Outsourcing: Some Ideas about When and Why to Do It by Baker Phil

Author:Baker, Phil...
Language: eng
Format: epub
Published: 2014-05-21T23:02:34.323000+00:00

One of the most frequently asked questions I get is whether a product brought to China to be manufactured will be copied. After all, China has a reputation for copying everything from designer purses to expensive watches to software. Do you face a risk of using a company to build your product if it’s already making a product like yours? Will they copy your ideas and incorporate them into their own products or, worse, into your competitors’ products?

I have never once encountered an overt act of a manufacturer copying products that were then sold to others. Never. Perhaps I’ve been lucky to work with companies that don’t engage in these practices. Certainly it happens to some. But the overt copying is done mostly by different types of companies, not OEM and ODM companies whose business model depends on trusted relations with their customers, on whom they depend for most of their business.

Still, there are some ways to protect a design if you’re concerned. Consign a unique part or custom chip to your manufacturer, but produce it elsewhere. Or manufacture parts of your product in several different factories and bring them to another company to do the final assembly.

But do note that a manufacturer may gain new skills just by building products for their customers. They become aware of new designs and new markets, and of course how well the products sell. From my experience, the advantages of working with a company with experience making similar products vastly outweigh trying to work with a company without that experience. But remember that once a product goes on sale and is on the market, the design is readily available to be reverse-engineered and copied by anyone.

Ultimately, the best antidote to your product being copied is speeding your time to market, expanding distribution quickly, and working on your next generation product while your competitors are busy copying your old one. The best lawyers and the best patents won’t help in the short term and often are of little value in the long term, particularly with product lives being shorter than ever. Put your money in product development and marketing rather than in lawyers.

I do recommend signing an NDA (nondisclosure agreement) and developing a simple agreement or letter of intent, but I’ve rarely waited for an agreement to be completed before beginning the project. Delays in the early part of the project can never be made up. I’ve begun many projects on a handshake and have never regretted it.

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