How can fashion designers overseas identify manufacturers and material in China that meet high ethical standards? And once production of their clothes, bags or shoes begins, how can they monitor compliance with labour and environmental laws, and broader standards of sustainability?
Ethical questions facing the fashion industry in its dealings with China were recently addressed at a panel discussion organized in London by Own-It, the Ethical Fashion Forum and Creative Connexions. The panel included Luke Minford, head of the China practice at intellectual property law firm Rouse; Lesley Roberts, director of corporate responsibility at Pentland Group, whose brands include Speedo and Berghaus; and Galahad Clark, founder and owner of sustainable fashion footwear company Terra Plana.
According to Clark, China is the largest market for Terra Plana’s shoe brand United Nude, accounting for sales of almost 60,000 pairs a year. United Nude also manufactures in China with a local partner. “They are not cheap shoes – they’re nearly US$300 a pair – and we are starting to get copied a lot,” said Clark. The company currently has four lawsuits outstanding against various parties, including small components suppliers, which have allegedly copied a patented heel design.
Minford offered a selection of tips to fashion businesses hoping to source goods from China.
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China is a civil law country; owners do not gain any common law rights through the use of their brands or designs. Rights to a brand or design are only gained through registration. “A lot of companies go to China with brochures and name cards, and then they find the company they have been introducing their designs or their brands to has gone and registered them.”
Everything must be in the contract. “If you are bringing designs or drawings, or you’re licensing certain designs, drawings, copyrights or brands, make sure all of that is very clearly spelled out in your contract. Otherwise, essentially, the other party will not understand what it is they can and can’t do.”
Make sure that the name of the company on your draft agreement is the same as that on the company’s registration certificate with the local Administration of Industry and Commerce. “Chinese companies will generally have five different books and five different entities through which they do business. And often they will have one entity you think you’re dealing with, and another entity that is actually the company that has the assets or the real legal liabilities … When something goes wrong, they say ‘sorry, that’s actually not us. That’s the company down the road, and they don’t have anything’”
If a manufacturer lacks the required export licence and instead uses an export agent, sign any contract with the agent rather than the manufacturer itself. “That’s the company you’ve got to have a contract with, because if the goods arrive and they are not the right goods, it’s not the Chinese factory that you can necessarily assume you have a claim against. It’s the agent.”
Make use of the European Union’s SME helpdesk for small and medium-sized enterprises. “It’s a good, cost-effective way to get information and to tap into the network of small and medium-sized companies.”
Minford also offered an up-beat assessment of the business environment and prospects for intellectual property protection in many parts of China. “Generally, though, those places are now more expensive than the areas where counterfeiting is rampant,” he said.
According to Clark, a letter to an alleged infringer is often enough to put a stop to a suspected infringement of IP rights. “Try to make a lot of noise with as few lawyers as possible, and a lot of the time it does work,” he said.
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Own-It (www.own-it.org) is a web-based service established by the London College of Communication which offers intellectual property advice for creative businesses. There is a podcast of the discussion of ethical sourcing in China on the Own-It website.
The Ethical Fashion Forum (www.ethicalfashionforum.com) is a London-based, not-for-profit network focusing on social and environmental sustainability in the fashion industry.
The China IPR SME helpdesk (email enquiries@china-iprhelpdesk.eu) provides free information and advice to help European SMEs with regard to China-related intellectual property matters.
