Speaking of competitors buying your products, did you know that the very first new model cars that roll off the assembly line are knowingly shipped directly to the automaker’s competitors? Yep, they are. Alas, I have to leave the whys of that compelling tidbit for part two because Rebecca sends this question (company and personal names are omitted):
Hi Kathleen, I got a very weird order yesterday evening and I don’t like the looks of it. The order was placed by [Full Name] from MadeUpName Unlimited in Hong Kong. The email address is sales@MyCompetitorAsia.com
The url is identical to [My Competitor’s] US site, so I assume it truly is associated with my competitor. The order is for one style of my widgets in each size. Are they looking to knock off my product? Or just checking out the new girl? I’m trying to decide what to do:
- Refund their money and refuse the order
- Email them and ask what the heck they want
- Contact my competitor in the USA and see if they are interested in arranging a license for my patented technology
- Something else I haven’t thought of?
I do have a very expensive patent attorney who I would prefer not to involve, since my competitor hasn’t done anything wrong as yet, they just seem to have the intention of doing something wrong. Anyone ever run up against something like this? Any suggestions for me?
Before jumping to any conclusions, my first step was to find out more about MadeUpName Unlimited and their site. As it happens, the site is an exact duplicate of your competitor’s US site except for contact information. To eliminate the possibility of site spoofing, I called your competitor and asked if the site in Asia was affiliated with their company. They confirmed MadeUpName Unlimited is a legitimate reseller of their product with a broad exclusive territory in Asia. Further checking of MadeUpName Unlimited itself would lead one to believe the company is legitimate -as well as can be determined.
I believe there are two possible situations here. One, your niche widgets are increasingly hot in Asia. It hasn’t caught on there yet like it has here but demand is growing. It is possible the firm in Asia is interested in becoming your representative and wants to review your products before approaching you with an offer. The matter of sizing is critical in this market and I can’t say more without giving it away.
Most people who are up to no good will have a friend order for them but this party has been completely open thus far. Before filling the order, I would send a friendly, non confrontational email to the buyer asking if they are barred by your competitor from representing competing products. This suggests you are amenable to a similar relationship and not fraught with paranoia meaning you’re not provincial and someone they can do business with. If they cannot enter into similar relationships, I don’t see why they need your product except to use it as a point of comparison with their primary partner’s widgets but then it doesn’t make sense. That would be a function of product development from the US side and they likely already have your stuff on hand. Put it this way, if your competitor is any good they will have already done a tear down of your product.
[The subject of tear downs is actually why I wanted to write this entry but then it would be too long so I’ll leave that for part two.]
Believe me, I know that sending something off to Asia can be a great source of anxiety but plenty of US products sell well there. The Made in the USA label has a lot of cachet abroad. I think I even said in my book that if it were possible to sew a made in the USA label to the exterior of an item, it’d sell even better. Fortunately for you, owing to the constraints of your product type, your label must be sewn to the outside.
Let me tell you a story about my ex-husband’s cousin who came to visit us from Montevideo, Uruguay. She was dead set on buying a coat. Other than that our seasons are reversed and it was going to be challenging to buy a coat in Phoenix (where we lived at the time) in the middle of July (to say the least), her criteria for coat selection was, well, unusual. Her first criteria was looking for a Made in the USA label. Even twenty years ago that was hard, nigh impossible now. If it didn’t have one, she wasn’t interested. Second, she didn’t try anything on. No no. She tested each coat by grasping it by the collar and slinging it over a chair, draped casually with label facing up. She’d sling each coat two or three times. If the coat didn’t lie neatly in such a way as to prominently feature the label facing out where everyone could see it, she wasn’t interested. She bought the best slinger. It was only after she bought it that she even tried it on. It wasn’t her color and it was two sizes too small but she was pleased. There are plenty of people who are similarly motivated to signal.
My only question at this point is, since your product must be labeled on the outside (by virtue of its attributes), does the label read “Made in the USA”? It should -for both marketing and legal reasons. If it doesn’t, this buyer may not be interested.
Somewhat related: If you enter into a relationship with this buyer, you should seriously consider redesigning your site because they’ll want to copy it, most likely appending the url with “asia” as they’ve done with your competitor. Actually, you should probably invest in a professional site design anyway. If this buyer has picked up on you, that means your product image should match your increasing stature. I realize you do what you can DIY style until growing a bit larger but maybe this is a signal that it’s time to take that step.
In my next entry I’ll cover tear downs. It has a lot to do with this topic.
Fascinating! Thanks for this, Kathleen!
Thank you very much for this post. I thought you would surely have a lot of insight to offer. The situation seems so fishy yet like you said, if they just wanted to knock off the product it is simple enough to buy under a name that doesn’t tip anyone off. Looking forward to part 2.
So great to see this perspective on a topic that definitely interests me from an intellectual property standpoint. I’m not sure it would have occurred to me to think that the firm in Asia might be looking to expand on a business that is already working for them by adding a new widget to their arsonal.
Makes my MBA brain purr like a kitten. I strongly suggest that Rebecca follow Kathleen’s excellent advice.
We had a “competitior” buy our product and I sent the friendly email to her simply indicating that we knew who she was. She is now more of a colleague than a competitor.
Great points! I read the scenario and thought it seemed fishy but everything you mention makes sense. I remember in high school taking some French exchange students shopping. They wanted Levi’s to take home. Its easy to forget sometimes that like Americans see European products as sophisticated a lot of other countries view American products that way.
I forgot to mention, it may be better to be a good sport and fill the order because you’ll have a legal record of the sale rather than forcing them to work around you. The key reason is a basis for claim under the Economic Espionage Act of 1996 but I plan to discuss more of that in today’s entry.
Just wish I knew more about the ins and outs of negotiating a deal like this. One important matter: I would own the “asia” url as a condition and just let them use it. I would try to get as much information about their arrangement with your competitor as possible because while this could end up being an opportunity for you, you don’t want to be foolish either.
“I’m not sure it would have occurred to me to think that the firm in Asia might be looking to expand on a business that is already working for them by adding a new widget to their arsonal.”
Renee, it could be that the other widget isn’t working as well as they might like, precisely because this other widget is better . . .
This is an interesting topic since I am an American living in China. If the company is based in Hong Kong you may have more power over them to keep them from copying your product without giving you any of the credit or royalties. You might also contact the US Consulate in HK since they have an office that handles US-China business and manufacturing.
Make no mistake though that Chinese manufacturers will steal a product idea including putting “Made in the USA” lables on things marketed within China and the rest of Asia.
They presently do it with such high profile items as cars and DVDs, so clothing lines would be no big deal. The Chinese have also figured out that most westerners want to produce their product so much that they will enter into deals where the westerner gets screwed.
If this ends up as a licensing deal then you will need someone here that can not only speak two languages fluently but can also access sales records so you do not get shorted. I guarantee that if there is a way to not pay you the Chinese will figure out how to do it. And some areas of the country are worse than others when it comes to dishonesty. Just proceed slowly.