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August 10, 2004

Consequences of Weak IP Protection: Bankruptcy

Yesterday's China Daily reported on the necessity of trademark protection, particularly for established brands.

Last year, Beijing's Wangmazi Scissors Store declared bankruptcy.  Wangmazi Scissors Store was founded over 350 years ago and had been the standard for the scissor industry in Beijing.  Unfortunately, imitators using the Wangmazi name produced and sold so many scissors that Wangmazi ceased being profitable.  An expert states that "lack of brand protection and advancement is one of the main reasons for the decline of Wangmazi and other 'laozihao' stores."

In China, this is not a unique occurrence.  According to the article, China has over 16,000 old and famous brands.  Of these, only 10 percent are consistently profitable.  Experts believe the primary reason for this is that trademark protection is lacking.

The Chinese government is encouraging trademark registration by all of the old companies, which may prevent newcomers from preying on established businesses.  According to the web-site for the China Trademark Office, fees for trademark registration in China are comparable to those in the United States, and a trademark may be registered in three business days.

I agree wholeheartedly with the Chinese government that trademarks should be registered by well-established businesses.  However, protection should not be limited to those businesses that are already established.  Every business should consider trademark registration, particularly when the business prides itself on quality.

Posted by at 08:54 AM.
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