I had a great conversation the other day with a company that called me with what I think is a killer product. I spoke with the company’s CEO and found myself really enjoying the conversation because she had done such a good job laying the groundwork both in the United States and in China for all she was seeking to do with her company’s new product. Among other things, she had hired the right people to help her every step of the way and had actually called me a tad too soon for China. But as I told her, “call me back when you think you will be doing manufacturing with China that might involve your IP and just remember, there is no penalty for calling me too early, but there very well could be one for calling me too late.”
It got me to thinking about how so many people in similar positions to this CEO completely blow it in terms of getting their product to market. Twice very recently, our China attorneys were contacted by someone who had started manufacturing product in China and now that they were ready to step up production to profitable levels, their Chinese factories were telling them that they owed large sums of money for the prototyping work and if they did not paid that money, the Chinese factories would lay claim to their products and to all of the products’ IP. In both cases, the American product inventors had messed things up so badly that the Chinese factories were not only in a very strong position in terms of business leverage, they also had strong legal claims as well. In both cases, the product inventor ended up having to give up on their own product because it would have cost them too much money to attempt to turn things around.
So I started “writing” a post in my head on the basic steps to take a product from idea to market. But lo and behold, my friend Ashton Udall has beaten me to it, with a post, entitled, Bring Your Product to Life, I urge you to read Ashton’s post in full, but here is my outline of the basic steps an individual or small company should take to get their product from conception to market:
1. Develop and design the product. Typically this is done by the product inventor outside China.
2. Get a prototype made either in your home country or overseas.
3. If you are not fluent or nearly fluent in Mandarin and if you do not have a lot of experience dealing with Chinese factories, you should find someone good to help source your product in China. I cannot emphasize this enough.
4. Good sourcing people know the good Chinese factories and they know the right factories for the right products and they know roughly what these factories should be charging for products and they know how to get good quality from them.
5. At the same time you are establishing contact with a sourcing person, you should contact an international lawyer experienced with China. You can use your really good sourcing person to help you find the right lawyer or vice-versa. Choose an international law firm that can both help you on the China side and with your various intellectual property issues in your home country and in whatever other countries you plan to sell your product. This same law firm should also be able to draft your China NNN Agreement (in Chinese) and your China manufacturing contract (in Chinese also). This lawyer should also help you negotiate your contract with your China product consultant/sourcing person, if you use such a person.
6. Decide who is going to oversee your quality control. Sometimes you may want your sourcing person to do this (if you have one), sometimes you will want to hire a third party quality control company based in China, and sometimes you may want to do this yourself.
Though I have obviously left out many important steps for taking a product from conception to market, including such things a market surveys, market testing, shipping logistics, packaging issues, etc., the above are usually the most important and where our international manufacturing lawyers most often see mistakes.