4 things hardware startups should know when entering China

2 min read

For hardware companies, China is a no-brainer place to be, considering its market size and its role as a manufacturing hub. Hardware companies like Xiaomi and Huawei and success stories about crowdfunding campaigns have proven that the Middle Kingdom has gone from “Made in China” to “Designed in China.” This year’s CES 2017 was also splashed by Chinese founders’ innovative technologies and hardware, such as iGULUNEOBEAR, and uSens.

At a panel organized by Startup Grind Shanghai yesterday, Jason Wong, founder and CEO of Omnicharge, shared his insights on building a hardware company in China.

1. Shield your product with patent and license

When startups successfully launch their product, multinational companies sometimes approach  for cooperation. Jason advises the startups to be protective of their product, saying that the benefit usually leans on the corporate’s side rather than the startup.

“Be cautious when taking your ideas or innovation to a larger company. Make sure your ideas is already well protected as corporations may take a financial interest approach to your ideas, and they may or may not license from you,” he said. “If you have strong IP protections you will have more confidence when working with corporate partners. Always read the fine print in any contracts, and pursue what makes sense to your business model.”

2. Focus both U.S. and China market

Hardware founders weigh between two markets. Strategically, some Chinese companies position them as an international company to get global attention.

“When you are competing on a global scale, you need to have a presence in your key markets. It is hard to be successful otherwise. For us that is the US and China. It is critical for us to work closely with our suppliers. Not everyone can be like Apple, with an established partnership with Foxconn. Manufacturing and supply chain is very critical in the hardware business,” Jason remarked.

3. Register your patent globally. 

The patent issue is a controversial one. To avoid something similar to Apple losing it’s iPhone case in China, startups should register their patents globally as soon as possible.

“Always protect your ideas and apply for IP protection in your key markets using PCT (Patent Cooperation Treaty). It is great to launch a product on crowdfunding and get funded, but if you fail to register first, you will encounter other companies copying your product quickly,” Jason said.

4. Do not follow the trend. 

Finally, Jason advises startups to follow their guts, rather than following the market trend.

“Rather than following major trends or hot sectors, focus your efforts on problems that you personally care about. It takes sometimes 5 to 10 years to scale your business, and you need to have passion in order to survive the journey. So ask yourself what you care about,” Jason added.