How To Use E-Commerce To Sell Your Products Into China

The Seattle Times recently wrote a long article on the trials and tribulations and successes involved in selling consumer products to China online. The article is entitled, Seattle-area businesses plug into China’s love of online shopping and subtitled, American companies such as Blue Nile, Northwest Cherry Growers and Costco are dipping their toes into the waters of e-commerce in China to learn what appeals to consumers in the world’s largest online marketplace. It makes for a fine introduction.  

On the legal side, selling consumer products into China is relatively easy, particularly if you use one of the many companies that handles all of the logistics for you. Our China lawyers are frequently called on to assist American and European companies looking to sell online into China and we typically do little more than review their contracts (most of the Chinese companies have pretty standard form contracts by now) and make sure that they are protecting their intellectual property.

On the intellectual property front, we explain the following:

1. Your trademarks and patents in other countries are not going to protect you in China.

2. China is a “first to file” country. This means is that (with very few exceptions) whoever files for a particular trademark in a particular category gets it. So if your company’s name is ABC and you make shoes and you have been manufacturing your shoes in China for the last five years and some other company (Chinese or foreign) registers the ABC trademark in China for shoes, that other company gets the trademark. If you allow some other company to register “your” trademark in China, that other company can stop you from selling your products in China using “your” trademark. This happens all the time.

2.  A trademark or patent in Hong Kong or Taiwan or Macao is not a trademark or a patent in China. If you want to protect a trademark or a patent in the China , you must register the trademark or patent in China.

3.  Before just going off and registering a trademark in China, you need to think long and hard about exactly what it is that your should be registering.  Do you register just your English-language name? Do you create a Chinese name and register that as well? Should your Chinese name be a translation of your English name, a transliteration, or something unrelated? Determining these things oftentimes requires both a China trademark lawyer and a China marketer. In Hermès’ China Trademark Case. Do You Know What Trademarks You Really Need? I talked about how my firm’s clients typically handle these issues:

In situations where our clients are making product in China for export only and their product has the trademark on it only in English, securing just an English language trademark is usually enough. In situations where a company intends to manufacture its product in China and eventually sell in China, the company must weigh the costs and benefits of securing a Mandarin (or other language) trademark now, or just wait. In situations where the company knows it will be selling its product in China right away, it needs to analyze the options set forth above. In almost all instances where our client’s trademark has actual meaning, they have chosen to trademark both the English and the Mandarin of the word. Rarely do our clients seek a China trademark in a language other than either English or Mandarin. Only around 25% of the time do our clients seek to secure the trademark for a transliterated or phonetic version of their English language trademark. Most of the time, they choose to wait and see how their product does in China and then, if it proves successful, they usually come back and register more on it. Waiting also allows them to see exactly what the Chinese will call their product. The downside to waiting is that someone else may register the name in the meantime.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.