Chinesepod - Experts warning: beware mergers that clip local brands

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BIZCHINA / Opinion/Analysis

Experts warning: beware mergers that clip local brands

(Xinhua)
Updated: 2007-08-06 17:27

Chinese experts in intellectual property rights have called on the
government and enterprises to be more aware of protection to avoid losing
control of domestic brands when cooperating with overseas investors.

At the Summit of Independent Innovation and Domestic Brand Development
Strategy last week, IPR experts and entrepreneurs expressed their
concerns about the loss of Chinese brands resulting from mergers and
acquisition between Chinese and overseas businesses.

Statistics from the summit show that seven of China's top eight beverage
companies have been merged with Coca Cola or Pepsicola, and foreign
brands account for more than 90 percent of the market share of the
country's carbonated drinks.

In the cosmetics industry, foreign brands make up 75 percent; in food and
medicines, 30 percent to 40 percent. And three of the top four laundry
detergent producers have been acquired by foreign companies.

Wu Handong, president of Zhongnan University of Economics and Law and an
IPR expert, said that some domestic brands with unique techniques and
reliable quality are fairly competitive in both domestic and
international markets, but when they join hands with foreign enterprises
to seek either financial or technological support, they are gradually
edged out of the market and finally disappear.

Liu Liedong, general legal consultant of the China Oil and Food
Corporation, which is a leading grain, oil and foodstuff trading
conglomerate in China, said that the fundamental purpose of international
companies in China is to raise their market share and promote their
trademarks, with capital, technology and brands acting as their most
powerful weapons.

Attracted by foreign capital and technology, many Chinese enterprises do
not pay due attention to the handling of their brands when cooperating
with foreign investors.

He said Chinese enterprises usually put their trademarks into joint
ventures. With the development of the new company, foreign investors will
gradually get a controlling position or just replace the Chinese brands
with their own.

Senior brand expert Yang Xingguo said that many Chinese enterprises mean
to take advantage of foreign technology and management experience to
develop their own brands but often lose the brands on the way.

(For more biz stories, please visit Industry Updates)

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