When products are exported to China, border controls prevent parallel exports of
products of the same brand. This is particularly important for non-Chinese
manufacturers who have exclusive distribution agreements with Chinese partners.
Distributing imported products in China is very challenging and expensive. The difficulty
stems not only from the complexity of access to the Chinese market, but above all from
the costs incurred by the exclusive Chinese distributor for the formalities relating to the
product’s entry into the market (certification) and the costs of promoting a given brand.
The parallel export of this brand to China creates a real risk of a price war between
distributors – those who work under contract with the manufacturer and those who carry
out parallel imports. Many European manufacturers have adopted a strategy of long-term
brand building in China, which can be undermined by parallel imports not controlled by
the parties.
The situation is slightly different for importers from China. If an importer from the Middle
Kingdom orders production under his brand behind the Great Wall, he can also set up
border controls in a situation where he has the right to protect his brand in China. This
gives him the ability to control the release of his branded products. This solution will
prevent a situation where a Chinese manufacturer, using the design or technology of a
company that orders production from abroad, wants to export products on its own, either
to the market where the customer comes from or to any other market. This is, of course,
subject to the establishment of border control of the trademark in China.
Trademark border control in China can only be carried out at the request of the person
or company holding the trademark rights in mainland China. It is necessary to present
a locally issued certificate of registration of a trademark in the Middle Kingdom and to find
a professional representative who, on behalf of the client, will establish border control of
goods bearing a particular trademark at the Chinese customs office.
Internationally certified companies can also establish border controls, but must first
obtain a locally issued trademark protection certificate.
A company that has successfully established trademark border control in China has
full control over the movement (import and export) of its branded goods across the
Chinese border.
During customs clearance, the customs office checks in the customs clearance system database whether border controls have been established for a particular brand of goods. If this is the case, it is checked whether the company carrying out the clearance appears in the register of customs officers as a person authorized to import/export a particular brand. If this company is authorized, the clearance of the goods should not be a problem. If not, the goods will be detained at the border and the trademark owner will be notified. Within a few days he will have to issue an order regarding the detained cargo. If he allows customs clearance, the cargo will be released after payment of the information fee. If the decision is negative, the cargo will be destroyed at the expense of the company trying to clear the goods. In this case, the cost of notifying the detention of the cargo and the cost of disposing of the goods will initially be borne by the trademark owner. These costs will be reimbursed when the Chinese office recovers this amount from the company attempting to clear the goods.
