Experts caution against lapse of home brands in foreign cooperation

HOHHOT, Aug. 4 (Xinhua) -- Chinese experts in intellectual property right (IPR) have called on the government and enterprises to be more aware of their IPR protection to avoid losing control of domestic brands when cooperating with overseas investors.

At the Summit of Independent Innovation and Domestic Brand Development Strategy held here on Thursday, IPR experts and entrepreneurs expressed their concerns about the lapse of home 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 by Coca Cola or Pepsicola, and foreign brands account for over 90 percent of the market share of the country's carbonic drinks.

In 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 (COFCO) 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 they often turn out to be going toward the other way -- their foreign partners use the opportunity to root out competing Chinese brands and get a monopolizing position in the Chinese market.

"You can just count how many famous domestic brands have disappeared just because of cooperating with foreign investors?" he said.

The experts held that the main reasons leading to brand lapse are that enterprises are not conscious enough to the importance of brands, the existing brand appraisal system is not sound enough, and some enterprises with capital or technological difficulties tend to sacrifice their long-term interests to resolve problems at the moment.