Trademark Vulnerability: How Unregistered Brands Face Customs Holds in China

A foreign company engages in OEM or ODM activities in China and only manufactures goods for export without selling their brand’s products in the Chinese market, it’s highly advisable to register their brand as a trademark in China. Why? We are going to illustrate the reasons by a real life sanitized example.

Example: XYZ Electronics – A Brand Unregistered in China

XYZ Electronics is a well-known international electronics company that manufactures high-quality electronic devices for export to various countries, including China. While XYZ Electronics is renowned globally, they have not registered their brand as a trademark in China, assuming their primary market is outside of the country.

However, during a routine customs inspection in China, authorities identify a shipment of electronic devices bearing the XYZ Electronics logo and branding. The China Customs officers notice that the brand is not registered as a trademark in China, raising concerns about potential trademark infringement.

As a result:

– The shipment is held by China Customs for further investigation, causing delays and disruptions to XYZ Electronics’ supply chain.

– The company faces inquiries from China Customs regarding the authenticity of their brand and the ownership rights to use it in the country.

– XYZ Electronics has limited legal recourse in China to defend its brand’s identity without a registered trademark, making it challenging to swiftly resolve the issue.

Moreover, during the investigation, it comes to light that unauthorized local manufacturers in China have been producing counterfeit electronic devices bearing the XYZ Electronics logo. These counterfeit products not only harm XYZ Electronics’ reputation but also lead to potential revenue losses and market confusion.

To resolve the situation and protect their brand’s interests in China, XYZ Electronics must initiate immediate steps, including engaging legal assistance, to address the customs hold and potential trademark infringement issues. This process can be time-consuming, costly, and may hinder their ability to smoothly conduct business operations in China.

This example demonstrates the risks of not registering a brand as a trademark in China, even if the primary focus is on exporting goods. To safeguard their brand’s identity and avoid potential customs holds or trademark infringement issues, foreign companies engaged in OEM or ODM activities in China should prioritize early trademark registration in the country. Doing so provides essential legal protection and ensures a smooth and successful business experience in China’s manufacturing landscape.