Protecting Intellectual Property for Electronic Product Development and Manufacturing

PAG Electronics has a deep understanding of what Intellectual Property means. This is not only about signing a document (most of time NDA) in the hope to get it usefull while going to a court. It is also all about to establish procedure, data management, adapted and customized manufacturing and supply chain strategy.

For a business willing to launch a new product on the market, confidentiality is a critical notion which can not be neglected. It has consequences on time to market for the company itself, but also to stay ahead the competition.

Especially in China, more than anywhere else, intellectual property remains a big concerns as culture, business practice and law may be fundamentaly different from western countries. PAG Electronics have been facing those challenges in the past and with years and cases of experience on the ground, we are able to offer our customers the right strategy to avoid to get their product to be copied too fast. 

Legal System to protect your IP

It can sounds usefull to sign a Non-Disclosure Agreement ("NDA") as being the first basic step to protect your idea. However, in China those NDA might not protect you so much because to chinese law a such document will probably not worth much. It is usually also difficult to get law enforcement and obtain full compensation as it will need to be proven a certain number of elements you might not have.

It may be also difficult for foreign established companies to enforce the law in country where they don't even have a single legal entity.

In most case even you would win the case the following situation would happen: 

- You will spend so much money in lawyer firm and so on, that your compensation will not cover your expenses

- Win-win situation 50-50, you don't win it all, 

- Copycat manufacturer will close out business and will go to bankruptcy, pulling out their asset to the next building and starting business within another name. Still you will not get your compensation and you will still have to pay the legal fees to your attorney.

It can be usefull and we even recommend it to register your brand, trademark, design (both in China and in other countries) as in China such registration is based on "first arrive first serve system" and get your brand to be registered and approved may take till 2 years time frame to be accomplished.

In China, reverse engineering is not considered as being illegal.

Risks when manufacturing Electronic in China

While performing product development, procurement and manufacturing in China, risks mainly come from customer to speak too much about their projects.

Risk doesn't come only from the supplier, it comes also from customer. Here are a shortlist of what we have already seen in the past as situation while visiting, auditing, inspecting some suppliers and while working with customers:

- Customer gives too much information to suppliers who finally turn to have access all the data to manufacture full product itself, and to market it directly from China, becoming direct competitor of its own customer. Sometimes, customer get contact with supplier by giving their website address, making easy for supplier to see what finished products are manufactured, on which markets, to which client and at what price.

- Customer A to give some documents about project A to suppliers (sales people A) via USB key, which is later used by another sales B to give to another customer B to copy file of project B, the files from customer A were remaining on the USB key, and the customer B was no one else than competitor of customer A...

- Customer A to pay mould fees to supplier A to design a customized mould. The mould got used by supplier A to supply another supplier B who sell the parts to customer B, being the competitor of customer A

- Customer A to pay mould fees to supplier A with iron steel quality selected to be used 300 000 shot, but supplier A was renting the mould to supplier B, making the mould life cycle of customer A to be diminished and not long enough to handle the production which was scheduled. Customer A had to pay two mould...

- Supplier A produce for customer A some parts but instead of producing 10000 pieces as agreed, he produced 5000 pieces extra which were sold on the back by supplier A to the competitor of customer A.

- Supplier A produce for customer A final product, but dispute occur or supplier A estimate that quantities manufactured are not enough to generate profit, in order to compensate its cost (or to revenge in case of dispute), supplier A will produce and sell product somewhere else without letting know customer A.

- Customer A asks supplier A to print and operate packaging, on which one information are clearly indicated and which usually give access to final customer, final concept, final market and many more information that may help supplier A to become the competitor of its client. 

The key to operate efficient Intellectual Property Protection

The key remains in establish a strategy of Operationnal Intellectual Property and not only a Legal one. PAG Electronics voluntary spread the information in small part for each sub-suppliers to make difficult for them to reconstruct the full product.

Benefits using a Western Product Development Firm in China

One of the reason why our customers prefer to work with us than with an electronic factory making full finished product  is because we have capabilities to coordinate several sub-suppliers making each one a single only sub-elements of the product to be manufactured while having the capability to respect intellectual property, confidentiality and discretion.

