Jack Ma Supports Fake China

For years, criticism has been rampant about fakes and knockoffs manufactured in China.  International brands yearly spend millions of dollars protecting their intellectual property and trademarks. 

Big brands employ teams especially to manage trademarks and copyrights in a counter-espionage war on fakes.  The Chinese government has supported this war on fakes by raiding companies and individuals infringing on patents, trademark and copyright, confiscating goods, closing businesses and prosecuting the individuals responsible.  But it was and still is a war hard fought, you close one infringer, and another sprouts up in its place due to a massive global demand for all that is cheap.

Global economies are suffering because of the demand for Chinese fake products…but Jack Ma insinuates this is the new norm.

I have seen several articles in recent months touting “Fake China has Ended”, but on the 14th June 2016 the Richest Man in Asia, Jack Ma with $33.3 Billion in assets commented that China’s unbranded goods are usually better than their branded counterparts.

“The problem is that the fake products today, they make better quality, better price than the real product, than the real names,” he said in Hangzhou at Alibaba’s investor’s day on Tuesday (14 Jun).

Noting that the “way of doing business has changed” due to the presence of Chinese factories marketing their lower cost, brand-free imitations to consumers via e-commerce platforms like Alibaba, Jack Ma still holds true to his company being able to handle the problem “better than any government, any organization, any people in the world”.

http://business.asiaone.com/news/jack-ma-reiterates-importance-honour-says-singapore-great-example

The challenge with this notion is, where do all the original ideas come from if China factories are going to copy continuously what other organisations develop?  Anyone with a creative, engineering or scientific flair won’t want to share their ideas; the philosophy is doomed, there will be nothing new, just copies of copies.

But amongst the current madness in the news on Friday 17th June 2016, Beijing had in May issues an administrative order to Apple addressing the following, another global tech giant is also potentially copying;

The administrative order, issued last month by the Beijing Intellectual Property Bureau, addresses claims from Chinese electronics company Shenzhen Baili that the exterior design of those iPhones violates design patents for its 100C smartphone. As a result of Apple’s appeal, those models, as well as the iPhone 6s, iPhone 6s Plus and iPhone SE, continue to be available at retail in China, Apple said in a statement.

The ruling represents the latest stumbling block for Apple in China, which accounts for about $59 billion of its annual sales and looms large as a concern that has caused some investors, such as activist Carl Icahn, to dump shares.

http://www.usatoday.com/story/tech/news/2016/06/17/report-apple-forced-stop-iphone-6-sales-beijing/86028892/

Perhaps, China is not the only one copying.  Does everyone copy everyone?  The game is who gets to the market first with innovation wins.  With competitors rebranded and tweaked products following shortly thereafter, pushing down margins that only the big players can survive.

But one thing I have seen, factories and suppliers, not just in China, if they find value in a product there is a fair percentage of players that will copy and try to undercut the original brand, sell to new markets, or enter the same market and retailers at a lower price.  If you haven’t completed your intellectual property due diligence stringently, fool on you, the supplier will surely take out a patent, trademark or copyright on whatever you didn’t if there is any value.  If you have something unique, protect your intellectual property.

If you ridicule intellectual property laws in China and think you can just change suppliers, remember, if the vendor owns the intellectual property because you didn’t register it, the vendor has the right to stop you exporting goods from other suppliers infringing their IP.  You will then be forced to re-engineer your product, buy back the intellectual property or pay a royalty for use of to the vendor.

Manage your supplier “T&C” terms and conditions, enforce your “IP” intellectual property rights through the supplier chain of custody both downstream and upstream.  Ensure that you have initial non-disclosure requirements for preliminary discussion, absolute terms and conditions dictating intellectual property rights across trademarks and copyright.  Where patents are involved, or any other exclusive conditions, ensure there is an “MOU” Memorandum of Understanding related to a product or product group that clearly outlines the exclusive conditions.

Are you protecting your intellectual property?

ID Global Concepts is involved in various vendor evaluations and start-ups, we understand what is needed to get the best long term result from a supplier. We can add value to your sourcing operation either through consultancy or management contract to ensure your business is using a vendor that is the right fit for your business and meets your value expectations.

If you would like to learn more or wish to discuss other supply chain opportunities, please email us at info@idgc.co.

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