SERVICES

SOURCING HUB

Manufacturer Confirmation

Outsourcing through a trader can offer certain advantages, such as a smaller workload, occasional shorter delivery times, and lower minimum order quantities (MOQs). On the other side, it also means higher unit price, and less adaptive quality and features. Most businesses prefer to work directly with manufacturers to ensure better control over quality and cost. Unfortunately, from abroad, it can be challenging to determine whether you are dealing with the manufacturer or one of his traders. At Shineza, we provide several solutions to verify and confirm that you are communicating directly with the manufacturer, ensuring that you connect with the party you intend to reach.

General Purchasing Agreement


No purchase order should be placed without an agreed-upon Purchasing Agreement, signed and stamped by both parties. In China, there is one correct and many incorrect ways to stamp legal documents. Shineza provides legally sound contracts and agreements, with General Purchasing Terms being the most important. Avoid risks and obtain an up-to-date bilingual template or a customized Purchasing Agreement.


So, what should a Purchasing Agreement include?


  1. Clarity and Expectations: Clearly outlines terms and conditions, including product, packing, and labelling specifications, delivery timelines, and pricing, reducing misunderstandings. Example: Avoids disputes over product specifications

  2. Legal Protection: Provides a legally binding document under Chinese law, which can resolve disputes and protect both parties’ interests. Example: Prevents issues where a manufacturer fails to deliver on time by allowing legal recourse based on the agreed terms.

  3. Quality Assurance: Sets product quality standards and includes inspection clauses to ensure compliance. Example: Avoids receiving substandard products by establishing inspection protocols that the manufacturer must follow.

  4. Payment and Confidentiality: Defines secure payment terms and includes non-disclosure agreements to protect proprietary information. Example: Prevents financial losses by outlining secure payment methods like letters of credit and protects trade secrets with confidentiality clauses.

  5. Risk Management and Consistency: Identifies potential risks, establishes protocols for handling issues, and ensures consistent supply and terms for future orders. Example: Avoids supply chain disruptions by including clauses that detail actions to take in case of delays or defects, ensuring steady and reliable deliveries.

Contracts / MOU

Memorandum of Understanding (MOU):

A MOU is a formal but non-binding agreement that outlines the general principles and intentions of the cooperation between two or more parties.
It serves as a preliminary document to establish mutual understanding and outline the framework of the future contract. MOU’s are typically used during the negotiation phase to ensure that both parties are aligned on key terms before drafting a detailed contract.

Example: a MOU is drafted to outline the agreement’s general terms, such as the intent to purchase 10,000 units, estimated pricing, and the timeline for finalizing the detailed contract. The legal translation to a different language is crucial to prevent misunderstandings.

Using contracts and MOUs appropriately helps ensure clarity, alignment, and legal protection in business transactions between Chinese manufacturers and foreign buyers.

 

Contracts:

A contract is a legally binding agreement between 2 or more parties that outlines the terms and conditions of their business relationship. 

It includes detailed provisions on product specifications, pricing, payment terms, delivery schedules, quality standards, dispute resolution mechanisms, and other relevant terms. Contracts provide legal protection and recourse for both parties in case of breaches or disputes. 

For instance, if a manufacturer fails to deliver goods as agreed, the buyer can enforce the contract in court to seek remedies.

Example: If a foreign buyer signs a contract with a Chinese manufacturer for 10,000 units of a product, the contract will specify the exact specifications, delivery date, payment method, and penalties for late delivery or defects.

 

3 Common Contracts that are signed between Chinese manufacturers and foreign buyers are:

 

  1. OEM (Original Equipment Manufacturer) Agreement: This agreement specifies the production of goods according to the buyer’s specifications, including intellectual property rights and confidentiality clauses.
  2. Distribution Agreement: This contract defines the terms under which the foreign buyer will distribute the Chinese manufacturer’s products, including territories, pricing, and marketing responsibilities.
  3. Quality Control Agreement**: This agreement details the standards and procedures for ensuring that the manufactured goods meet the agreed-upon quality specifications, including inspection and testing protocols.

Business Registration Search

Are you skeptical or have doubts about a manufacturer’s or trader’s references? Our Business Registration Search service is designed specifically for this purpose. It often came to our attention that suppliers may lack legal business registration or even may not exist at all.

Shineza can verify whether a corporation or individual is registered as claimed. This precaution will help you avoid potential significant losses.

INTELLECTUAL PROPERTY

NNN Agreements: Non-Use / Non-Disclosure / Non-Circumvention

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A NNN Agreement (Non-Disclosure, Non-Use, Non-Circumvention) is a contractual document designed to protect a company’s confidential information and trade secrets when engaging with manufacturers or other partners in China.

In contrast to NDAs, an NNN agreement provides more comprehensive protection.

It includes three key components:

 

  1. Non-Disclosure: This clause ensures that the Chinese counterpart does not disclose the shared information.
  2. Non-Use: This provision prevents the receiving party from using the disclosed information for their own benefit, typically applying to business ideas, processes, or intellectual property rights.
  3. Non-Circumvention: This provision prohibits the provider from circumventing the client and directly reaching the client’s customers, such as bypassing the client and selling directly to those customers.

