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Taking Your Product From Conception To Market. China Manufacturing Included.

By Dan Harris and Steve Dickinson

I had a great conversation the other day with a nurse who called me with what I think is a killer product. I spoke with her for a while and found myself really enjoying the conversation because she had done such a good job in terms of laying the groundwork both here and in China for all that she was seeking to do with her product. Among other things, she had hired the right people to help her every step of the way and had actually called me a tad too soon for China. But as I told her, "call me back when you think you will be doing manufacturing with China that might involve your IP and just remember, there is no penalty for calling me too early, but there very well could be one for calling me too late." It got me to thinking about how so many people in similar positions to this nurse completely blow it in terms of getting their product to market. Twice very recently, we were contacted by someone who had started manufacturing product in China and now that they were ready to step up production to profitable levels, their Chinese factories were telling them that they owed them large sums of money for all of the prototyping work and that if they were not paid that money, they would lay claim to the product and all of its IP. In both cases, the American product inventors had messed things up so badly that the Chinese factories were not only in the strongest position in terms of business leverage, they also had strong legal claims as well. In both cases, the product inventor had to give up on his own product because it would have cost way too much money even to attempt to try to turn things around. So I started "writing" a post in my head on the basic steps to take a product from idea to market. But lo and behold, my friend Ashton Udall has beaten me to it, with a post, entitled, "Stanford 'Bring Your Product to Life' 2010 Workshop Roundup," summarizing a recently completed Stanford University workshop with the following on the panel:

Allen Adolph, Adolph Consulting Jeffrey Schox, Schox Patent Group Dr. Dongkai Shangguan, Flextronics Dr. Dariush Rafinejad, Blue Dome Consulting Marc Theeuwes, Nokia Growth Partners Dr. Richard Toepfer, INTJ Associates Phillip Trinidad, Protopulsion Ashton Udall, Global Sourcing Specialists

I urge you to go read Ashton's post, but here is my outline of the basic steps a U.S.-based individual or small company should take to get their product from conception to market: 1. Develop and design the product. Typically this is done by the product inventor in the United States. 2. Go see a United States based intellectual property attorney for help on such things as trademarks, patents, copyrights, trade secrets, confidentiality agreements, non-disclosure agreements, and non circumvention agreements. 3. Get a prototype made either in the United States or overseas. I generally prefer the United States even though it may cost more. I prefer it because your chance of getting quality, reliability and confidentiality will be higher. 4. If you are not fluent or nearly fluent in Mandarin and if you do not have a whole lot of experience in dealing with Chinese factories, you must find someone good to help source your product in China. I cannot emphasize this enough. Good sourcing people know the good Chinese factories and they know the right factories for the right products and they know about what these factories should be charging for any product and they know how to squeeze out good quality from them. If you have not been doing this for the last five years, you don't. You will have a greater chance of landing on red on a roulette wheel than you will of finding the right manufacturer at the right price on Alibaba or by using the cousin of the Chinese person down the street. I am basing this strictly on my many years of dealing with clients who source to China and you should believe me on this since I have no dog in this hunt. 5. At the same time you are establishing contact with a sourcing person, contact a lawyer experienced with China. You can use your really good sourcing person to help you find the right lawyer or vice-versa. Your China lawyer will help you on the China side with the same intellectual property issues with which your American lawyer will have already protected you in the United States. Your China lawyer will also be the person you should use to draft the OEM contract you will eventually need with whichever manufacturer you choose. This lawyer is also likely to be the best person to use to help you negotiate your contract with your China product consultant/sourcing person. 6. Decide who is going to oversee your quality control. Sometimes you may want your sourcing person to do this, sometimes you will want to hire a third party quality control company, and sometimes you may even be able to do it yourself. Though I have obviously left out many important steps for taking a product from conception to market, including such things a market surveys, market testing, shipping logistics, packaging issues, etc., the above are usually the most important and where I most often see mistakes.

Full post as published by China Law Blog on March 05, 2010 (boomark / email).