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Manage your Intellectual Property in South-East Asia

Business Partners

The ASEAN region, including Brunei Darussalam, Cambodia, Indonesia, Laos PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam is an increasingly attractive business destination for European companies in Asia. Partnerships are often regarded by businesses and in particular smaller European Businesses as crucial in order to operate effectively in South East Asia. This is mainly due to a lack of strong regional regulatory frameworks and as such businesses’ often focus efforts on finding the right partners within target markets in the region.

Below are some of the issues which can pose an IP risk...

Contracts in the ASEAN region

When looking to identify your supplier, you should consider how you want the relationship to work and what controls you need to put in place to secure your rights. These issues need to be spelt out in a written agreement which can form the basis of a contract. It is not advisable to start any business partnership anywhere in South-East-Asia without a signed contract. It is important to keep in mind, that a contract signed in Europe is viewed as legally binding, whereas in some ASEAN nations it could be viewed as a "guideline for cooperation". Contracts should not be rushed through, but should instead be a process where the contract can work more as a relationship manual.

As an SME you should ensure that the potential business partner really is who they say they are. This can be done in a number of ways, but initially check whether the company is legally registered, and whether it is trading under the registered name. Helpdesk team leader Simon Cheetham from ERINYES INTERNATIONAL, a firm used to performing background checks, says:

"Often we find that we can save SMEs a great deal of trouble and expenditure by doing a simple background check prior to negotiations with a potential supplier. In this way we can ensure that the legal entity that the SME is to enter a sourcing contract with is also the company that can be held responsible for any wrong doing. It pays to know who you are dealing with."

It is best that you or your local adviser conduct due diligence directly with the prospective partner such as requesting certified copies of its incorporation document so that you can decide if there are any red flags that require further verification or investigation.

In the contract, it is advisable to clearly state what Intellectual Property Rights (IPR) are owned in respect of the items to be supplied and to clearly state that any know-how, discovery, invention (whether patentable or not), design, drawing, computer program, photograph, plan or record relating to the development of prototypes and the subsequent final version of products or any future developments to products which are made, created, developed or acquired by the supplier (together with all IPR and any future rights in respect of any such matter) will belong to the SME absolutely.

Preventing disclosure of valuable information

When handing over material to another company or individual in any business matter, it is important to use confidentiality, non-competition and non-disclosure agreements to minimise the risk that the company or individual will disclose such information to third parties or use the information to compete against your company.

Employee contracts in the ASEAN region

Local lawyers should be appointed to prepare employee contracts. For more information about finding the right lawyer in ASEAN countries please see the Helpdesk 'Finding the Right Lawyer' guide here.

Cultural differences

Difference in cultural background has often shown to be one of the most important issues in any business partnership. There is a great difference between how Europeans and Vietnamese, or Thai nationals for example view a partnership. The countries of South East Asia have many cultures, customs, and religious practices. Learning about ASEAN cultures before entering into a business negotiation with a partner is beneficial if not crucial. If you understand who you are dealing with you will have a better chance of success.
It is important to spend time with your prospective local partners as people of South East Asian cultures are relatively reserved. Having a good interpreter or local associate will be helpful particularly in making sure you do not make any cultural faux-pas.