On November 7, 2016, China’s National People’s Congress promulgateda new Cybersecurity Law. The law will come into force on 1 june 2017.
The Law applies to the operations, construction, maintenance and use of information networks in China, as well as administration and supervision of the network security. Any company that operates a WFOE in China are now required to censor any information that is seemed as critical or banned and are demanded real name registration for any user of services like instant messages.The new law also requires that all personal information for Chinese citizens and any important business must be stored on storage devices inside Mainland China. However, any data that is transmitted outside of China by any entity must first be reviewed and approved. The new cybersecurity law also states that no individual will be allowed to use the internet to endanger national security, spread false information that can have consequences on the economic order, maintain public interest, etc.
You have been searching online for reliable suppliers and just came across a Chinese supplier whose organization look good. You see potential for a business opportunity and decide to go for it. BUT before making any decisions you may consider to lift the lid and see what kind of organization they are and investigate further in order to avoid unpleasant surprises.
China is the largest exporting country in the world, which means there are an enormous number of available suppliers, and this is where the challenge lays. You may consider a greater number of suppliers as a good thing because it offers you as a buyer more options. However, a long list of suppliers can be a good thing but it can also mean greater risk if you select the wrong supplier for your business.
Below are six practical tips that can help you reduce your risk when choosing reliable suppliers to manufacture your product.
1. Background Check
When you find a potential supplier online, it is a good idea to check what they claim before doing business with them. You can gather more information about the supplier by running background checks on their company. A supplier background check can prove invaluable before entering into business with a supplier. You can find a lot of information and other relevant data from various public sources online, such as bank information, credit reports and licenses. But most of that information is in Mandarin and hard to find. However, it is therefore a better idea to get all relevant information and all reports about the supplier by hiring a company or get help from a lawyer or accounting firm that are based in China who specialize in this field. By doing that you will get a better overview of the supplier and you can more easily decide whether or not you want to start a business relationship with them.
When you work with Chinese suppliers you should also problably know that there can be significant communication barriers, even with suppliers that employ English-speaking staff. But the language problem is not the only barrier when doing business with Chinese suppliers. The cultural differences can also severely slow down the development of the solid relationship that you would like to achieve. If you want to improve the communication between you and your supplier and avoid future problems, you need to understand the differences in how communication is viewed between cultures. Often, people from western cultures sees the communication only as a way to exchange information, while for most Chinese, communication is an important part of relationship building. This differences in viewpoint can often lead to barriers in communication when doing business with Chinese suppliers. However, you should always have in mind to treat each communication as a way to both exchange information and to build a relationship. It is also important to have an experienced international team in place in order to faciliate effective communication.
3. The importance of quality
Don´t choose your supplier based on price only. If a factory is offering you the lowest price, then you can absolutly be sure that they are either going to get back those costs in some addtional charge, or they will use cheap materials. This can lead to poor product quality and a disaster for your business.
It is also important to check the quality of your products before the whole production is completed. It can take weeks or even months to re-work goods that are defective, and even longer if all the goods must be reproduced. If you want to be sure of the quality of your products then it is a good idea to send an inspector and perform quality inspections, to make sure that issues are discovered early and that corrective actions can be implemented on time by the factory.
4. Get a sample
You have been inspecting your potential supplier and the audits results are acceptable. If you really want to be sure about your product quality and verify your products conformance to standards, you can request a product sample before production starts. If all goes well and you are satisfied with the result, then you are one more step closer to placing your future orders and finding a reliable supplier in China.
Make sure to order multiple samples from your supplier in order to be sure that you will get the same standards as your final product. The supplier can make a perfect and a high quality version of your product and pass it off as a sample of the final product if you only order one or two samples. Prices for samples can vary, some offers a free sample while other suppliers gives a discount or take normal price of manufacturing the product.
5. Visit the factory
To visit the supplier in person obviously won´t be an option for everyone, but it´s highly recommended and is the best way to verify your suppliers. It is common that suppliers utilize fake pictures of the company and give the impression that they are a big and reliable manufacturer. Your first meeting with your supplier is therefore a very important part of the sourcing process if you want to avoid unnecessary surprises in the future.You can also discuss directly with your suppliers when it comes to prices, delivery time, quality inspection and other important terms of your business. Your visit will also reinforce the relationship that you are trying to build and is good for your future business transactions.
