The Copycats Are Coming for China’s Hit Brands

the copycats are coming for china’s hit brands

SINGAPORE—For years, Western companies complained about Chinese copycats. Now, the copycats are coming for Chinese companies.

Starbucks’s Chinese rival, Luckin Coffee, has fought a long legal battle with a look-alike in Thailand that it says damages its brand. Beverage franchise Heytea, which recently opened its first store in New York selling its signature cheese-foam tea, has faced off against its Singaporean doppelgänger Heetea.

And behind Nigeria’s first lithium-processing plant, launched with great ceremony in October, isn’t the China-based Tesla supplier Ganfeng Lithium but a local venture called Ganfeng Lithium Industry.

As more Chinese companies go overseas and become coveted brands, they are discovering one of the pitfalls of international success: imitators.

the copycats are coming for china’s hit brands

After all, “you are more at risk if you are actually successful and famous,” says Catherine Lee, a senior partner at the international law firm Dentons Rodyk and one of the lawyers representing China’s Heytea.

International lawyers interviewed by The Wall Street Journal said that inquiries from Chinese companies seeking to protect their intellectual property had risen in recent years. There were nearly 6.2 million trademark registrations in China in 2022, triple the amount compared with five years earlier, according to data from the China National Intellectual Property Administration.

China has strengthened enforcement at home, with higher penalty fees for patent infringements, and shortened the time courts take to handle the cases. In 2022, China handled around 430,000 first-instance civil IP cases, up from 280,000 in 2018, according to China’s Supreme People’s Court.

In 2005, Starbucks sued Shanghai Xingbake Cafe, a Chinese coffee-shop chain using Starbucks’s Chinese characters, for trademark infringement, alleging that the latter was its doppelgänger and causing confusion among customers while diluting the value of its brand in China. Starbucks won the case and Xingbake was ordered to pay damages and change its name.

Luckin’s out

Now, Luckin Coffee, which has knocked Starbucks off its top spot in the Chinese coffee market, is fighting against a look-alike abroad.

Pictures emerged online two years ago showing a cafe in Thailand with the name “Luckin Coffee” and a logo of a blue deer on a white background looking left. The logo of China-based Luckin Coffee shows a white deer on a blue background looking right.

the copycats are coming for china’s hit brands

The Chinese company issued a statement in August 2022 calling the Thai store “fake” and saying it would take legal action.

In December 2023, however, Thai Luckin said on social media that Thailand’s Central Intellectual Property and International Trade Court had rejected Luckin’s case for trademark and copyright infringement.

That is because Thailand, like China, follows a “first-to-file” regimen for intellectual property, which grants use rights to whoever registered the trademark first.

50R, the company behind Thai Luckin, has registered nearly 200 trademarks in Thailand, including names such as TikTok, T-Mall and Pinduoduo—all of which are popular Chinese online platforms. (The company also trademarked Chinese-character versions of Chanel, Tesla and the name “Trump.”)

It registered Luckin with Thai authorities in 2018, three years ahead of China’s Luckin, and then proceeded to sell coffee.

Luckin’s pre-2018 fame in China carried no weight with the Thai court because of the lack of a trademark protection treaty between the two countries, said Lin Shanlin, a Bangkok-based lawyer at Mandarin Accounting Law Firm.

Luckin Coffee declined to comment. Neither Thai Luckin nor 50R Group responded to requests for comment.

Some 73 of the “100 Most Valuable Chinese Brands in 2023,” as determined by marketing data firm Kantar, attempted to have their trademarks registered in Thailand. In nearly half of the cases, this appears to have been done by third parties suspected of not being the legitimate owners of the mark, according to data collected by Akkaraporn Muangsobha, a Bangkok-based partner at the international law firm Rajah & Tann Asia.

What’s in a name?

China’s global leadership in solar panels and batteries is also attracting imitators.

A company billing itself Ganfeng Lithium Industry treated Nigeria’s minister of solid minerals development, Dele Alake, to a red-carpet reception and gave him a golden spade for a ceremony marking the construction of a $250 million lithium-processing plant in October.

Days later, Nigeria’s Ganfeng released a statement taking issue with media reports that called it a subsidiary of China’s Ganfeng Lithium, one of the world’s largest lithium-salt producers for EV batteries, and accusing its Chinese counterpart of impersonation instead.

It had “never relied on or utilized any resources or influence” from its more established namesake, Nigeria’s Ganfeng said in the statement, adding that the Chinese characters for its name mean “Sweet Harvest.”

The meaning of the Chinese characters in the name of Tesla supplier Ganfeng is “vanguard of Jiangxi,” a reference to the southeastern Chinese province in which it was founded in 2000.

China’s Ganfeng said it was surprised to see someone undertake an entire project using its name. It added that it was currently in the process of registering its trademark in Nigeria and elsewhere in the world.

Nigeria’s Ganfeng and the ministry didn’t respond to requests for comment.

In countries with strong IP laws, Chinese companies have fared better.

In Singapore, a store called Heetea began operating more than six years ago, selling drinks with a salty layer of cheese foam on top of fresh tea. Its logo showed a cartoon man in black and white from the side drinking from a cup.

There was only one hitch in Heetea’s plan: Heytea.

Heytea is a Chinese beverage chain founded in 2012 and was already famous in the Chinese-speaking world for introducing cheese tea to a broad audience.

Singapore’s intellectual-property office sided with the Chinese firm, invalidating Heetea’s trademark in 2021.

The office pointed to striking similarities in the logo, from the “shape of the head, nose, and mouth; angle of the head tilt; the way the boy holds the cup in the right hand with four fingers visible” to the font and positioning of the text.

For the future, intellectual-property law practitioners say Chinese companies need to do what Western companies long ago learned to do: carry out due diligence, register trademarks early and monitor their use overseas.

That advice comes too late for China’s Luckin Coffee, at least in Thailand, where it won’t be allowed to open stores called “Luckin Coffee.”

Write to Sha Hua at [email protected]

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