China has always been one of the most attractive markets for international companies. The Chinese government also recognizes the importance of foreign investment and intellectual property as a part of the country's development. In order to create better conditions for international companies they have taken numerous steps to improve the legal protection of IP.
Any business looking to expand internationally should have China as a priority country on the list. Whether you are already doing business there or just considering starting out, registering trademarks in China offers numerous benefits and, therefore, should be an essential part of your international trademark plan.
Gain entry to Chinese market
Given its vast population of 1.4 billion, rapidly growing middle class and loosening economic restrictions, China is now one of the most lucrative international markets in which to conduct business. In 2021, China’s GDP grew by 8.1 percent to reach US$18 trillion. With this growth, China’s economy surpassed that of the entire 27-country European Union, which stood at US$15.73 trillion.  Almost 60% of multinational corporations have plans to expand business in China in 1-3 years, among that, 91% of respondents say their primary objective is to “expand market/customer base for existing products/services”.
With its booming economy and ever-growing consumer base, it is no wonder that more and more companies are expanding their businesses to Chinese market. Brand identity is critical for success of the company, and this rule applies the same in China, so if you want to make sure your brand is well-protected, registering an international trademark in China is an essential next step for your business.
Protect your brand from copycats
China’s trademark regime follows a first-to-file system and so does not recognize international trademarks if they are not officially registered in the country. First-to file approach has been condemned by many because of its vulnerability to ‘trademark squatting’ - someone else registering a trademark of a popular brand with the motive to sell it for a profit later or to ride on the brand’s success. Trademark squatting can be done to sell the trademarks back to the original owners for a higher price, to sell counterfeits, or to impersonate the brand in order to damage its brand reputation.
Recently Chinese authorities started to recognize this issue and the damages that it brings to international companies, which led to certain amendments in Chinese trademark law, making it easier to reject trademarks that have been filed in bad faith. Following this, a number of international brands, including Jordan and Manolo Blahnik, have been able to regain the rights to their trademarks in China, which highlights the positive development within Chinese IP rights.
Secure your product at the production level
While most businesses agree to obtain trademark protection in China if they sell their goods there, many foreign companies fail to realize that trademark protection is also required if their goods are manufactured there. Trademarks in China also cover branded goods that are not sold but are manufactured in China.
Given China's first-to-file system, obtaining trademark protection is highly recommended, even if branded products are not sold in the country. The trademark may be registered first by the product's manufacturer. Furthermore, if the trademark is not protected in China, the exported goods may be seized by customs as counterfeit.
Register your international trademark in China
In the upcoming years, we will inevitably see more and more international companies on the Chinese market. Still, China is a “first-to-file” trademark system, which makes trademark registration an unavoidable step if you want to start offering your products and services there. The person who registers a trademark first will also have all exclusive rights to distribute and sell the product. You want to make sure that you are in control of your brand before expanding globally. And even if a third party tries to register or use a trademark for similar goods or services that includes a part of your trademark, you will have the right to oppose that application and protect the reputation of your brand.