On the legal side, selling consumer products into China is relatively easy, particularly if you use one of the many companies that can handle the logistics for you. Our China lawyers are frequently called on to assist American and European companies looking to sell online into China and that typically consists of reviewing their contracts (most of the bigger Chinese online companies have decent form contracts) and making sure they are protecting their intellectual property.
On the intellectual property front, we explain the following:
1. Your trademarks and patents in other countries will not protect you in China. This includes trademarks and patents in Hong Kong and Macau. If you want to protect a trademark or a patent in China you must register the trademark or patent in Mainland China.
2. China is a first-to-file country for trademarks. This means that (with very few exceptions) whoever files first for a particular trademark in a particular category gets it. So if your company’s name is ABC and you make shoes and you have been manufacturing your shoes in China for the last five years and some other company (Chinese or foreign) registers the ABC trademark in China for shoes, that other company gets the trademark and it can now stop you from making or selling ABC shoes in China because it owns the China trademark to ABC shoes. It can also sue you for monetary damages for infringing on its China trademark.
3. Before just going off and registering a trademark in China, you should think long and hard about what you should be registering. Do you register just your English-language name? Do you create a Chinese name and register that as well? Should your Chinese name be a translation of your English name, a transliteration, or something unrelated? Determining these things oftentimes requires both a China trademark lawyer and a China marketer. In The China Trademarks You Need. We talked about how our clients typically handle these issues:
In situations where our clients are making product in China for export only and their product has the trademark on it only in English, securing just an English language trademark is usually enough. In situations where a company intends to manufacture its product in China and eventually sell in China, the company must weigh the costs and benefits of securing a Mandarin (or other language) trademark now, or just wait. In situations where the company knows it will be selling its product in China right away, it needs to analyze the options set forth above. In almost all instances where our client’s trademark has actual meaning, they have chosen to trademark both the English and the Mandarin of the word. Rarely do our clients seek a China trademark in a language other than either English or Mandarin. Only around 25% of the time do our clients seek to secure the trademark for a transliterated or phonetic version of their English language trademark. Most of the time, they choose to wait and see how their product does in China and then, if it proves successful, they usually come back and register more on it. Waiting also allows them to see exactly what the Chinese will call their product. The downside to waiting is that someone else may register the name in the meantime.
Take the ABC shoe company example. They are making only shoes now, but does it have plans to eventually expand to wallets? If so, it should at least consider registering the ABC brand name for wallets as well as for shoes. Does it care if someone makes shoe polish with its name on it? If it does, it should consider securing a China trademark for shoe polish as well.
To the above, I would add considering whether you should register names in Chinese only in simplified characters, or in traditional characters as well. Mainland China uses simplified characters, while Hong Kong and Macau use traditional characters (for now). Traditional characters are also used in Taiwan and are more used within established diaspora communities. In some cases, it might also make sense to take into account Chinese languages other than Mandarin, such as Cantonese. By the same token, be careful when using Chinese names originating in places like Hong Kong. One of the legacies of British rule in Hong Kong is the use of Sinicized versions of English terms. For example, Hongkongers generally refer to strawberries as 士多啤梨, which is clearly an adaptation of the English word. By contrast, in Mainland China the term 草莓 (cao mei; literally, “grass berry”) is used.
By necessity, thinking of which trademarks to register is a moment for reflection regarding China business plans, as well as of the cultural dimension of entering the Chinese market.