From time to time, an importer asks me about everything he can do to protect himself. Let’s say they just received a shipment of defective goods. Now they are willing to pay for extra protection.
They will want to know how to check the components, then how to check the beginning of production, then how to check again later in production, and how to check what is loaded in the container. Then I explain that it’s probably overkill, and that an inspection during production + a final inspection are probably enough in their case.
And it’s the same for supplier selection: a good discussion + a background check + a factory audit are usually enough.
I realized it’s the same when it comes to legal protection, when reading Getting Started On Manufacturing In China. The Legal Basics. on the China Law Blog.
A western buyer who needs to develop and manufacture a new product in China can do all of the following:
- Before even showing any product information: “NNN” agreement (if the product to manufacture is truly unique and different from what the factory already manufactures).
- Before the supplier starts developing prototypes: product development agreement (if it would take a long time to start development from scratch with another factory and/or if there are expenses for customized molds/tooling).
- Before communicating any brand name: trademark registration (applicable to all importers who manufacture products under their own brand in China).
- Before authorizing production/wiring a deposit: manufacturing agreement (always a good idea, especially if you don’t pay by letter of credit).
All four of these agreements are not always required, depending on the situation. They also cost money, so there is a business decision to make.
I guess it’s the same as quality control: it depends on your aversion for risk and on your past experiences…