When traveling overseas shoppers may see historic Chinese brands for sale, including Wangzhihe fermented bean curd, Goubuli stuffed buns, Wuliangye liquor and Tongrentang traditional Chinese medicine.

But experts warn consumers to be careful, as many brands have been illegally registered by foreign entities instead of by their original makers.

Faced with the overt trademark infringement, a group of old and famous Chinese brands have filed lawsuits against companies for infringing on their trademarks, while others decline to pursue legal action in foreign countries because of cost and time constraints.

Trademark infringement

A recent case is centuries-old Beijing fermented bean curd Wangzhihe, whose brand was registered by German food import-export agency OKAI. Wangzhihe filed a lawsuit against OKAI that was heard by a Munich court on August 8. A final ruling on the case has not been made.

Sichuan Baijia instant potato noodles is following the example of Wangzhihe, as OKAI also registered the Baijia brand in Germany, as well as that of QiaQia sunflower seeds and Laoganma spicy sauce.

Japanese giant chain retailer Daier registered a trademark for Goubuli, a well-known Tianjin stuffed bun brand, in Japan in 1993. After strong objections from Goubuli, Daier announced in July that it will give up the trademark. Insiders say it was a landmark success for old and famous brands to recover their rights in foreign markets.

Trademark infringements on long-established brands are estimated to have exceeded 100 annually since the country opened its market in the mid-1980s.

The brands include cosmetics, beverages, food, garments and cultural products, sources from the Beijing Vistron Law Firm say.

The agency has found that Guifaxiang 18th Street, a Tianjin snack, and Beijing pickles brand Liubiju have been registered in Canada by a local company using similar logos to the original companies.

The trademark of Wuliangye liquor is infringed upon in South Korea, cigarette brand Hongtashan is illegally registered in the Philippines and Japanese-made Tongrentang traditional medicine is for sale there.

The most popular trademark is Shaolin, birthplace of Chinese kung fu, which has been unlawfully registered in the United States, Japan and many European nations.

Motivation

"China-made products and Chinese culture are now in the international market and some foreign businesses are eyeing the potential and seek to cash in on it," says Wang Chuanli, lawyer of Vistron, who forecasts that unethical registration and unfair competition will continue for at least five more years.

His prediction is based on the poor awareness about brand protection in many Chinese enterprises and the high costs in both funds and time to reclaim brands in foreign countries and regions, especially in developed markets.

"Some foreign institutions are speculating on famous Chinese brands," says An Huimin, deputy chairman with China General Chamber of Commerce and currently director with Chinese Time-honored Brands Committee.

He cites a Canadian agency whose core business is preempting and transferring Chinese trademarks.

The situation is difficult for some famous old brands, as most developed from family companies or workshop businesses and their knowledge of and skills in intellectual property right (IPR) protection are not advanced.

Many of them are also showing poor business performance.

According to the Ministry of Commerce, there are about 1,600 such enterprises in China, 70 percent of which are just breaking even, with another 20 percent at the brink of bankruptcy or suffering losses.

Only about 10 percent of them are showing good profits. Beijing Er Shang Group has dozens of the nation's traditional brands with hundreds of years of history, including Wangzhihe, Liubiju, Yueshengzhai, Baiyu, Moqi, Gongyifu, Jingtang and Dahongmen. The company had 5.31 billion yuan in sales and 39.32 million yuan in profits last year.

Its wholesale and processing subsidiaries made substantial contributions to revenues, with Beijing Sugar Tobacco and Wine Corp sales registering revenues of 2.21 billion yuan and Beijing Fifth Meat Processing Plant generating 730 million yuan. More than 10 historically well-known brands were responsible for the other half of revenues.

Insiders say it requires a substantial investment in money and time to file a trademark lawsuit in developed markets. In the United Kingdom the minimum cost is about 100,000 pounds and the process will take at least a year.

Solution

Local registration upon arrival is vital to any domestic company expanding into foreign markets. Registering according to the Madrid agreement concerning international registration of marks (MACIRM) is cost effective, says Vistron's Wang.

China embraced MACIRM in 1989 and adopted its related protocols in 1995.

In line with the agreement, if a trademark is registered with the World Intellectual Property Organization, the brand will be protected in all member nations and regions that are signatories to the agreement.

Over the past 18 years, applications through MACIRM that originated in China increased from nine in 1989 to 1,328 in 2006.

Enterprises should also pay close attention to trademark announcements. If they find an infringement, they must raise objections to the State Administration of Industry and Commerce, the nation's top market supervisor, immediately and entrust agencies to trace and inspect the infringements and offer assistance.

"Chinese old and famous brands should be more proactive," says An.

Experts say that government should make more effort in providing access to information, policy guidance and legal support to help brands protect their interests.

"Those brands are our national treasure, yet due to their long history of workshop-style operations, their consciousness of brand protection is relatively new and they do not have enough international market experience," says An.

He suggests that a government institution should be established to help them get timely information and an early-warning system should be developed to help reduce brand protection costs.

The government is now taking measures to help historically well-known companies to protect their brands.

The Ministry of Commerce announced 434 qualified time-honored Chinese companies last October and committed to offering them more support, with brand protection one of the key tasks, according to the ministry.

(China Daily 08/27/2007 page9)

2013-07-17