China sourcing has hit the international trade very hard. It started out as a strategy which has now become a must if a company wants to compete with its contemporaries. But many companies fail to realize the need to protect itself against the risks due to lack of planning and analysis of the market tradeoffs. When such companies are to face problems, they are left with no back up plan and ultimately get doomed. And then, the blame comes on to sourcing which is certainly not the case. Yes, the problem people face is that all the problems need to be solved under the Chinese legal system. It can get tough to do so but, since the success story of Sourcing even the Chinese legal system has become more liberal. It only requires a few basic steps to safeguard from the risks. The investment for such legalities is much less when compared to the consequences of the risks involved.
Here, are five steps which can help to reduce the risks involved in China sourcing:
-Form intellectual property rights and register the intellectual property rights properly. This is because if one does not do the above, it actually fails to have a firm basis required for the IP rights. This can leave a company with nothing to protect against, when in China. This emphasizes on the need of intellectual property rights and its proper registration. Also one should protect its brand identity by forming and enrolling the slogan, trademark and logo of the brand. All of this is should be done in the home country before landing up in China.
-Now register the brand in China. This gives the rights to access the Chinese markets in the future, prohibiting the export of fake goods and also impedes a competitor from registering your mark in China.
-In China sourcing, if a company wishes to have confidentiality and non- competition protection then a written agreement really is a boon especially for small and medium level companies. The written agreement should preferably be in both Chinese and English.
-The payment rules are very simple. Do not pay until one is very sure of the on-time delivery and the ordered product quality.
-Make sure to use comprehensive agreements of OEM with each individual manufacturer. Many small and medium sized businesses do transactions via a straightforward purchase order. But this is wrong as it protects the manufacturer only. A company’s protection depends on it having the written agreement of OEM. Such an agreement should be with each and every Chinese manufacturer with whom the company works. It should ideally take care of all the issues discussed above and in addition also the basic legal issues like dispute resolution and jurisdiction. Such an agreement should also be in both Chinese and English languages.
With these issues in mind, it is quite safe to plunge into the China sourcing market. These issues cover almost all the anticipated risks involved in China sourcing. So, addressing them will surely make your risk of diving into global sourcing, a successful effort and will surely make a name for your company in the international trade.
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