Trademark

Registering your brand name and logo as a trademark is the most crucial step to protect against unauthorized use. China’s trademark registration system follows a first-to-file principle, meaning that the first to register a trademark holds the rights to it. The registration process typically takes 3 to 6 months to complete.

 

When applying, you must decide whether the registration will be under an individual’s name or a company’s name. 

Once the necessary identity and registration proof are provided, Shineza’s lawyers will conduct a comprehensive screening for similar brand names and logos, both in English and Chinese, in written and oral forms. This process is often complex and filled with potential pitfalls.

 

After paying the trademark fee to the National Office of Trademark, the application is submitted, and you must wait for the dossier to be accepted. The filing date and registration are critical in establishing and claiming trademark rights in China.

No declaration of continual use is required for renewal. However, if a registered trademark is not used in Mainland China for any continuous period of three years, it becomes vulnerable to cancellation on the grounds of non-use.

Patent

pexels-photo-5425648-5425648.jpgA patent is a type of intellectual property that gives the owner the legal right to stop others from making, using, or selling an invention for a certain period. In return, the owner must publicly share details about the invention.

Patent rights are usually part of private law, meaning the owner has to sue anyone who infringes on the patent to protect their rights.

 

The process for getting a patent, the rules for the patent owner, and the extent of the rights vary by country and international agreements. Generally, a patent application needs to include claims that describe what protection is being sought. A single patent can have many claims, each outlining a specific right.

 

Under the PRC laws, there are three types of patent rights: patent for invention, utility model and design. Invention patents protect any new technical solution relating to a product, a process or an improvement thereof. Utility models only protect a product’s shape, structure, or a combination thereof. Design patents only protect new design of a product’s shape, pattern or a combination thereof, as well as the combination of the color and the shape or pattern of a product.

A copyright is a type of intellectual property that gives the creator of an original work, or another right holder, the exclusive and legally secured right to copy, distribute, adapt, display, and perform a creative work, usually for a limited time. 

 

The creative work may be in a literary, artistic, educational, or musical form. Copyright is intended to protect the original expression of an idea in the form of a creative work, but not the idea itself. 

 

A copyright is subject to limitations based on public interest considerations, such as the fair use doctrine in the United States.

TRADE DISPUTE HUB

Dispute Assessment

You and the Seller remain in a deep disagreement to the point of communication being frozen or broken. It is not a surprise that China Trade Dispute Resolution Service turned out to be our most demanded service. You send us a copy of your agreements and contracts and we estimate wether there is a chance to get communication with your seller right on track.

Demand Letter

A demand letter, or letter of demand, is a letter stating a legal claim (drafted by a lawyer) which makes a demand for restitution or performance of some obligation due to the recipient’s alleged breach of contract or legal wrongdoing.

 

Although demand letters are not legally required, they are frequently used, especially in contract law, tort law, and commercial law cases. 

 

In the context of a buyer being defrauded by a Chinese manufacturer, a demand letter can be used to seek a resumption of communication and ultimately a financial refund. If one anticipates a breach, it is advantageous to send a demand letter asserting that the manufacturer appears to be in breach and requesting assurances of performance. Demand letters that are not responded to may constitute admissions by silence. Additionally, a demand letter will often generate a denial letter stating the basis for rejecting the claim, and is sometimes a good indication of what defenses will be raised if a suit is brought later. Evidence of attempts to settle are often required before a court case will be accepted, and demand letters are commonly used to fulfill this requirement.

Litigations

Litigation is the process of resolving disputes through the legal system.

One common issue is the violation of IP rights, such as unauthorized use of patents, trademarks, or copyrights. For instance, a tech company may find that a Chinese manufacturer is producing counterfeit versions of its products, affecting sales and brand reputation.

Another frequent problem is manufacturers failing to fulfill purchase agreements. This can involve delivering substandard goods, delays, or using inferior materials. For example, a fashion brand might receive garments that do not meet the quality standards stipulated in the contract.


Engaging in Litigation

When such issues arise, engaging in litigation becomes necessary. Here’s how this might work:

1. Initial Assessment and Documentation: Collect all relevant documents, including contracts, communications, and evidence of violations or breaches.

2. Engage Legal Counsel: Hire legal experts with experience in Chinese law to guide the process and assess the feasibility of success in Chinese courts. At Shineza we can provide all this services.

3. Pre-Litigation Actions: Attempt resolution through negotiation or mediation, which can be quicker and less costly.

4. Filing a Lawsuit: If pre-litigation efforts fail, file a lawsuit in a Chinese court. Legal counsel will draft and submit the necessary documents.

5. Court Proceedings: Participate in court hearings and present the case with the help of legal counsel.

6. Judgment and Enforcement: If successful, enforce the court’s judgment, which may involve compensation or cessation of IP violations.