6. Contracts and agreements
After months of searching for a reliable supplier, you finally found a good one that matches your requirements, and now its time to sign a contract (also called "OEM" agreement") to cement your relationship. If you want a contract that you can be able to enforce in a Chinese court of law, then make sure that the contract is drafted by a Chinese lawyer. All intellectual property that is used to manufacture the product, including copyrights, trademarks, patents should be licensed to supplier, for the purpose of complying with its obligations under the agreement. You should also carefully draft related terms in order to restrict your supplier from exercising any rights of ownership to the licensed IP. Include detailed product specifications and quality control and inspections procedures in your supplier agreement, and make sure to seek warranty from your supplier and include it into the agreement.
China is the world's leading manufacturing country and the world's second largest economy, so hundreds of thousands of business people attend trade fairs in Shanghai from basically every country in the world hoping to buy or sell needed products and searching for business opportunities. Shanghai is a major exhibition center in East Asia. All kinds of cultural, business, educational, recreational and comprehensive expositions are held in the city all year round. Below are 6 large and interesting exhibitions that will be held in Shanghai shortly. Keep yourself updated and dont hesitate to visit and/or participate in one of them.
Venue: National Convention & Exhibition Center, Shanghai, China
The 22nd INTERNATIONAL BUILDING & CONSTRUCTION TRADE FAIR 2017 is a 4 day event, which will be held during March 22-25, 2017 at National Exhibition and Convention Center, Shanghai China. This event will showcase products like Building & construction material, green building material, chemical building material, building hardware, installation & tools, renovation products, quarry tile, pavement tile, Staircase, component, processing equipment, Windows, door, gate, facade etc. Read more
China Refrigeration is a 3 day event being held from 12th April to 14th April 2017 at the Shanghai New International Expo Centre(SNIEC) in Shanghai, China. China Refrigeration is one of the leading exhibitions in the world for Refrigeration, Air-conditioning, Heating and Ventilation, Frozen Food Processing, Packaging and Storage and more etc. in the Industrial Products industry. It features a wide range of exhibits, with the latest advances in technologies reflecting the most significant developments and achievements in the industry. China Refrigeration is an ideal marketplace for the companies in the industry to launch the latest products, technologies and to find what they want, for professionals to buy, sell and build up business network. Also various seminars will be held covering the latest and hottest topics in HVAC&R industry. Read more
IE Expo is a 3 day event being held from 4th May to 6th May 2017 at the Shanghai New International Expo Centre in Shanghai, China. This event showcases products like latform for the professionals in the environmental industry. IE EXPO China 2017 will cover all the high potential markets in environmental area, such as Water and Sewage Treatment, Waste Management, Site Remediation, Air Pollution Control and Air Purification. Along with the increased market demand and big support in the environmental industry from the Chinese government, the business potential in the environmental industry in China will be huge. Undoubtedly, IE expo China 2017 will be a “must” for the environmental players to exchange ideas and develop their business in Asia. Last year IE Expo China was once again underlined its position as the number one environmental technology show for China and Asia. In IE Expo 2016, there were 1,303 exhibitors from 30 countries presenting their lasted product and solutions in the environmental area to more than 43,000 trade visitors. Read more
PACKTECH & FOODTECH is a 3 day event being held from 17th May to the 19th May 2017 at the Shanghai New International Expo Centre in Shanghai, China. PACKTECH & FOODTECH co-locating with SIAL China is the largest event
ever organized for a completed chain from equipments to products in the
field of international food and beverage market in China. Since 2001, the
synergy of SIAL China and Packtech-Foodtech has attracted an increasing
number of players in Food and beverage Industry, allowing visitors and
exhibitors to take advantage of their synery. Read more
Keep updated about coming fairs in Shanghai here.
If you're ever going to sell your products in China you should register your trademark now. Before someone else does!
To get a trademark protected in China you need to register the trademark in China. China has a first-to-file policy on trademark registrations meaning that the rights to the use of a trademark in China belongs to whoever is the first one to register it with the Chinese authorities. Only "well known" international trademarks have a protection from this. The potential consequences of having someone else registering your company or product name is not limited to that your brand is used in commercial purpose on the Chinese market. If you ever want to sell your own products in the country you will have to try to obtain the rights to your own trademark or risk getting sued. Both scenarios of which might cause tremendous financial consequences. That's why we recommend you to register your trademark as soon as possible if you consider ever acting within the Chinese market.
Also be aware that if anyone else plan to import and sell your product in China they need to make sure the trademark is protected or risk the same consequences as mentioned above. If you as the original trademark owner doesn't protect your trademark in China, the importer or distributor is forced to do it. And it might not be in your longterm interest to let them own the trademark rights.
Registering a trademark is fairly straightforward and inexpensive and well worth the effort. Register your trademarks today!