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Three Myths About Branding In China - KLM BlueBiz Blog Post

11 April 2018

If you have a great future in mind for your products and brand in China, take precautions. Make sure you register and protect your brand and logo, or face the risk that it gets ‘hijacked’. This is a very real risk, as brands are a million dollar business in China, says Robin Tabbers of R&P China Lawyers in Shanghai, China. According to Tabbers, three myths about brands persist among western entrepreneurs.

Myth 1 – “Brand name registration in China is meaningless. Our brand is already registered internationally."

Tabbers: “This misunderstanding is widespread. It is of great importance to register your brand name (and logo), provided you do so in China. As China applies a first-to-file system, the individual or company that registers a brand name first will be the legitimate owner of this trademark (i.e. registered brand name or logo) in China. A registration in a country other than China (even in Hong Kong or Taiwan) is irrelevant and offers no protection in (Mainland) China.”

Myth 2 - "My international brand name is sufficient in China"

Tabbers: “Many companies have paid the price because they thought they could rely on their international name & fame. In reality, the majority of the Chinese population is unfamiliar with the Roman script, and knows only Chinese characters. Brands in a Western language are not used. Especially if a company is planning to sell to Chinese consumers, developing a Chinese brand name is a must. You can use a phonetic translation, preferably with a positive association in Chinese. For example the Chinese equivalent of Coca Cola (Ke Kou Ke Le) means something along the lines of thirsty and happy. Register it and introduce it to the market. If you decide not to, the market may do it for you while somebody else could register this Chinese brand name – and prevent you from using it!”

Myth 3 - "Chinese copy everything and there is nothing I can do"

“Not correct, you can protect your brand against infringements both in China and abroad. There is one condition: registration as a trademark in China. You can hire lawyers and special agencies that are actively spotting Chinese companies infringing your trademark rights. Should you still become a victim of an infringement, have your lawyer send a ‘Cease and Desist letter’. It is the first step that indicates that you will take legal action if the infringement is not stopped. Next steps may depend on your situation and could include government or Chinese court action.”

Another route to avoid counterfeiting, Tabbers adds, is to record your registered trademark in China with Chinese Customs. “Customs has the right to seize exported goods with counterfeit trademarks, and they are actively doing this.”

‘Trademark squatting’

Tabbers also has extensive experience in dealing with the ‘trademark squatting business’: “A Chinese trademark owner who registers your brand name or logo before the foreign creator even thought of it, will demand high sums of money to sell such trademark back to the international creator. He can easily keep you from using this trademark for manufacturing or sales in China, including on your business cards, on your Chinese website, in the market; he can even attempt to have Chinese customs block the export of your Chinese-manufactured products for international markets!”
Difficult decision
A foreign company that does not own its brand name in China, will have to face a difficult decision: trying to obtain - if registered - the trademark either through purchase from or opposition against existing trademarkholder, creating a different brand name, or taking the risk of entering the market without a protected brand name. The latter may cause serious consequences and issues, Tabbers explains. “If another company registers your brand name as trademark, you may experience customs officers stopping your branded products at the border, while you may even get sued for damages resulting from the sale of products with ‘your own’ brand name.”

Furthermore, you may be unable to sell at T-Mall and TaoBao platforms, for which a China Trademark Registration Certificate is often required. Even if no other company has registered your brand name as trademark, you face major risks as you are not able to prevent others from using this brand name legally in China as well.”

“Take my advice: register your brand name and logo as trademark today if you want to do business in or with China in the future.”