By Dan Harris
Our China lawyers are always working on some China manufacturing matter or another. Those matters typically involve what I internally call the manufacturing trifecta: China NNN Agreement, China Manufacturing Agreement, and China Trademark.
For each of these matters (and for just about anything we do), the first thing we try to do is to get a general sense of the client and the project. We typically achieve this by starting out with a broad set of questions that are loosely tailored to the client and the client’s project, with very few assumptions by us.
Once we receive and analyze the client’s answers to our broad questions, we then come back with a set of hyper-focused questions, the answers to which should allow us to start drafting the contract or filing the trademark. The below is a slightly revised email that went out this week to a client regarding its China Manufacturing Agreement. I am running it here because it nicely highlights some of the basic issues that go into manufacturing in China and, correspondingly, some of the basic issues that go into drafting a China Manufacturing Agreement.
To get started, please provide the following basic information:Please provide a basic statement in reasonable detail regarding your plan for your manufacturing project in China. This statement should include at least the following:
- What is the product or products? How will you provide specifications for this product or products? I note that your company sells a large number of products. Which of these, in general terms, will be made in China?
- Who will be manufacturing this product or products? What is the current status of your relations with your Chinese manufacturers?
- What quantities per year will you be buying of this product or products?
- Will you be using one factory or several factories?
- Do you design the product or products, or do you brand Chinese designed product, or do you do both?
- Who is responsible for production design? Who will own the result of that design process?
- How do you plan to monitor the manufacturing process?
- What entities will be the retail customers for the product or products? Will you sell a) to distributors, b) to retailers, c) direct to the public? Or some combination of these?
- What are the pricing and payment and shipment terms?
- How do you deal with basic business terms: price, quantity, delivery dates and similar?
- What registered IP do you have that is embodied in the product or products? Where is such IP registered? IP means patents, trademarks, copyrights, and trade secrets.
- Do you make use of molds, jigs or other tooling in the manufacturing process? If yes, what is your current procedure for dealing with such items?
- What are your specific business concerns related to manufacturing in China?
After I get your responses to these questions, I will then provide you with a more focused set of questions.
Dan Harris is founder of the Harris Bricken law firm, a boutique international law firm focusing on small and medium sized businesses that operate internationally. China is the fastest growing area for the firm. Dan writes ChinaLawBlog.com as a source of China legal and business information.