What could go wrong?


The fol­low­ing sce­nar­ios are typ­i­cal of what hap­pens when Kiwi com­pa­nies haven't put enough plan­ning into an ex­port op­por­tu­nity, or re­ceived the right ad­vice.

Just prior to Christ­mas a New Zealand com­pany is de­lighted to re­ceive out of the blue a large or­der for its prod­uct via an Asian agent, for China. The com­pany has al­ways been in­ter­ested in China as a po­ten­tial mar­ket, but not had the time to in­ves­ti­gate this fully.

The or­der and of­fer of help from the agent seem to be an op­por­tu­nity that's too good to turn down. Af­ter all, what pos­si­bly could go wrong?

Even though it's a busy time the or­der is packed and shipped.

Then, in the New Year an­other or­der is re­ceived from the same agent. This gets the com­pany think­ing that its time they se­ri­ously looked at China as a new mar­ket. They then dis­cover that the agent has al­ready ap­plied to reg­is­ter their trade mark in China, and is try­ing to use this as lever­age to get very favourable terms of trade out of the New Zealand com­pany.

This kicks off a costly dis­pute with the agent – as the agent had taken full ad­van­tage of China's first-to-file sys­tem. The New Zealan­ders ended up pay­ing a size­able sum to the agent to have him re­lin­quish the trade mark.

The most com­mon vari­a­tion of this sce­nario con­cerns the dis­grun­tled dis­trib­u­tor. This can arise where the New Zealand brand owner has a fall­ing out with their dis­trib­u­tor, but is more com­mon when deal­ing with po­ten­tial dis­trib­u­tors. In this case the brand owner is con­tacted out of the blue by some­one who is keen-as to be their dis­trib­u­tor in China. For what­ever rea­son ne­go­ti­a­tions fail. When the brand owner comes to reg­is­ter their brand in China them­selves, they learn that the dis­trib­u­tor has al­ready ap­plied to reg­is­ter the brand in or­der to stop the owner from ap­point­ing an­other dis­trib­u­tor.

We've seen sit­u­a­tions where the New Zealand brand owner has spent a small for­tune wrestling the trade mark off the dis­trib­u­tor, but also where they've been forced to reluc­tantly ap­point the dis­grun­tled dis­trib­u­tor in China – not the best way to start a re­la­tion­ship.

Fi­nally, al­though Kiwi com­pa­nies own their English trade marks in China, we are see­ing more and more dis­trib­u­tors de­vis­ing their own Chi­nese ver­sions of those English brands, and then ap­ply­ing to reg­is­ter the Chi­nese ver­sions them­selves.

Once the Chi­nese ver­sions gain trac­tion in the mar­ket, the dis­trib­u­tors then turn around to use this as a bar­gain­ing chip for ex­clu­siv­ity/bet­ter deals on those prod­ucts.

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