Where to start? You won't win putting legal pressure on any Chinese startup since that is an empty threat, but you also won't win talking to any big Chinese IT company. The startup won't care about the threat of legal action and the big company will simply clone your product once you convince them the market has potential.
If your goal is making money and/or securing a partnership you have to put yourself into a position of strength. The best way to do this is to launch an actual Chinese competitor yourself. This should cost no more than 10k USD per month assuming you can leverage your existing code, which makes it much cheaper than going the legal route. Feel free to contact me (contact info in profile) if you need help or introductions to people who can actually make this a reality for you in a week or two. I'm in Beijing and have done three startups in China and can put you in touch with people here who can actually help you.
A live product from you poses an existential threat to your competitors and keeps the big IT company from delaying in perpetuity (the typical modus operandi for big players here is to have middle management rush to agreement on the general principles of possible cooperation and then stalling and never doing anything more substantial -- the delay means they aren't sure if it is worth their while to clone you yet). But the threat of your getting actual traction matters because growth puts a deadline on your willingness to accept other people stalling, and your presence starts imposing actual costs on the startup. Those guys will need to change their branding at a minimum since they can't build an independent brand with you in the market, and once they know you will play hardball you will find them a lot more amenable to compromise if you want to go that route. With that said, if your market reception is good you may not even want to continue talking with them, since most Chinese startups are really inefficient and you can probably blow them out of the market anyway.
Thank you very much. Your advice sounds on point, and it is maybe even a bit too realistic to really reduce our stress levels.
We're really not sure what to expect from the Chinese market, and if our resources aren't better spent on US / EU only. We'd be interested to explore that option, though. Maybe there is a lot of low-hanging fruit. I will contact you next week if it is fine with you.
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I've been in China from 2004-2014 and built a startup there that was sold to one of their internet giant.
I can confirm that the parent is on point. Imo, your best bet - if you dont want to give up the Chinese market - would be to raise from a reputable Chinese investor. Without that you wont have much pull with any partner you find in China and they will happily stall and then copy your stuff. That is completly "fair game"
to them and most wont even comprehend what your trying to tell them - a bit like the guy telling you that he admires/like what you've done after you asked him why they copied your stuff as-is...
If you want to chat feel free to contact me, email in profile.
Really interesting advice. Starting a Chinese version is a very smart reaction, since by creating the clone the copiers have actually lowered the cost of creating a Chinese business for the legitimate owners.
All of the work they did creating the clone becomes transformed into the work the real owners would have to do translating and proving the idea of a Chinese version to themselves or investors.
Starting a venture in China is not that easy as a European compared to a Chinese. The strategy may work if one can get good support. The reverse is also true, it is no that easy to open a business in Europe as a Chinese.
I would say that unless China is your market focus on R&D / marketing / customer service in your primary markets and worry about that first. You can grow there while the folks in China will have troubles addressing anyone beyond their borders.
As for cloning your site into Chinese it's probably harder than you think and even still your site could be blocked with the right payoff to the government. When I was managing bitbucket.org a Chinese company approached us to license the technology and setup a mirror in China -- we refused and almost immediately bitbucket.org was blocked in China. A few weeks later a clone of bitbucket.org showed up with far less features.
It took many months of effort, however after working with the Australian Embassy and several lawyers to contact the Chinese government we were able to file a position with the Ministry of Technology (or Information, cannot remember exactly) and then a few days later our site was unblocked.
After it was all said and done, in the end we decided to focus on markets that are more approachable (western) since we could better service those markets as they matched our identity better.
If your goal is making money and/or securing a partnership you have to put yourself into a position of strength. The best way to do this is to launch an actual Chinese competitor yourself. This should cost no more than 10k USD per month assuming you can leverage your existing code, which makes it much cheaper than going the legal route. Feel free to contact me (contact info in profile) if you need help or introductions to people who can actually make this a reality for you in a week or two. I'm in Beijing and have done three startups in China and can put you in touch with people here who can actually help you.
A live product from you poses an existential threat to your competitors and keeps the big IT company from delaying in perpetuity (the typical modus operandi for big players here is to have middle management rush to agreement on the general principles of possible cooperation and then stalling and never doing anything more substantial -- the delay means they aren't sure if it is worth their while to clone you yet). But the threat of your getting actual traction matters because growth puts a deadline on your willingness to accept other people stalling, and your presence starts imposing actual costs on the startup. Those guys will need to change their branding at a minimum since they can't build an independent brand with you in the market, and once they know you will play hardball you will find them a lot more amenable to compromise if you want to go that route. With that said, if your market reception is good you may not even want to continue talking with them, since most Chinese startups are really inefficient and you can probably blow them out of the market anyway.