Using a Chinese Manufacturer For Your New Invention
Posted: Monday, September 14, 2009
by Amy Green
Innovate Product Design
For many new product ideas and inventions, there could be great savings to be made by outsourcing their manufacture to China. In recent decades China has become a world leader in the manufacturing sector and can often provide British entrepreneurs with high levels of service at a lower cost. Before making any decisions on whether to use a Chinese manufacturer, it is best to investigate costs relative to those likely to be incurred if using a European or American manufacturer. If you do decide to go ahead with a Chinese company, this article outlines the main points you need to bear in mind and offers some valuable tips on how best to proceed.
The first thing you need to do before approaching manufacturers is to make sure your idea is fully developed and has been CAD modelled. From your CAD designs, competent manufacturers should be able to produce your product. Furthermore, CAD designs can make it easier to split your plans across a number of manufacturers producing different components without showing anyone the whole plan. Naturally, this provides an extra level of safety and protection for your idea. Companies such as Innovate Product Design can help with this.
Get your idea protected
To ensure that your idea is fully protected and legally belongs to you, it is incredibly important to have the right intellectual property protection in place. I cannot emphasise this enough. Without protection, if you disclose your invention to any third party they would be able produce it themselves without repercussions. For most inventions a patent would be most relevant, but it may be that a registered design would also be of use. For a British inventor to get a patent in China, the most common course of action would be to first file for a UK patent and then also nominate China as a country to protect in. This will add extra costs to the patenting process but is a necessary step. Companies specialising in helping individuals to protect their ideas, such as Innovate Product Design, can help with this.
In addition to patenting, when dealing with China in particular it is important to draft confidentiality agreements to be signed by both you and any third parties involved. Intellectual property rights are not yet as strong in China as they are in the West but legally binding confidentiality agreements do hold considerable sway and should be used in addition to any relevant intellectual property protection. Lawyers may be best placed to provide advice on this.
Find relevant manufacturers
Once these issues have been dealt with, you can start to look for potential manufacturers. The internet is a valuable resource for this, with several online directories able to provide product information and contact details of Chinese manufacturers. The two most useful for English-speakers are:
http://www.alibaba.com/
http://www.made-in-china.com/
These can be searched as with any other online search facility, using keywords. The most useful way of searching the databases may be to find manufacturers of products similar to your own invention, or components of your invention. The manufacturers must have specified that they are willing to take on OEM (original equipment manufacture) and new specification projects.
Begin to build a relationship
Having built a list of potential manufacturers, you can begin finding out more about them and letting them know more about you. Your first instinct may be to try and find out exactly what they can offer you. However, this approach is unlikely to be well received in China. Chinese business is based on the concept of guanxi, where trust and relationships are of utmost importance so, naturally, developing relationships with Chinese companies is incredibly important. As Chinese companies often prefer to know and trust those they work with, it is usually best to start building up a relationship with them before any business agreements are made, both on a business and personal level. A good start would be to send relevant people within the companies you are interested in working with some information on yourself and your invention to build up trust. From this point on, frequent contact is important to foster friendships.
At this point, it would be very useful to get some references for the companies you are interested in from those who have dealt with them before, and also some samples. If it is at all possible, it would also be of great benefit to visit their factory in China to see exactly how they work and how reputable they are. This is clearly a big commitment and may not be possible for many inventors due to budget and time constraints. However, it can help to greatly strengthen relationships with the manufacturers and also serve to set your mind at rest, so if there is any chance at all of such a visit it is strongly recommended.
Down to business!
Now you have established relationships with a small number of Chinese manufacturers, it is time to discuss business. This can take on any form and varies by invention - as such, no firm guidelines can be given here. However, in general, it is always worth asking whether a manufacturer would be willing to reduce or waive up-front costs in exchange for an alternative form of payment, for example, a percentage of any future profits. The likelihood of such a deal taking place depends on the potential the manufacturer sees in the product. It is important to be cautious here, making sure there is a time-limit on any such deal so that you are not locked in to using one manufacturer for the lifespan of the product.
Best of luck with your new invention!
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