HELP?! How can we do a China “take back”?
I recently received a question from a US company with NO Chinese business entity. They had partnered with a Chinese firm, who put their Tmall store under the Chinese company’s name. They asked, “Can we TAKE BACK the store if one day we decide to form a China entity? Is the Tmall store transferable?”
Unfortunately, the answer wasn’t what they were hoping to hear. Let me lay it out for you…
If the brand is engaging a new partner (likely), that TP must have at least 3 star status with Tmall domestic (like us). Otherwise, no. And their new domestic entity needs IP seasoning time too (ownership of trademark). In some categories, it can be a year or more.
The worst part isn't the qualifying entity. It's getting the existing partner to turn it over. They can block the process. They can shut down the store. They can destroy the rankings "instantly." They can hold the IP and the relationship with Tmall hostage. Not to mention we've seen cases of sabotage where the brand itself is destroyed by the TP.
During the "take back" process, lots of bad things can happen. I've done a dozen of them over the years...never easy. Better to shut down the existing store and launch a new one if the traffic and store reputation isn't at scale.
If it is, then the only commercially viable option is a "buyout" of the existing contract. The more generous, the better. And those payments must be done in stages because the transfer process requires the existing partner to (1) initiate transfer, (2) wait a few weeks and then verify the transfer and (3) finalize the transfer after Tmall approves it.
Possible, but far from simple… what would you do in this situation?