Guangzhou Pharma spins wheels in legal offensive

By Liu Yonghua Source:Global Times Published: 2013-3-19 22:28:01

JDB Group, a Hong Kong-based herbal tea maker, is making noise once again about Guangzhou Pharmaceutical Holdings, a rival beverage maker and the current holder of the Wong Lo Kat trademark. Specifically, JDB argued last week on the sidelines of the country's two sessions that as a private company it is at an unfair disadvantage against State-backed Guangzhou Pharmaceutical.

This is just the latest salvo fired off in the ongoing conflict between these cross-border foes, who have been locking horns since April 2011 when Guangzhou Pharmaceutical filed a trademark infringement lawsuit against JDB.

Tensions between JDB and Guangzhou Pharmaceutical first came to the fore in 1997, when the latter company granted JDB the right to use the Wong Lo Kat trademark until 2010. Although a subsequent deal allowed JDB to continue using the trademark until 2020, this agreement was ruled invalid last May due to illegal activities which happened behind the scenes - namely, a Guangzhou Pharmaceutical executive was found to have taken bribes from JDB. In the end, JDB was required to return the trademark that it had developed into a widely recognizable brand, leaving it to sell its own herbal teas under the Jiaduobao label.

But so far Guangzhou Pharmaceutical has largely failed to capitalize on the sudden acquisition of one of the most valuable trademarks in the mainland. Sales of the drink were down to only 3.7 billion yuan ($595.3 million) last year, well below the 18 billion yuan from the year before.

 This is largely because Guangzhou Pharmaceutical lacks experience with marketing or brand building, especially compared to JDB. But instead of trying to strengthen these areas, it has distracted itself with a series of legal counterattacks against JDB, which periodically provokes it with jabs like the one mentioned above.

At present, Guangzhou Pharmaceutical is suing JDB for, among other things, false advertisement as well as damages which resulted from a street brawl between representatives from the two companies.

While all of this has been going on though, JDB has managed to grab a 73 percent share of the domestic herbal tea market with its Jiaduobao products, while Guangzhou Pharmaceutical's Wong Lo Kat-branded drinks have gained only an 8.9 percent share, according to industry data. Much of this success came from JDB's accomplishments in building up partnerships with distributors, as well as its nationwide advertising campaigns on social media and popular television shows, such as The Voice of China.

Guangzhou Pharmaceutical is only wasting precious time, effort and resources by giving chase to its competitor. The company needs to lay its war with JDB to rest and devote its attention to developing the Wong Lo Kat brand, or risk becoming an even more marginal figure in the country's booming market for consumer staples.

The author is a commentator on branding and marketing. liuyonghua2046@163.com



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