Have a new product idea? But scared potential factories might steal it?

Then read on to find out how we overcome this challenge with our brand and for numerous sourcing clients.

Entrepreneurs, and SMEs often face the dilemma of protecting their product IP when outsourcing to Chinese manufacturers and designers​​. 

This is a real concern when dealing with contractors in different countries, especially when your product’s concept, industrial design files, and other intellectual property (IP) elements are involved​​.

In product development, we all know early validation is key.

Part of this process involves getting factory quotes.

But what if you don’t want to share your unique design far and wide?

Let me introduce you to the “approximate quote.”

Step 1

We reach out to 5-10 factories and give them:

➡️ Dimensions, materials, and approximate specs

➡️ An existing on-the-market reference product*

➡️ Our desired MOQ, or tiers of MOQ (e.g. 1,000 – 2,000 – 5,000 units)

With this starting point, we can normally get:

➡️ Approximate, but fairly accurate initial quotes

➡️ An idea of mold costs

➡️ Feedback on manufacturing feasibility (some changes may be needed)

➡️ A feeling for how cooperative the factory is

*Ensure that the reference product you provide does not infringe on another company’s intellectual property. It should be used strictly as a guideline for quality and functionality, not for copying or replicating proprietary designs or features.

Step 2

From here we start shortlisting to 2-3 factories.

We ask them to sign an NNN agreement and have a video call to go over the importance of IP protection.

Enforcing legal agreements in China can be challenging, but these steps establish an important precedent: you’re a brand that takes IP seriously.

You’d be surprised by how many brands don’t do this with their factories.

Step 3

Next, send your potential Chinese suppliers precise specs for final quoting and move on to sampling.

Ultimately you will go with one factory, maybe two if your quantity is large.

So, this method isn’t foolproof because your design may still be with factories you ultimately won’t work with.

And it’s only a part of an overarching IP strategy.

But it definitely helps.

Expanding on IP Protection Strategies

To further protect your product IP, let’s expand on the above and consider additional strategies:

1. Get Legal Advice: Work with law firms experienced in international IP protection.
   
   This might involve creating enforceable agreements like NDAs and NNNs and registering trademarks and patents in the countries you’re working with.
   
2. Retain a Digital Master Copy: Keep your IP digital, backed up, and distribute it piecemeal to reduce risk.
   
3. Drip-Feed Information: Share only essential information with suppliers, keeping the full design protected until later in the process.
   
4. Start with a Niche Product: Targeting a niche market can reduce the attractiveness of copying your prod​​uct. 
   
5. Rapid Product Launch: Being first-to-market can still offer a competitive advantage, although it’s less significant than in the past due to the speed of IP replication.

Thanks for reading, I hope you found this helpful!