China Sourcing: My personal experience.
To sum up part one briefly, China has a conundrum when it comes to intellectual property. On the one hand, they are the world masters at copying or knocking off. There is a cultural argument, or some might call it an excuse, that it in the tradition of Confucianism, it is considered an honor for your idea to be copied. And copying can even be rationalized as patriotic, as that it keeps Chinese employed. But as China transitions from low cost provider to the high tech leader they are determined to become, they are creating intellectual property that needs protecting world wide, including China. So the dynamic is changing, but still, rampant copying or knocking-off is occurring. This is a reality and the best way to deal with it is to divide and conquer so to speak. In other words, your China sourcing plan should include having different components made in different factories in different locations and the packaging and assembly in yet another location.
Go-Dome™, China Sourcing and Intelectual Property.
OK, that catches you up on part one of China Sourcing and intellectual property. Now on to a personal example. I also have another company called Go-Dome™. Go-Dome™ manufactures the world's finest inflatable portable planetariums. We sell through distributors around the world. And most of what we provide is made in China as you might imagine. The dome cloth, the Go-Dome™ itself and the Newtonian™2 spherical projection cases are all made in different places in different locations. So the above mentioned scheme is critical to securing our place as the finest inflatable portable planetariums in the world.
From China Sourcing to selling in China.
And now I am actually selling Go-Dome™s in China this year. To do this, I have developed a relationship with a Chinese distributor. So it is even more critical to protect my intellectual property now. Since I have started this effort, a Chinese company has knocked me off. So I guess I should be flattered. It validates that China is a good market. But the big difference is that although my Chinese competitor knocked me off, it is a poor copy and gives me distinction in China. We are the BMW of inflatable planetariums in China and China loves quality. It is never a bad thing to have a competitor to be judged against. And as long as we keep improving and innovating, we will always be number one in the Chinese market. I can feel good about that because China is a huge emerging market. I am proud that this China sourcing story of my American company, Go-Dome™ is not only sourced and protected in China, but is also selling to the Chinese market.