Look before you leap. That was the message of the experts who spoke at the Sawyer Business School’s latest entry in the “Doing Business in China” series. The event, held March 10 at Sargent Hall, focused on “Protecting Your Brand Name in China,” and moderator C. Gopinath, chair and associate professor of strategy and international business, led a trio of speakers with expertise in launching brands, consumer behavior, and the legal requirements involved in structuring businesses in China.
While the exploding economy and the expanding middle class in China may tempt companies to rush products into the market, Associate Professor of Marketing Giana M. Eckhardt cautioned the audience of students, entrepreneurs and business people with research that shows more than 20 percent of all products in China are counterfeit.
“Most Chinese do not believe it’s unethical to purchase a fake,” she said, “and feel that since they don’t earn as much as Americans, they shouldn’t be expected to pay the same price.” Counterfeits are so ubiquitous, Eckhardt said Chinese consumers have a hard time finding the real thing. In addition, knockoffs often make it into the marketplace before the global brand with more features and lower price tags.
John McDonnell, Chief Operating Officer and Executive Vice President at Patron Spirits International A.G., was sent to China in 1992 for Seagrams Liquors to introduce Chivas Regal. “Before we had a chance to establish the brand,” he said, “123 brands that looked like Chivas, with similar labeling or typeface but filled simply with colored water, flooded the marketplace.”
Since moving to Patron Spirits five years ago, McDonnell said he has led the company’s efforts to expand from two to 115 countries. “The lessons we learned in China were about registering both the name and the package design in advance,” he said.
Attorney David Woronov, a partner at Posternak Blankstein and Lund, specializes in assisting clients setting up businesses in mainland China, Hong Kong and Taiwan and he says recent changes in trademark laws are a good start, but companies must pay attention to details. “A company must be the first to file for a trademark, not the first to use it,” he said, “and, sensitivity to language can make a huge difference in consumer adoption of a product.”
Although Professor Eckhardt said her research shows knockoffs often drive demand for the real thing, all three speakers said businesses will save time and money by knowing not just the market, but the cultural and legal aspects of launching a product before jumping in.