Firms’ fight over name rights reflects growing recognition of brand value
By Ho Ai Li 28 May 2012
A battle over herbal tea is heating up this summer in China, turning the spotlight once again on the country’s growing tussle with trademarks and brands.
Decades after the communists wiped away differentiation, the country’s thriving market economy is learning, with more than a bit of pain and angst, the importance of uniqueness.
JDB Group from Hong Kong found out the hard way.
For years, it had sold herbal tea under the brand Wong Lo Kat, or Wang Laoji in Mandarin, in a red tin can. It did such a good job that the drink even outsold Coca-Cola in China at one point.
Sales grew from 180 million yuan in 2002 to about 18 billion yuan (S$3.6 billion) last year, making up 70 per cent of the herbal drinks market.
But JDB did not own the brand name. It belongs instead to a mainland company, the state-owned Guangzhou Pharmaceutical, from whom JDB leased the name in 1995.
JDB got the loan of the brand name extended in 2010 by bribing a senior employee at Guangzhou Pharmaceutical. The employee was jailed after the mainland company discovered the fraud and declared the extension void.
The dispute went to arbitration about a year ago, and the case ended in Guangzhou Pharmaceutical’s favour two weeks ago.
Now, JDB plans to market its own herbal drink - to be called Jia Duo Bao - in the iconic red cans. The herbal tea, it says, will be ‘exactly the same as before’.
The mainland company, which already sells its own Wong Lo Kat herbal tea, which comes in green packets, meanwhile plans to introduce its own red canned drink next month.
The spat is just one of a growing number of trademark disputes in China and reflects how it is reaching a new stage of business development, say analysts.
Instead of just competing on price, Chinese companies are increasingly fighting over brands and trademarks too.
Besides the Wong Lo Kat case, sports apparel maker Qiao Dan has been sued by American basketball legend Michael Jordan, while Apple is still trying to own the iPad brand in China despite selling millions of the tablet computer worldwide. Both cases are still ongoing.
‘These cases have educated the Chinese public about the importance of protecting trademarks,’ said marketing expert Kang Youzheng.
In recent years, China has sought to protect its lao zi hao, or established names, like traditional Chinese medicine group Tongrentang, from overseas copycats.
Likewise, Guangzhou Pharmaceutical has cast the trademark tussle with JDB as one in which the protection of an indigeneous brand is at stake.
But such trademark spats may cool consumers’ ardour, says analyst Hong Tao of the Beijing Technology and Business University.
‘They won’t know which brand to be loyal to,’ he adds.
Whichever side wins, observers say, such disputes have driven home the importance of nurturing one’s own brands in China.
Said Mr Kang: ‘Previously, people thought that the value of brands was insubstantial, but this case shows that their value is very real and can be monetised.’
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A storm over a herbal tea can in China
Firms’ fight over name rights reflects growing recognition of brand value
By Ho Ai Li
28 May 2012
A battle over herbal tea is heating up this summer in China, turning the spotlight once again on the country’s growing tussle with trademarks and brands.
Decades after the communists wiped away differentiation, the country’s thriving market economy is learning, with more than a bit of pain and angst, the importance of uniqueness.
JDB Group from Hong Kong found out the hard way.
For years, it had sold herbal tea under the brand Wong Lo Kat, or Wang Laoji in Mandarin, in a red tin can. It did such a good job that the drink even outsold Coca-Cola in China at one point.
Sales grew from 180 million yuan in 2002 to about 18 billion yuan (S$3.6 billion) last year, making up 70 per cent of the herbal drinks market.
But JDB did not own the brand name. It belongs instead to a mainland company, the state-owned Guangzhou Pharmaceutical, from whom JDB leased the name in 1995.
JDB got the loan of the brand name extended in 2010 by bribing a senior employee at Guangzhou Pharmaceutical. The employee was jailed after the mainland company discovered the fraud and declared the extension void.
The dispute went to arbitration about a year ago, and the case ended in Guangzhou Pharmaceutical’s favour two weeks ago.
Now, JDB plans to market its own herbal drink - to be called Jia Duo Bao - in the iconic red cans. The herbal tea, it says, will be ‘exactly the same as before’.
The mainland company, which already sells its own Wong Lo Kat herbal tea, which comes in green packets, meanwhile plans to introduce its own red canned drink next month.
The spat is just one of a growing number of trademark disputes in China and reflects how it is reaching a new stage of business development, say analysts.
Instead of just competing on price, Chinese companies are increasingly fighting over brands and trademarks too.
Besides the Wong Lo Kat case, sports apparel maker Qiao Dan has been sued by American basketball legend Michael Jordan, while Apple is still trying to own the iPad brand in China despite selling millions of the tablet computer worldwide. Both cases are still ongoing.
‘These cases have educated the Chinese public about the importance of protecting trademarks,’ said marketing expert Kang Youzheng.
In recent years, China has sought to protect its lao zi hao, or established names, like traditional Chinese medicine group Tongrentang, from overseas copycats.
Likewise, Guangzhou Pharmaceutical has cast the trademark tussle with JDB as one in which the protection of an indigeneous brand is at stake.
But such trademark spats may cool consumers’ ardour, says analyst Hong Tao of the Beijing Technology and Business University.
‘They won’t know which brand to be loyal to,’ he adds.
Whichever side wins, observers say, such disputes have driven home the importance of nurturing one’s own brands in China.
Said Mr Kang: ‘Previously, people thought that the value of brands was insubstantial, but this case shows that their value is very real and can be monetised.’
GuanYu..! I am agree with your ideas thank you for such a awesome info..
Herbal Tea
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