Chinese officials, experts, and entrepreneurs have called on the government and enterprises to be more aware of Chinese brands that are at a disadvantage in the world and to avoid losing control of domestic brands when cooperating with overseas investors.

 

At a seminar during the China Commodity Trade Fair held over the weekend in North China's Inner Mongolia, Vice Minister of Commerce Jiang Zengwei said Chinese lack of innovation in technology and brand cultivation hinders upgrades of the industrial structure and transformation of economic growth.

 

Statistics from the seminar showed that the contribution of products with domestic brands to China's economic growth was already over 25 percent and the country ranks first in terms of production in more than 170 products.

 

However, not a single Chinese brand has ever been listed among the top 100 global brands released by Business Week annually.

 

"Currently in China, only three in every 10,000 enterprises own intellectual property rights (IPRs) and unique techniques. And more than 60 percent of enterprises do not have trademarks," said Wang Qiguo, director of China Brand Research Center of Beijing University, adding that an enterprise without a trademark is unable to become a famous brand.

 

Most of "Made-in-China" products are made for overseas firms, thus bearing those firms" trademarks, according to Wu Handong, president of Zhongnan University of Economics and Law.

 

s a result, the majority of profits, made by taking advantage of a large amount of land and mine resources, as well as cheap labor force and even at the price of environment pollution, do not go to the OEMs (original equipment manufacturer) in China, but their foreign counterparts.

 

As a matter of fact, China also ranks first in terms of the absolute number of trademarks, which reached 27.74 million by the end of last year, according to statistics from the seminar.

 

However, some Chinese brands are gradually edged out of the market and finally disappear in mergers and acquisitions between Chinese and overseas businesses.

 

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, while in food and medicines, they comprise 30 percent to 40 percent. Three of the top four laundry detergent producers have been acquired by foreign companies.

 

Liu Liedong, general legal consultant for the China Oil and Food Corporation, 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 gradually gain a controlling position or just replace the Chinese brands with their own.

 

Furthermore, few Chinese brands have overseas registration. Forty-six percent of 500 famous domestic brands have no registration in the United States, according to data from the seminar.

 

Some famous Chinese brands, including Tongrentang, a leading traditional Chinese medicine manufacturer, China"s largest computer maker Lenovo, and electric appliance maker Haier have been maliciously or falsely registered in some foreign countries.

 

Malicious registration of domestic brands outside the country has caused a direct loss of US$200 million in the past over three years, added Wu, saying it is partly due to a lack of awareness in brand cultivation and a global strategy.

 

Liu suggested that Chinese enterprises improve their awareness of IPR protection and at the same time that the government strengthen law enforcement of its trademark assessment system.

 

(China Daily August 8, 2007)