I recently went to the Hong Kong Toys & Games Fair and wrote a story about several small plastic toy makers from Europe and Hong Kong that want to try to start selling their toys to Chinese consumers, and it prompted an interesting e-mail from a small U.S. furniture manufacturer with the same goal.
This U.S. firm said it's been looking at the Chinese market for a while, but its main question to me was, if it starts to sell there, how does it best protect its intellectual property and the value of its designs and product development, in China's anything goes domestic market.
Of course, it's not a new question, but it's going to be asked more and more.
Stung by slower growth in the United States and Europe, or maybe just attracted by rising markets in Asia, smaller firms like toy makers are strategizing about whether they can tap into growing consumer wealth in China, particularly in coastal cities like Beijing, Guangzhou, Shanghai and Shenzhen.
But as the question from the U.S. firm shows, IP protection remains a big issue. Another incident at the show with a U.S. toy maker reinforced that point.
Plastic yo-yo maker Duncan Toys found one of its Chinese competitors displaying yo-yo packaging with a nearly exact copy of a key Duncan trademark, a blond-haired kid doing yo-yo tricks.
Duncan complained to the show organizers and presented its legal trademark of the image in Hong Kong. The show organizers, the Hong Kong Trade Development Council, told the Chinese firm, Shantou Chenghai Hanye Toys Factory, to stop its violations.
The Chinese firm responded by putting pieces of tape over the image in question, but kept displaying the products in its booth.
That upset the Duncan managers, who wanted the exhibition organizers to force Hanye to remove the products from the fair.
I couldn't help wondering if the Hong Kong fair organizers did not immediately remove them because they are trying to walk a line between being responsive to exhibitors who file IP complaints, but at the same time, not risk losing the business of other exhibitors, even those who might be violating IP laws.
That is speculation on my part, but I think it's a dilemma any trade show organizer faces in an industry where IP problems are plentiful, and in a small way, this shows the continued difficulty of China's market.
Duncan's problems reminded me about something I'd read lately, a column in the January issue of China Economic Review magazine by American lawyer Steven Dickinson, who is based in Qingdao.
Dickinson writes that China, flush with new economic power, is becoming much tougher in the details of foreign investment, with officials in some cases imposing investment requirements outside what the law says or making it harder to register technology licenses. Foreign business groups in China have made similar points.
Of course, Chinese readers will point out, rightly, that Western governments employ their own forms of market restrictions. And other foreign firms in China I've talked to lately say IP enforcement is easier now than in previous years.
It may at first seem odd to link a dispute over a toy logo with big-picture problems of foreign investment. But both show to me that for all the opportunities and talk of China's domestic market, it remains an undertaking best approached with eyes wide open and healthy caution.
Toloken is Plastics News' Asia bureau chief, based in Guangzhou.
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