China Trademark Risks for OEM Manufacturing in China
Foreign brands manufacturing in China for export often assume they face no trademark exposure — a costly misunderstanding under China’s first-to-file system.
Executive Summary
Many foreign companies manufacture products in China purely for export and assume that trademarks are irrelevant unless products are sold in the Chinese market. This assumption is one of the most common — and costly — misunderstandings in China trademark practice.
In reality, OEM manufacturing does not eliminate trademark risks in China. Foreign brand owners frequently face:
- Trademark hijacking by Chinese factories or third parties
- Customs seizures blocking exports
- Platform enforcement actions triggered by local registrations
- Loss of control over the brand name in China, even without local sales
This guide explains how OEM-related trademark risks arise, why courts and customs treat OEM differently over time, and what foreign companies should do before manufacturing in China.
What Is OEM Manufacturing in China?
OEM (Original Equipment Manufacturing) typically refers to the following structure:
- The brand owner is located outside China
- Products are manufactured in China by a Chinese factory
- All goods are exported, with no domestic sales in China
- The foreign brand owner assumes the activity is “outside” the Chinese market
From a commercial perspective, this is correct.
The Core Misunderstanding: “No Sales in China = No Trademark Risk”
Many foreign companies believe:
“If we don’t sell in China, Chinese trademark law does not apply to us.”
However, China follows a strict first-to-file trademark system, meaning:
- Trademark rights are granted to whoever files first, not who uses first
- Use outside China generally does not establish rights inside China
- OEM manufacturing does not automatically shield foreign brands from infringement or enforcement risks
As a result, OEM activity often creates exposure without ownership.
Key Trademark Risks in OEM Manufacturing
Trademark Hijacking by Factories or Third Parties
One of the most frequent OEM-related disputes arises when:
- A Chinese factory
- A former supplier
- A local distributor or unrelated third party
Registers the foreign brand name in China before the legitimate owner does.
Once this happens, the registrant may:
- Block exports
- Demand licensing fees
- File infringement complaints
- Use the registration as leverage in commercial negotiations
Customs Seizure of Export Goods
Chinese Customs actively enforces Chinese-registered trademarks.
If a third party owns the trademark registration in China, customs authorities may:
- Detain OEM goods at the border
- Suspend exports pending investigation
- Require proof of authorization from the Chinese trademark owner
In many cases, the foreign brand owner is unable to provide such authorization, because they do not legally own the trademark in China.
The result:
- Shipment delays
- Contract breaches
- Significant financial losses
OEM and Trademark Infringement: Changing Judicial Attitudes
Historically, some Chinese court cases suggested that OEM manufacturing for export might not constitute trademark infringement if:
- The goods were not sold in China
- The trademark was legitimately owned overseas
However, this position has become increasingly narrow and inconsistent.
Recent trends show that:
- Courts examine whether the OEM activity causes confusion in China
- Customs enforcement operates independently of court interpretations
- Administrative actions may proceed even when civil infringement is disputed
Platform and Supply Chain Risks
Even without Chinese sales, OEM brands may face problems when:
- Products appear on B2B platforms
- Factory listings include branded samples
- Images or catalogs circulate online
If a local trademark owner files a complaint, platforms may:
- Remove listings
- Freeze accounts
- Share information with enforcement authorities
OEM manufacturing often leaves a digital footprint that triggers enforcement.
Why OEM Brands Are Especially Vulnerable
OEM brands face a unique combination of risk factors:
- Long manufacturing cycles before market entry
- Disclosure of brand names to multiple Chinese parties
- Delayed trademark filings
- Overreliance on contracts rather than registrations
Preventive Trademark Strategy for OEM Manufacturing
File Trademarks in China Before Manufacturing Starts
The most effective risk control measure is simple:
This applies even if:
- You do not sell in China
- You only export
- You plan to enter China “later”
Register Core Marks in Black-and-White
For OEM brands, black-and-white trademark filings provide:
- Broader protection across color variations
- Flexibility for manufacturing and packaging
- Stronger enforcement options
Cover Relevant Subclasses
China’s subclass system is strict.
OEM brands should ensure:
- Core product subclasses are covered
- Key defensive subclasses are considered
- Future expansion risks are evaluated
Failure to cover subclasses can leave legal gaps exploitable by third parties.
Align Customs Recordal with Trademark Ownership
Once a trademark is registered:
- Record it with Chinese Customs
- Link manufacturing entities to the brand owner
- Establish export authorization clarity
This significantly reduces seizure risks.
OEM Manufacturing and Trademark Disputes: What If It’s Too Late?
If a third party has already registered your trademark in China, options may include:
- Opposition (if still within publication period)
- Invalidation based on bad faith
- Non-use cancellation (after three years)
- Negotiated assignment (with caution)
Each route depends on timing, evidence, and registrant behavior.👉 Brand already registered by someone else in China — Legal Remedies & Actions for foreign companies
Who Should Pay Special Attention to OEM Trademark Risks?
OEM-related trademark risks are particularly high for companies in:
- Industrial equipment and machinery
- Automotive and spare parts
- Consumer goods and private labels
- Electronics and hardware
- Fashion and branded components
Conclusion
OEM manufacturing in China is not legally neutral territory for trademarks.
Foreign brand owners who delay China trademark registration often discover that:
- Control over their own brand has shifted
- Exports are disrupted
- Legal remedies are slower and more expensive than prevention
Frequently Asked Questions (FAQ)
Yes. Even if all products are exported and never sold in China, trademark risks still exist under China’s first-to-file system. A third party may register your mark in China and use that registration to block exports, file complaints, or request customs seizure.
It depends on the specific facts and judicial interpretation. While some past cases suggested export-only OEM activity may not constitute infringement, recent practice shows courts and customs authorities take a stricter view. OEM activity does not automatically shield foreign brands from liability.
Yes. If a third party holds a valid Chinese trademark registration and records it with Customs, authorities may detain exported goods bearing that mark. The foreign brand owner may be required to prove authorization, which is impossible if they do not own the registration.
Unfortunately, yes. Factories, suppliers, distributors, or unrelated third parties may file trademark applications in China before the foreign brand owner does. Preventive filing is the most effective way to eliminate this risk.
Possible legal options include opposition (if within the publication period), invalidation based on bad faith, non-use cancellation after three years, or negotiated assignment. The appropriate strategy depends on timing, evidence, and the registrant’s conduct.
No. Contractual provisions do not replace trademark registration under Chinese law. Trademark ownership is determined by registration, not by private agreement alone.
In most cases, filing in black-and-white provides broader protection across different color variations and manufacturing formats. Strategic filing structure should be aligned with long-term brand enforcement goals.
📌 Part of the China China Trademark Risk Scenarios series
This article is part of our China Trademark Risk Scenarios series for foreign companies manufacturing in China.
