Manufacturing in China can be a smart business move. The country offers skilled labour, advanced facilities, and competitive costs. But while the opportunities are significant, so are the risks — especially when it comes to protecting your brand. One of the most common (and costly) mistakes foreign companies make is starting production in China before securing local trade mark rights.
China’s “First-to-File” System – The Trap You Don’t See Coming
Unlike some countries that give priority to the first person to use a trade mark, China operates under a first-to-file rule. This means that whoever registers a trade mark first — whether they own the brand overseas or not — gets the legal rights to it in China.
This opens the door for “trade mark squatters” who monitor overseas brands, register them locally, and then either sell the rights back for a high price or block the brand from using its own name or unscrupulous manufacturers.
If you haven’t registered your trade mark in China before manufacturing begins, you could find:
- Your own products blocked from export.
- Your goods seized at the border.
- Your brand name appearing on counterfeit products in the market — and you powerless to stop it.
A Real Risk for Export Only Brands
Many businesses think they don’t need a Chinese trade mark because they don’t sell in China. This is a dangerous assumption. If your products are made in China, the trade mark still exists and can be registered there by you or someone else. Even if all goods are exported, you still need the rights to your own brand to avoid legal disputes.
How to Protect Your Brand Before You Start
- Register Your Trade Mark in China Early – Do it before signing manufacturing contracts or sharing designs. Cover the correct class and sub-class for your goods, and consider registering a Chinese language version of your brand name.
- Record Your Rights with China Customs – This allows customs officers to stop infringing goods from leaving or entering the country.
- Use Strong Contracts – Include Non-Disclosure, Non-Use, and Non-Circumvention (NNN) clauses, written in Chinese, and ensure disputes are handled in Chinese courts.
The Cost of Waiting
Registering a trade mark in China is a relatively small investment compared to the cost of losing your brand. Once someone else has your trade mark, getting it back is often expensive, time consuming, and sometimes impossible.
Bottom line:
If you plan to manufacture in China, secure your trade mark rights there before you share your brand, place orders, or start production. It’s the single most important step you can take to protect your business from the hidden pitfalls of manufacturing in China.
Contact one of our IP and branding experts for further advice or assistance with securing your brand in China.