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.