How should you protect your trade secrets in China? Are patents the only way?
China’s IP protections have improved greatly in recent years – but don’t just take our word for it: this report from The Diplomat discusses the positive effects of China’s continuing reforms.
Many don’t realise that counterfeits also have a bad name in China. We’re not talking about Adadis shoes or Guchi bags here, but rather products claiming specific characteristics or functions, a lack of which could (and does) have serious consequences for public safety. It’s important to recognise that Chinese users are more aware and wary of counterfeit goods. The government is also alert to its damaging effects, publishing stricter regulations concerning liability, especially for large projects, ensuring that said liability lays squarely on counterfeiters’ shoulders.
Despite this, many are still worried that they won’t be able to protect their trade secrets when operating in the Chinese market. They do have good reasons to be wary: IP law is still not fool proof, with persisting grey areas and loopholes which can be used to evade effective enforcement.
In this article, we will talk about a number of practical strategies for protecting your trade secrets – and most importantly, your interests – in the Chinese market, instead of simply relying on yet imperfect IP law.
Set realistic expectations and be prepared
Accept that you will likely have to share the market – even if you have created something completely novel and everyone else is playing catch-up – especially when your product or technology has huge potential.
It is tempting to perceive copying, stealing ideas, and infringing IP as Chinese behaviours, or as only occurring in the Chinese market. However, Steve Jobs himself dispelled this myth when he famously said that “good artists copy; great artists steal” (although it’s best not to go into details on endless infringement law suits and accusations between Apple and its Silicon Valley contemporaries). The reason for China’s infamy for IP infringement and counterfeiting is largely due to its ever-expanding manufacturing ability, allowing a product to easily be broken down and studied before being manufactured quicker than anywhere else. But no matter where you operate, it’s inevitable that if you have a good idea, someone will see it and think “I could do that too!”. Sooner or later, you should expect to see competition, whether legitimate or not. If a copycat decides to “steal” your idea, it’s not in your control.
However, you DO have a choice when deciding how to tackle a copycat situation. Should you bow to frustration and leave the market to them, or persist? China has more consumers than any other country, and can easily satisfy many competitors. By exiting the market, you are handing all your successes in educating the market, as well as future profit, to the copycats. However, play your cards right and you can retain a large market share. Your goal should not be to eliminate all potential competitors, but to maintain the bigger market share. But how can you achieve this?
Continuous innovation is key
As a pioneer, you can rest assured in your unique ability to create your product. Your expertise cannot be taken away by others. They can learn, but they must play catch up.
To stay ahead, you need to ramp up research. While copycats work hard to replicate your product, you need to working overtime on moving the goalposts out of their reach. Through this continuous iteration of your product, it you will always be ahead of the game. This of course relies on your proven ability to innovate, as well as to listen and adapt to market feedback and trends. By building a close relationship with your users and manufacturers, you can get valuable first-hand insights for your next area of improvement.
Build your brand and credibility
As well as focusing on your product, you need to build your brand. This is achieved, of course, through a strong online presence, lending credibility to your operation. Weibo is China’s Twitter, and dominates brand-consumer interaction. WeChat is a ubiquitous ‘super-app’ that permeates almost every aspect of a Chinese resident’s life. An essential starting point for the Chinese market is official account for each service. For truly original products, creating a Baidu Baike page is also a good option. Baidu is China’s leading search engine, and Baike is its answer to Wikipedia, commanding a similar level of public trust.
Building your online presence bolsters credibility, but there are other ways to enhance it. Collaborating with well-established organisations will allow some of their credibility to rub off on your brand. Makers of B2B products should aim for cooperation with public bodies, such as industrial associations, government-funded projects, or the powerful SOEs (state-owned enterprises).
“So how can you help me?”
Entering an unfamiliar market, carving a space in China’s electric, turbulent market and catching out the copycats can be daunting. However, A&C has extensive experience with every stage of the journey.
We first help to educate, providing market profiles and knowledge sharing opportunities, allowing you to understand and prepare. Then, our market research and social media marketing give insights and user-feedback, enabling your continuous innovation, while our established liaison and translation services ensure the foundation of your operations – your relationships with your Chinese partners – remains rock-solid. Finally our 30+ years of experience working with government, SOEs and industrial associations can help you connect to the right people and make things happen, gaining access to funding and knowledge, and enhancing credibility and trust.
Most importantly, you can enjoy access to expert due-diligence services, bilingual legal documentation assistance, and IP dispute resolution channels (should all else fail!).
Still not convinced, or need something that we haven’t discussed? Contact us today for a free consultation, and let us understand your needs.