I had an interesting discussion a few days ago with the manager of a factory in China. He has big plans for selling on Taobao.com. Selling what? The same products he manufactures for one of his American customers…
His customer orders large quantities of garments, mostly in small size. This was already intriguing to the factory. The products have to be delivered to a warehouse in China. An employee from the warehouse told the factory’s truck driver that 90% of the products would be sold on the Chinese market.
The factory manager connected the dots. Of course it can be sold in China. He even found where it was sold, and for how much. His next step? Using some slightly different fabrics (to cover his a** in case the buyer finds out and investigates this situation), designing a logo that are relatively close to the buyer’s brand identity, and pushing it on Taobao.A few notes about Taobao: it is the sister company of Alibaba (the famous B2B directory), and it was launched as a response to eBay’s entry on the Chinese market. It takes no fees on transactions–only on advertisement. It has grown considerably, and most urban and connected Chinese have already purchased something on Taobao (even I did it…).
Could this happen with consumer goods sold in Europe or in the US? With many of them, yes. Sometimes they will use your brandname. It is actually very easy to figure out whether it is already the case… Go to Taobao.com, type your brand and search. You might be surprised.
Related articles, about what I call “parallel supply chains”: