandits who evade authority control in their mountain strongholds, the term shanzhai has developed an international notoriety over the past couple of decades as a synonym for counterfeit goods, particularly those originating from Chinese manufacturers.
While copying happens everywhere, many businesses have fallen victim to China’s aggressive and lightning-fast copy cats. So what are the things a company can do to protect themselves from this relentlessly cut-throat practice?
Designing a complex product
By maintaining complexity, your product can be defended against quick knock-offs. This complexity may be based on a sophisticated physical design, an innovative choice in manufacturing materials, or an intricate software algorithm.
Choosing your suppliers carefully
It is extremely worthwhile to do your research and ask for recommendations of manufacturers who are experienced in exports, as they would be more likely to value and respect your intellectual property rights. To further discourage suppliers from leaking information to third parties, businesses should always have a ‘NNN’ contract in place to stop the other party from using the IP themselves (“non-use”), sharing it with others (“non-disclosure”), or starting a partnership on their own and then selling surplus products (“non-circumvention”).
Registering and enforcing your intellectual property
Patents, designs, and trade marks can prove incredibly effective against some competitors and Chinese manufacturers. Before communicating any technical information or advertising your products, you should work with a competent legal counsel to devise an effective IP strategy and ensure all your relevant rights are in place.
Companies selling products that can be easily reverse-engineered should put extra effort into branding and marketing investment in order to build a conscious and loyal customer base. A steady stream of customers can be ensured if people can relate your trade mark to a certain level of quality.
Even with sufficient IP protection, it may still be fairly time-consuming to sue and stop every single copying entity. In order to speed up the legal process, specifically the collection of evidence, some businesses may consider incorporating traceable features into their products. For example, a tech startup ScanTrust has developed a copy-proof QR code, which can be printed into a product’s packaging to allow people to easily verify on a mobile phone whether the product is real.