Dilemma: deal with 3 separate factories to protect a product or 1 and risk it all.

[Vadim26]

Hey guys.

Long story short,

I have a product ready to manufacture. I was advised to contact a few suppliers and share separate components of my product with each of them. This way no one will have a full product, and the design can't be stolen.

I am in contact with 3 suppliers, and just now realizing how much headache it is going be. What will happen is that they will all ship me the components, and I will have to hand-assemble them myself here (this is for the sample). It's OK, but what do I do when it is the batch of 100-300 products coming?

NDA's don't work in China, anything can be stolen with small tweaks, and provisional patent (for the design) takes a long time. It does make sense to get it when the sales are consistent, though.

Can I deal with just 1 factory, let them do a full assembly and ship me the complete product? The company I am working with is a well-established manufacturer. They are in business of manufacturing, and not selling products.

I have very limited experience in sourcing products from China.
Hoping to get an answer from experts.

@Walter Hay
@AgainstAllOdds


Edit: the design is not finalized, as I don't have a sample on my hands yet to confirm everything.

 

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[Walter Hay]

Hey guys.

Long story short,

I have a product ready to manufacture. I was advised to contact a few suppliers and share separate components of my product with each of them. This way no one will have a full product, and the design can't be stolen.

I am in contact with 3 suppliers, and just now realizing how much headache it is going be. What will happen is that they will all ship me the components, and I will have to hand-assemble them myself here (this is for the sample). It's OK, but what do I do when it is the batch of 100-300 products coming?

NDA's don't work in China, anything can be stolen with small tweaks, and provisional patent (for the design) takes a long time. It does make sense to get it when the sales are consistent, though.

Can I deal with just 1 factory, let them do a full assembly and ship me the complete product? The company I am working with is a well-established manufacturer. They are in business of manufacturing, and not selling products.

I have very limited experience in sourcing products from China.
Hoping to get an answer from experts.

@Walter Hay
@AgainstAllOdds

It is true that NDAs don't work in China, but the Chinese NNN does. It is not so easy to prepare, but if you want protection for your idea, it is really the only way.

It is essential that the agreement be written in Chinese and acknowledge that Chinese law applies. Never include any reference to US jurisdiction because that would render the agreement useless in China.

You should have it written for you by a Chinese lawyer, or a lawyer in Canada who has experience in that field.

In my book I mention a Chinese lawyer friend who should be able to write an enforceable agreement for you. Search for Justin.

Walter
EDIT: NNN Stands for:

1. NON USE
2. NON DISCLOSURE
3. NON CIRCUMVENTION
   
   
   
   
   

 

[Vadim26]

It is true that NDAs don't work in China, but the Chinese NNN does. It is not so easy to prepare, but if you want protection for your idea, it is really the only way.

It is essential that the agreement be written in Chinese and acknowledge that Chinese law applies. Never include any reference to US jurisdiction because that would render the agreement useless in China.

You should have it written for you by a Chinese lawyer, or a lawyer in Canada who has experience in that field.

In my book I mention a Chinese lawyer friend who should be able to write an enforceable agreement for you. Search for Justin.

Walter

Thank you, very helpful.
I have your book, and going to contact him.

I think what I am going to do for now is to get a sample using 3 suppliers.
Once all the design is set in stone and confirmed by me, liked by customers etc. then I will get NNN and work with just 1 manufacturer.

 

[Walter Hay]

Thank you, very helpful.
I have your book, and going to contact him.

I think what I am going to do for now is to get a sample using 3 suppliers.
Once all the design is set in stone and confirmed by me, liked by customers etc. then I will get NNN and work with just 1 manufacturer.

You should have an NNN signed at the earliest stage in discussions with suppliers, otherwise you might not have complete protection.

Cost of enforcement would be too high for most people so Justin might be your man. He tells me that he has most success by bluffing rather than court action.

Walter

 

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[Fastlane Liam]

It depends what your experience is, and how much demand there is for this product. But if it was me speed > everything else, and I would just use one factory to test demand and get it out there. Wouldn't take a rocket scientist to redraw the product in CAD on their own

 

[Vadim26]

Thank you, everyone.

I would assume NNN implies that you have final design of the product, that won't be changed (i mean just small tweaks here and there).

Will quickly research that.

It depends what your experience is, and how much demand there is for this product. But if it was me speed > everything else, and I would just use one factory to test demand and get it out there. Wouldn't take a rocket scientist to redraw the product in CAD on their own

Speed > everything. Exactly!

No it wouldn't, my only concern is that once someone sees what's inside the metal structure of the product, because this is what I am trying to protect (and overall look obviously).

Looking into NNN now.

 

[AgainstAllOdds]

Great advice above.

As @Fastlane Liam said - most products are not difficult to knock off. Most likely it won't be the factory that's selling the same product to other customers. It will be a competitor that sees the product and finds a factory to recreate it. At that point the floodgates open.

Also, the only way to really protect a product with a particular factory is by giving them enough business that the cost to go against you becomes too high.

In my book, getting started and establishing the market is a lot more important than the fear that someone will steal your product.

Product is 20% of the equation. Marketing/sales/distribution is the other 80%.

 

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[Walter Hay]

I would assume NNN implies that you have final design of the product, that won't be changed (i mean just small tweaks here and there).

Will quickly research that.

No you don't need to have the final design ready. The NNN is intended to protect your idea.

Make sure you do your due diligence on your suppliers before making your choice.

Walter

 

[biophase]

Great advice above.

As @Fastlane Liam said - most products are not difficult to knock off. Most likely it won't be the factory that's selling the same product to other customers. It will be a competitor that sees the product and finds a factory to recreate it. At that point the floodgates open.

Also, the only way to really protect a product with a particular factory is by giving them enough business that the cost to go against you becomes too high.

In my book, getting started and establishing the market is a lot more important than the fear that someone will steal your product.

Product is 20% of the equation. Marketing/sales/distribution is the other 80%.

Exactly! It’s not your factory that will knock you off.

Someone is going to buy your product and disassemble it and then give it to another factory to make all the pieces.