China, italy team up to safeguard rights, prevent counterfeiting

Italy is expected to press for tougher measures to protect the intellectual property rights of Italian companies and also check rampant duplication of famous brands after a recent investigation unearthed more than 60 cases of trade violation in China.

The Italian Trade Commission (ICE) in China has already forwarded a list of 30 so-called Italian brands to the Chinese authorities. These companies have been making false claims that their products are manufactured in Italy and in some cases are just using foreign names to mislead consumers, when they are really made in China, says Antonino Laspina, ICE chief representative.

Laspina says many of the Chinese companies have infringed on Italian intellectual property rights. With China emerging as an important market for nations such as Italy, businesses are now more than ever keen to protect their image and IPR.

ICE, which is an official government agency of Italy, is lending a helping hand to Italian businesses by organizing events and exhibitions to teach Chinese consumers how to make mature decisions when purchasing top quality goods, Laspina says.

The Italian agency established an intellectual property protection office in Beijing two years ago. So far, the office has unearthed more than 60 false Italian brands in the Chinese market, but it has only reported three actual cases of intellectual property infringement to the authorities, says China Radio International in a recent report.

China has become one of the largest markets for leading Italian brands such as Prada, Salvatore Ferragamo and Paul & Shark. In 2011, Prada reported a growth of more than 40 percent in sales at its retail outlets and outlined plans to open 160 more stores in China.

The number of Italian companies in China has also been growing, from 1,200 in 2006 to more than 3,000 last year, an increase of 150 percent over the past five years, according to ICE's Beijing office.

China became the world's second-biggest market for luxury goods last year, after the United States, with a forecast consumption exceeding 100 billion yuan ($16 billion, 12 billion euros), or about one-fourth of global sales.

Laspina says tough measures would dissuade the counterfeiters. "The counterfeiting activities have damaged the interests of Italian companies and China's image. It is also a blow to the Chinese consumers who are being forced to pay high prices for low quality products."

China's State Administration for Industry and Commerce dealt with 265,000 infringement cases during the 11th Five-Year Plan (2006-10), with about 20 percent, or 53,000 cases, concerning overseas firms, according to official statistics. The number of foreign firms reporting trademark violations rose by 10 percent year-on-year to 11,524 in 2010.

Customs authorities from Europe intercepted nearly 1 billion euros worth of counterfeit goods in 2010, with 85 percent of the involved goods originating from China, according to the European Commission. Europe is losing 8 billion euros annually through the flood of counterfeit goods, earlier reports said.

Trasarti Fabio, managing director of Giovanni Giusti, an Italian shoemaker which entered the Chinese market in 2005, says that his company took a hit because of rampant counterfeiting, after some Chinese companies started to blindly copy the Italian company's designs and ideas without giving any credit.

"It's also illegal to claim that your brand is registered in Italy when it is actually in China," he says. "It should be stopped, because we have spent hundreds of years to build a strong image for Italian products. When people talk about Italian products, they know they are buying the best quality in the world. But if the consumers find that they have paid a high price for something that is totally not worth it, it will cause irreparable harm to other Italian brands."

Laspina says that the Chinese authorities have realized the harm from such actions and are now working closely with Italian officials to unearth the culprits. Though there are now more controls on IPR violations, counterfeit brands are still mushrooming.

In a recent instance, a Chinese bedding brand called Jajemon was found to be making claims that its products are from Italy and the trademark is registered in the name of Luis Bags in Florence.

ICE's Beijing office, however, confirmed that there is no such company in Florence, after a thorough investigation by the Florence Chamber of Commerce. The actual manufacturer of Jajemon, Shanghai Jiali Bedclothes Co Ltd, refused to comment on the issue.

The Shanghai company had earlier said that the Jajemon mattresses are priced at 34,000 yuan in the domestic market, while the same product can cost more than 6,000 euros in Europe. This is a gross misrepresentation, as a genuine Italian mattress does not command a price of more than 600 euros in Italy, Shanghai-based Youth Daily recently reported.

Jajemon is just one example of how some Chinese companies are using Italy as a springboard to lure consumers.

A leather goods brand called Gladiator recently advertised in its brochure that it was born in Rome and has been in existence since 1873. The company also said its famous sub-brand Glad General was designed by Alvaro Bruni, a famous designer from the Institute of Marangoni. But as a matter of fact, it is entirely a Chinese brand, and no such brand exists in Rome.

In February, basketball star Michael Jordan announced that he is suing a Chinese sportswear chain Qiaodan Sports Co for improperly using the Chinese version of his name without authorization.

Qiaodan Sports has profited by illegally using his name on its marketing materials and products since the 1980s, Jordan said in a statement.

The Fujian-based company has been so successful that it is planning to raise 1.1 billion yuan through an initial public offering in Shanghai. It sells basketball shoes and jerseys in 5,715 retail outlets in China.

Qiu Baochang, head of the lawyers group for the China Consumers Association, says that it is hard to predict the outcome in the Michael Jordan lawsuit, but the case may also be an eye-opener for Chinese officials.

"Many Chinese people are unaware of the need for intellectual property protection. So the authorities still need to educate them," he says. "But from a legal perspective it's possible to register such a trademark using the false information provided in the advertisement. It is also difficult for the officials to verify the company's real identity due to language barriers."

Zhu Mingxia, director of the Research Center for Luxury Goods and Services at the University of International Business and Economics in Beijing, says such situations come about because of the lack of brand consciousness and the general perception among consumers that foreign goods are better than domestic products.

"These Chinese companies are taking a shortcut since they know Chinese consumers trust foreign goods, and anything related to foreign brands can lead to bigger profits," she says. "This is ironical, especially at a time when all roads lead to China. Domestic companies are looking to make hay by labeling their products as foreign brands, at a time when the rest of the world is stocking up on goods made in China."

(Source: China Daily)