Legal Product Protection
China has made great strides over the last 10 years in legislation to create a legal environment where the rule of law better supports the field of international trade and contracts. China's WTO commitments will soon have an even greater positive impact on business operations in China and that those companies that set up operations and contractual arrangements now, will have a distinct competitive advantage over those firms that wait. Yet, Western businessmen, still often find it difficult to handle business transactions or protect their interest in China’s current immature legal environment.
The most common concern of prospective clients is piracy (knock offs) of their products and the possibility of setting up future competitors. Though this does happen, it does not to the extent that everyone fears, and not yet to one of our clients. We work hard to build supply chains and a framework that provides legal protection, but there is no 100% guaranteed protection of trade secrets and non-competition. However, China and Asia would not be growing at their current torrid pace with the huge amounts of foreign trade and investment if the rewards didn’t far out weigh the limited risks.
GAC firmly believes that the best protection is to develop strong personal relationship that transforms Western clients and their Asian suppliers into “true partners”. GAC works hard to find qualified, committed and honorable managements to establish international business “relationships” with and to build and facilitate these relationships into strong profitable partnerships. However, once potential partners are found, it takes time and a commitment to build that special trust.
Our legal consultant does recommend contractual arrangements that can provide a significant amount of enforceable legal protection in the USA, Europe, and China. For example, there are Chinese laws that actually restrict most Chinese manufacturers from directly exporting out of their country unless they utilize a licensed foreign trade representative authorized by the state. In addition to doing due diligence work at the stage of locating appropriate Asian partners, GAC urges and helps its clients to secure sophisticated contractual protection in Asia and their respective countries while these partnership relationships are being established. In most cases, we encourage our clients to first try and settle disputes in Asia (while reserving final say of form and venue of dispute resolutions to their own country). This is because legal costs in Asia are usually less than 1/5 the cost compared to the USA for example.
We of course hope the need for litigation is never needed. Though GAC initially monitors your supply partners to not only assure quality, we take care of the mutual interest of the clients and Chinese suppliers and are committed in fostering possible strategic partnership between them. These relationships are developed through the building and management of your new supply chain. Together, GAC, the Western client, and the Asian supplier work together to resolve such issues as cultural differences, currency fluctuations, governmental and private corruption, over capacity, etc. to build a team that can maximize the opportunities of international markets and manufacturing.