A year ago the Beijing Wangmazi Scissors Store, one of the capital's old and famous laozihao brands announced bankruptcy.

Founded in 1651 in the Qing Dynasty (1644-1911), the Wangmazi Scissors company, with its gold-lettered signboards, has been the symbol of and the standard setter for Beijing's scissors industry.

At its peak, the annual tax paid by the store reached 2 million yuan (US$ 240,960).

After Wangmazi became famous, Beijing saw the emergence of many similar brands, such as "old Wangmazi," "True Wangmazi," remembers a former salesman, surnamed Zhang, of the original company.

Dozens of firms produced fake Wangmazi Scissors, with the annual production of more than 5 million pairs - three times the production of true Wangmazi, according to the Wangmazi store.

Lack of brand protection and advancement is one of the main reasons for the decline of Wangmazi and other "laozihao" stores, said Lu Renbo, an expert from the Research Institute of Market Economy, under the Development Research Center of the State Council.

China has about 16,000 old and famous brands, including Quanjude, Tongrentang, Shengxifu and Xinhualou.

But statistics show only 10 per cent consistently make a profit. About 20 per cent have been operating at a loss for a long period of time and are struggling to stave off bankruptcy.

The rest are struggling to survive.

These brands are mostly located in the historic cities of Beijing, Shanghai, Nanjing, Hangzhou, Tianjin, Fuzhou and Xi'an.

They may expect tougher times as the industries they belong to, such as retailing, catering and food, face stiffer competition.

Their demise can be attributed to a combination of factors, including an outdated enterprises structure, conservative management policies, backward technology, outdated products and small-scale operation.

But the lack of trademark protection consciousness is the main reason for their difficulties, experts claim.

Call for trademark protection

Many old and famous brands have been registered by outsiders, experts said.

In 1983, Jinhua Ham, a famous brand of Jinhua in east China's Zhejiang Province, was registered by a Hangzhou-based company, Zhejiang Food Company.

Fortunately, Jinhua, as the original place of the speciality, managed to win rights to use the Jinhua Ham brand, which ended the 20-year battle for recognition.

In central China's Hunan Province, many century-old brands, such as Deyuan baozi, or steamed buns with stuffing, Huogongdian and Youyicun, have also been registered by other domestic companies.

Some laozihao, including Tianjin Goubuli, Tiantan, Ashima have even been registered by foreign companies.

There is no statistics of the total "old and famous" brands registered in the Trademark Office under State Administration for Industry and Commerce.

Fortunately, some laozihao stores including Quanjude, Tongrentang and Ruifuxiang, have come to realize the significance of protecting their brands.

On June 29, Tongrentang Medicine established its 17th overseas branch in Jakarta, capital of Indonesia.

Founded in 1669, Tongrentong, a Chinese medicine store, highlighted the brands protection.

In 1989, the brand was recognized as the "famous brand" by the Trademark Office under the State Administration for Industry and Commerce.

 It is the first brand on the Chinese mainland to apply for a Madrid International Trademark Registration. It is also the first brand to apply for trademark registration in Chinese Taiwan.

As a famous brand, the Tongrentang company has registered trademark in more than 50 countries, including Canada, Australia and Thailand.

Ruifuxiang, the country's top seller of silk and cloth, boasts a history of more than 100 years.

But the business situation of Ruifuxiang is much worse than before, said Ma Xiurong, a manager.

With the aim to protect the brand, Ruifuxiang has been registered in the country's Office of Trademark for 10 years, another manager Xue Shiyi said.

And now the store is working to promote the brand value of Ruifuxiang and explore the traditional culture hidden behind it, Xue said.

He added that an exhibition on the culture of Ruifuxiang is being held in the store to offer knowledge about its long history to every customer.

Another famous brand, Beijing Quanjude duck, is also a successful example of protecting its name.

The Quanjude roasted duck has a history of 140 years.

This company has produced some 115 million roasted ducks.

And the brand value has reached more than 8 billion yuan (US$960 million).

In 1999, the Quanjude was recognized as a Chinese famous brand by the State Administration for Industry and Commerce.

The company has registered the brand in 37 countries and regions, and a series of traditional and up-to-date Duck Furnace (an apparatus to roast duck) technologies have applied for patent protection.

Another store, Neiliansheng, has had a registered trademark since the establishment of the Office of Trademark in China, said spokesperson Niu Shuxin.

And in 2002, the store applied for an appearance patent of its products, Niu said.

In Chengdu, capital of southwest China's Sichuan Province, and Chongqing Municipality, most of the laozihao stores are in the catering industry.

With the aim to promote the brand , the catering industry in the two cities have held "Good Food Festivals" to explore the region's folk snacks.

As for management of these brands, the laozihao companies of Chengdu and Chongqing pay more attention to the culture package and quality of their dishes as well as the comfort of their restaurants.

In Hangzhou, most laozihao have registered trademarks in the local office. So the management in Hangzhou is better than the average nationwide, said Shang Li, deputy secretary-general of Hangzhou Association of Laozihao Enterprises.

Among 70 old companies, about one third make a profit, while one third have been operating at a loss for long periods of time and the rest are just managing to survive, said Shang.

Staying the course

Laozihao stores have embraced trademark and property protection, but it is still far behind the requirement of their development, said Li Fuhua, a manager of Beijing Guolinmao Intellectual Property Co Limited.

Li said many have registered trademarks, but they did not apply for intellectual property protection for their own traditional techniques.

Laozihao have many kinds of traditional techniques, which is vital to their development. But now many of them have been sold and stolen. For example, the traditional technics of xuanzhi (rice paper), are now in Japanese hands, Li said.

In the traditional Chinese medicine industry, many laozihao stores suffer from weak intellectual property protection, according to Li.

In line with the Patent Law, the medical appliance, medicine prescription and manufacturing means can apply for the patent protection. But in recent years the patent application for medicine prescription and the manufacture of products has attracted little interest, Li said.

Every company has its own management ways. While some have registered their brands, many have not, believing it is not necessary "for the public to know of such protection", said Lou Yibo, spokesperson of the China General Chamber of Commerce.

Some companies with no qualification of laozihao abuse the brand names, thus undermining the reputation of genuine long-standing brands, Lou said.

Appraisal standards are being formulated and are expected to be set by the end of this year. They will be the first directives to give definition to the concept of laozihao and will offer support, Lou said.

Under new standards, the brands will comprise of four elements: luxuriant culture, original technic, integrated social cognition and representative outputs.

The government is to assist in preserving enterprises which are seen by many as part of the nation's heritage. A series of regulations and policies should be granted to help their revival and promote their brand value.

Every old company has its own special culture and history, and is part of the important cultural heritage of society, Shang said.

In Hangzhou, brands of some shut-up laozihao companies have been put into protective management by the related department of the government.

The government is now encouraging all old companies to register their brands, Shang said.

With the aim to promote the brand value, a national exposition on laozihao will also be held in Hangzhou in October, Shang told China Daily.

And in Beijing, a project has been started, said Gao Yidao, deputy secretary-general of Beijing Association of Enterprises Management.

Gao said the aim is to protect the brands through modern and scientific methods.

As part of the project, a modern management company has contracted with Neiliansheng shoes store to promote the brand's image, said Gao.
 
(China Daily August 9, 2004)