An Important Reminder For Speaker OEM Manufacturing in China
Manufacture China in 2023
By 2023, the influence of suppliers from China may have reached most countries worldwide, and China's import and export markets have become highly competitive for many multinational corporations.
If you are in the audio manufacturing industry and still have collaborations with Chinese factories (OEM or ODM Manufacturing), you should read this article.
Overview of the Speaker OEM Manufacturing Incident
You must confirm whether there is any infringement of the trademark（logo), and if so, please stop your current project immediately.
We use real example as an important reminder, and hope you avoid this easily overlooked but very important issue.
We present a real-life example as an essential reminder, hoping you avoid this easily overlooked yet crucial issue.
1. Beginning
In February of this year, a speaker OEM factory in Guangzhou received an order for Speaker OEM Manufacturing from a foreign wholesaler, which was for a portable party speaker.
Here, let's clarify that Chinese speaker factories generally offer four collaboration modes: supply of logo-less products, OEM manufacturing with logos, customized OEM, and exporting speaker components (mainly for customers with assembly facilities).
The collaboration mode between this enterprise and its client is OEM manufacturing with logos.
2. What Does OEM Mean in Manufacturing?
OEM stands for "Original Equipment Manufacturer." In the manufacturing industry, OEM refers to a company or entity that specializes in manufacturing and producing components, products, or systems, which are then sold to other companies or brands for further assembly, distribution, or sale.
OEMs typically produce products according to the requirements and specifications of other companies, which may be the final product brand owners or distributors.
In short, OEM companies are responsible for manufacturing products, but they may not necessarily market products under their own brand.
Instead, they provide products to other companies, which are responsible for integrating the products with their own brands or systems before selling them to end users.
3. The Problem Emerges
In April, this factory completed the order production, and I used the FOB payment method, and the client also paid the final payment.
We planned to ship by sea, and the client began arranging relevant information.
They even started booking warehouses for the goods.
Loading, inspection, and transportation to the port all went smoothly.
When everything is going well, this factory received a notice from Chinese customs: the goods were detained. The reason? Trademark infringement.
They stated that they had notified the rights holder of the product's logo, and penalties might be imposed.
4. Result
Eventually, the client reached a settlement with the trademark rights holder but needed to pay additional fees for trademark authorization.
The process lasted for three months from goods detention to release.
The client incurred significant losses–not only paying for trademark authorization but also for warehousing costs due to the delay.
This serves as a crucial reminder for businesses collaborating with Chinese factories.
5. Analysis
Let's analyze the event:
Here is the whole process:
Client places an OEM order --- Factory fulfills the order as requested --- Shipment --- Customs detain the goods --- Infringement negotiation --- Payment for trademark authorization --- Customs release --- Client receives the goods.
We estimate that the client likely had minimal or no profit from this order.
The trademark was provided by the client, and the OEM factory did not verify if it might infringe, nor was the factory alerted by the client.
Both sides' negligence led to the final outcome, and the OEM factory had to lower the unit price of the goods to share the loss with the client.
In fact, anyone who has encountered similar situations knows that paying settlement fees is the best possible outcome.
The worst-case scenario is if the trademark rights holder does not accept a settlement and proceeds with a lawsuit.
In such cases, both the factory and the client could face substantial compensation, possible seizure of goods, and legal proceedings lasting up to two years or more.
Conclusion and Reminder For Wholesaler or Branders
Whether you are engaged in OEM or ODM manufacturing with Chinese speaker factories, you must first confirm whether your products and trademarks infringe any rights in China or your target sales regions.
This approach helps minimize risks for your project.
Additionally, trademark infringement is not limited to the speaker manufacturing industry;
It applies across all sectors.
This incident serves as a vital reminder that we must take it seriously.
Speaker Manufacturer AUSMAN Audio Custom ServicFor Your Brand
Ensure that the selected speaker factory can deliver excellent product quality that meets your standards and requirements, including the durability of the speaker's housing material, power safety, sound output power, and overall speaker quality.
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