Langsey Company's Li Zhang is your insider industry guide to all things China. Here, she tackles factories and their terms.
No matter how small your fashion brand is, it’s your baby, and you don't want anyone to hurt it or steal it!
As a designer, you’re in the business of creating intellectual property (IP). Every time you create something new or original, you generate IP. So knowing how to protect your IP is a very important part of running your business.
Here, we have some recommendations to help you protect your brand throughout the supply chain.
1. Prepare a contract and get your supplier to sign
If you take your fashion business seriously, you should engage a lawyer to create a template contract that you can use with your suppliers.
In this contract, you want to clarify and clearly state that your business, and not the manufacturer, owns the intellectual property comprised in the goods. The contract should also outline that the manufacturer is not to provide your designs to any third party or sell your goods to any third party.
(Please note: this contract is specifically about copyright protection issues. It does not relate to production costs, processes or shipment – for those issues, manufacturers will generally have their own template contracts which you can use with some adjustments.)
2. Think about what you are going to do with excess product
Excess product (also known as ‘over-made’ or ‘short’ product) is very common in apparel supply chains. Often, manufacturers will make a little more than the order quantity, so that they will still have enough products to ship even if some defective products are thrown away.
It can be challenging to make sure the final number of products is exactly the same as the order quantity. Normally, a production contract will have a “More or Less Clause” to allow 5% to 10% more or less quantity, according to the buyer.
Brand owners – I suggest you allow 10% over shipment and ask the supplier to ship the excess quantity to you. You will pay extra for those items, however this will help reduce the risk of the supplier selling the over-made products on the market.
If the quantity of over-made products is unreasonably big, you can put a term in the contract requiring the manufacturer to destroy any products in excess of the 10% over shipment allowance, and strictly prohibit the manufacturer to sell them. Of course, this could be included in your IP protection contract as well.
Professional factories should have the ability to analyse and control their material usage. Having an excess of over 10% is simply too much, so you don't have to feel sorry for them when asking them to destroy those products.
3. Don’t forget about the defects
There are always defective products that your factory won’t ship to you – with unfixable problems such as wrong sizes, unwashable grease marks, or simply bad cutting or sewing.
Generally, the factory won’t even mention these defects to you. And while It’s a good thing that your supplier didn’t ship the defects or charge you for them, there is a risk that the factory may sell the defects in market.
Think that no one would want to buy defective apparel? You’d be surprised! Many young people living in developing countries would be happy to buy a designer’s brand for a low price and tolerate any small defect on the garment. If you don't want this to happen, remember to include it in your contract as well.
4. Control your accessories.
Want more security than relying only on a contract? Consider controlling your accessories for extra IP protection. You can customise labels, swing tags, embroidery patches, and even buttons and zips, with your logo.
Of course, it’s true that a supplier can copy your labels and accessories, but normally they won’t have motivation to do. Labels and accessories generally require big MOQ. And aside from this, suppliers will also know that copying your label is illegal, as stated in your contract.
To have your labels and accessories customised, you will need to order them yourself, and then supply them to your apparel factory. Be aware that this process will cost you some time and also increase your financial cost, as normally factories can purchase the labels and accessories for better prices because of their big order quantity, compared to your small quantity.
Not sure how many accessories to send to your supplier? If you order 100 pieces of garments and allow 10% over shipment, I recommend providing 120 sets of labels, accessories and packaging materials to your factory. 110 sets will not be enough, considering reasonable wastage – for example, if a worker sews the label upside down and has to remove it and sew a new one.
This approach to IP protection is more for well-known and established brands, who are exposed to bigger risks of being copied and also have larger human resources and capacity to handle. When I worked as the supplier of Kenzo’s kidswear department, the brand used this approach to protect its copyright.
5. A specific question for Chinese suppliers
In China, many factories sell their old samples, over-made products and defective products on the Taobao online platform, or wholesale to online storeowners.
If you work with a Chinese factory, be sure to ask the factory owner what they normally do with the old samples, over-made products and defective products. To be extra certain, ask if they have a Taobao store – if they have, ask for the store name, visit it later, and find out whether they sell their customers’ labelled products online!
Of course, you can (and should) always search your brand on Taobao. You will hope to never see any results come up, as this will mean someone is selling your products on Taobao!