At a time when the global supply chain is experiencing a relatively turbulent patch, “companies who sell products in China are actually better placed to approach manufacturing in a way that mitigates the challenges of shipping globally and avoids the recently rising costs and newfound difficulties of releasing goods from customs” – PTL Group’s GM Arie Schreier.
With such a backdrop, it’s an ideal time to discuss manufacturing and assembly in China. And this is precisely what we did in June as we hosted an event series comprised of three webinars, each focused on different aspects of manufacturing in China. We were joined by top-notch industry experts in the fields of manufacturing, risk management and IP Protection.
Here is a brief recap of each of the webinar’s main takeaways:
Be The Disrupter or Risk Being Disrupted – The Do’s & Don’ts of Manufacturing in China
Carl Breau, the CEO of Saimen Group presented several trends that have characterized manufacturing in China in 2021. He addressed some of the transformations the sector has gone through in terms of technology and automation, product complexity, fluctuating costs, and the national sentiment around products that are ‘made in China’, even when made by a foreign-owned company.
Among the many recommendations and stories Carl shared with the audience, he referred to three principles that are crucial for success in China, also known as “the three S’s of China”:
Speed – In a market as fast-paced as that of China’s, acting quickly is vital. Companies should strive to shorten their time to market, quickly acquire market share and minimize the window of opportunity for any copycats to pounce.
Scale – The Chinese market is huge!! Everything happens on a large scale. It’s recommended to partner with a well-established and trustworthy service provider who can support you and guide the business through its initial phases to future success.
Sophistication – China is developing rapidly and so are its standards in manufacturing. Its consumers’ expectations are high and the demand for sophisticated and complex products is constantly rising.
Protect Your IP when Manufacturing in China
Three guest speakers participated in this webinar: Michelle Tzhori, an international attorney (1996) and an executive manager in foreign-invested enterprises in China since 2005, Vincent Zhang, attorney, and Jean-Luc Hébert, vice president at Saimen Group.
The main talk delved into the topic of trade secrets in China. Mr. Zhang presented a thorough explanation of what trade secrets include and how they are considered in the eyes of Chinese law. A telling figure presented in this conversation was that in 80% of cases of trade secrets theft, it’s an employee or a partner who is responsible for the breach, be that intentional or not.
Ms. Tzhori covered the practical measures managers should take to protect their trade secrets. She emphasized the importance of issuing and implementing internal IPR policies, employee IPR training, managerial supervision, and constant balancing between the different departments of an organization. While acknowledging the importance of an NDA, she emphasized the practical need to refrain from sharing highly essential information in certain circumstances, even with a valid NDA.
Lastly, Mr. Hebert presented two cases of trade secret theft from his own personal experiences of working in China. Hebert told the stories of two Canadian companies from two different sectors, one had its trademark squatted and one had its products copied. Some of the conclusions drawn in the discussion:
- The fact you haven’t officially entered the Chinese market does not mean your products or even your brand aren’t already being sold, copied or falsely promoted locally.
- It’s recommended to register trademarks before entering China, and maybe even before companies are considering entering the market.
- It’s advised to carefully consider your China-market entry model and not simply copy and paste an approach that has worked in other markets.
- It’s impossible to always prevent trade secrets theft, but in China, it’s not always or necessarily a bad thing. It’s worth examining how copycatting could sometimes serve as an opportunity.
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Risk Management in Manufacturing
In the final webinar, Bruno Lhopiteau, managing director at Siveco China, fascinated the audience when he discussed, as he called it “the ugly duckling” of manufacturing.
Mr. Lhopiteau was referring to the importance of maintenance practices. He illustrated the lifespan of a facility in China and explained that it is usually shorter than factories in other parts of the world. He highlighted that in China, risk management and ongoing maintenance should be a top priority for those managing manufacturing infrastructures in order to achieve long-term operational stability and increase company value.
But risk management is not only related to staying on top of your facility’s performance in terms of maintenance, it is also related to training your employees and ensuring you conduct periodic check-ups and operational audits of your China business.
We thank all the speakers and attendees who joined this series.
Now more than ever before, manufacturing in China seems like the ideal route to sell in China and in the APAC region. Get in touch today for China business support, we’ll be happy to support you with planning and implementing manufacturing solutions
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