In the end, not a single manufacturer get the full product in hand. So as long as the product is still under manufacturing process in China, the copycat process remains less easy and quick than sub-contracting a full project to a single chinese supplier.

The other reason why our customer choose us is because PAG Electronics doesn't do marketing for products that get manufactured under its roof (unless an agreement has been established by customers and being part of the strategy). Since PAG Electronics is not specialized in a particular product, you will never see a project which has been delegated to PAG Electronics to appear being marketed online on B2B platform or anywhere else.

We act as a contract manufacturer for electronics products only.

Working wtih an Electronic Product Development company in China

The reasons why our customers prefer to work with PAG Electronics than with an chinese factory is because the best products are usually not standard one you can find on the shelf of all OEM chinese manufacturers displaying their product online.

Our customers are usually inventors, designers, industrial firms willing to develop a unique product they already had in mind, while reducing cost, time to market, securing quality and intellectual property. They usually quickly weight pro and con of using a western service provider locally established in China to design and manufacture their product face to buying a product on the shelf or made by a chinese firm living by operating marketing and sales worldwide.

Our approach is rather to act as your R&D business unit capable to handle electronic product development rather than just another asian manufacturer focusing on production only.

Confidentiality, discretion, ethics, full dedication and of course experience and expertize, are mostly the key of our customers choice to us face to local companies.

Choosing us for your electronic product development and manufacturing in China

By working with us you will enjoy a fully dedicated project engineer to support your product development. 

Not only about technical and manufacturing point, but also in terms of market analysis and consumer understanding, you will benefit our expertise and experience to guide you in the most optimized way to develop your products. We have a very specifical approach of projects which include a global view of both marketing and manufacturing standpoint.

Not just an implementation and action, you will probably enjoy having an external point of view from people who are capable to have a wide and general overview of what is it to turn an idea into a marketing success.

We are ready to assist you from the beginning till the end to lead your project in a safe and optimized path from product development till manufacturing and delivery. 

Sustaining Quality for Electronic Manufacturing in China

In China, more than anywhere else quality is a big concern when talking about manufacturing process. After so many years managing production under other local factories roof we are able to make a short list of the reason why quality in China remains a big concern:

- Profit: top management like to squeeze cost at maximum to increase margin sometimes by exchanging raw materials. 

- Turn over: if you have chance to compare a western factory (or even a korean one) with a chinese one, you will see that turn over of employee is much higher in China than anywhere else. The worker who was trained last month about one specific product moved to another factory from yesterday to today for a better salary this month and the lack of procedure standardization make that new worker is not really aware of quality standard.

- Communication: most of time, senior overseas buyer will be managed by a young 20 years old fresh graduated with an english background as sales engineer. Communication is distorsed and informations are not transmitted properly, provoking mistake and quality/conformities issues.

- Ressources partiontionning: we have seen several time in the past a phenomena of partionning of white collar and blue collar making that sales people (who consider themselves as white collar) will never go on the production line (because it means they would mix with blue collar = workers low class) to check the production whose they are responsible for. In result, they most of time discover issue in the same time that customer.

- Salary payment terms: some factory pay their employees per pieces and not per hour or per day, resulting in making workers sometimes going too fast to increase their salary. In result, production are made so fast that products are not manufactured properly (glue, paint doesn't have time to dry properly sometimes)

- Anticipation and Responsibility: one of the biggest issue related to quality take source from lack of anticipation and responsibility handling.  

We manage Quality Control at different step of the production

PAG Electronics structured its organization and procedure to manage and optimize quality output for your electronic product manufacturing. Unlikely many company who handle only quality control and inspection at the end of the production line, we handle quality issue at the different stage of the sourcing, procurement and manufacturng process.

It give us full control on the production to avoid quality issue, late delivery, recall and complaint from the market. Our team has a substantial background in product inspection and quality control operation in Asia, and this from South Korea till Indonesia.

Be confident that with our expertise in supply chain management and quality management we have full capability to handle your production and make sure it get exempt from defectives.