Brand hijacking: Register your trademark in China!
Counterfeiting is a thriving global industry, currently estimated to a value of USD 1 trillion. Cost of productions is low, demand is growing, and the legal consequences are almost non-existent in the big perspective.
China, as a source, is by far the biggest contender in the counterfeit game – especially when it comes to shoes and clothing. In spite of that, many companies do not register their trademark in China, making them a possible victim of counterfeiting and brand hijacking. More and more companies are witnessing their products and brands in the hands of the Chinese counterfeiters – leaving the companies with nothing but an empty bag of proprietary rights and a brand that have flattened like a balloon after a birthday party. Chinese registrations of your trademarks are therefore more important than ever.
In places like China, the language plays a big part of the counterfeit industry. For the most part, a Chinese name of a foreign trademark is much easier to sell, as the Chinese consumers are able to pronounce and remember the name. Companies, who don’t provide a Chinese name for their products, will often be the subject of counterfeit, as the Chinese counterfeiters will see a need for a product and supply it. The products are sold at the same price, without the consumers realizing the ingenuity – and thus, the counterfeiters are able to hijack the brand of the foreign company. Studies show, that hijackers are able to diminish the original product’s share of the market significantly – and all this within a year from the release of the product.
This shows that there is a need for protection in China – even if you don’t plan on selling your product there initially. If you have a good product, the Chinese counterfeiters will find you – and they will copy you, which can damage your brand profoundly.
There are 4 types of counterfeiting – and each has a different impact on the brand.
The first kind of counterfeiting is when the consumer knows he’s getting a cheap knock-off. This doesn’t cause a loss of sale for the brand owner, as the consumer isn’t likely to have bought the original product, had he not been able to get a counterfeit – but it damages the value of the brand, as the product becomes more accessibly for the regular consumer. Who wants to buy a genuine Rolex, when every other person on the street is wearing a fake one?
The next kind of counterfeiting is when the consumer purchases a substandard product in the belief that it is real. First of all, this causes a loss of sale for the brand owner, as the consumer has shown an interest in owning the original product, but secondly it also prompts safety issues, as the product might be of poor quality. If the consumer knows he’s buying a counterfeit, he will most likely be aware of the fact, that the product might break or fail – but when the consumer thinks he’s buying a genuine product, he will have certain expectations to the product. Expectations, which most likely won’t be met.
The third kind of counterfeiting is when the consumer buys a high-priced product, knowing it’s fake. This causes a loss of sale for the brand owner, as the consumer most likely would have purchased a genuine product, if the fake one had not been available.
The fourth and last kind of counterfeiting is when the consumer buys a fake product – believing it to be genuine. This is evidence of brand hijacking, as the counterfeit product slowly will take over the original product’s place on the market. It causes a loss of sale, and the brand owner might end up covering warranty claims for a product he did not produce, should the product show to be faulty.
The types of counterfeiting are different, but they are all damaging – both for the brand owner and for the consumer. They require different strategies to be developed and implemented to protect the brand, but each comes to show, that registering your brand in counterfeiting capitals like China is an important first step.