Saturday June 23, 2012
Herbal war still heating up
MADE IN CHINA
By CHOW HOW BAN
The tussle over the Wong Lo Kat herbal tea trademark is far from over. In the meantime, consumers are at a loss over whether the red can or the green pack is the real thing.
IS it called Wang Lao Ji or Jia Duo Bao? The confusion over the name of the popular red-canned herbal tea drink has bothered Chinese consumers for the last two years.
Last month, the China International Economic and Trade Arbitration Commission handed down judgment against Jiaduobao Holdings (JDB), ordering the Hong Kong company to stop using the Wang Lao Ji trademark.
The commission said that an agreement, purportedly signed earlier by Guangzhou Pharmaceutical Group (GPG) former vice-chairman Li Yimin to lease the brand to JDB for 10 years, was null and void.
The two parties had apparently signed two contracts in 1997 and 2000 allowing JDB to produce the Wang Lao Ji herbal tea drink in mainland China.
They agreed to a further extension of the trademark licence for the red-canned drink until 2013 and the red-bottled drink until 2020.
JDB has filed an appeal with the Beijing No 1 Intermediate People’s Court against the commission’s decision.
On the other hand, the winner of the case, GPG, has announced that it would start rolling out the red-canned Wang Lao Ji drinks.
This move prompted JDB to issue a statement saying that GPG should refrain from worsening the situation pending the court appeal.
“The trademark lease agreements have been kept on record by the Trademark Office of the State Administration for Industry and Commerce.
Until now, Hung To Holdings Co Ltd (the parent company of JDB) remains the only company to be authorised to use the Wang Lao Ji trademark on the red-canned and red-bottled drinks.
“Any company involved in the production and sales of the red-canned and red-bottled drinks is deemed illegal. We will protect all our rights,” the statement said.
The Wang Lao Ji herbal tea recipe was founded by a doctor named Wang Chat Bong in 1828 during the Qing Dynasty (1644-1912) in the Guangdong province and Guangxi Zhuang autonomous region.
The recipe was passed down the generations and over time, the brand has become synonymous with traditional Chinese herbal tea.
Wang Lao Ji is touted as the Coca Cola of China and has become the No 1 beverage in China. Abroad, its reputation is comparable with Tsingtao Beer. (In Malaysia, the drink is known as Wong Lo Kat.)
During the trademark war, GPG and JDB made moves to increase their market share in the herbal tea industry.
First, GPG started to produce a green packet version of the herbal tea drink using the same Wang Lao Ji trademark.
Then, JDB splashed millions of yuan on advertising and marketing for the brand.
The brand shot to fame during the Wenchuan earthquake in 2008 when JDB made a 100 million yuan (RM47mil) contribution to relief efforts.
Soon after a charity and relief concert aired nationwide, the company orchestrated a campaign to stir national sentiments in support of the Wang Lao Ji brand.
Its catchphrase pa shang huo, he wang lao ji (if you worry about feeling heaty, drink wang lao ji) caught the attention of the Chinese and sales shot through the roof, chalking up a revenue of 16 billion yuan (RM7.52bil) in 2009, which was a massive 96% increase from 2002.
The red-canned Wang Lao Ji achieved about 18 billion yuan (RM8.46bil) in sales last year, making it the No 1 herbal tea brand with a 70% market share. The No 2 brand, Fujian-based Heqizheng, garnered only 10%.
In the past year, as if it had sensed the commission’s unfavourable judgment coming, JDB repackaged the red-canned Wang Lao Ji drink.
The company printed the name Jia Duo Bao on the other side of the red can and even changed its catchphrase to “if you worry about feeling heaty, drink jia duo bao.”
A Netizen who goes by the moniker “de hua” posted on QQ.com: “No matter which company we support, what I am more concerned about is that when I buy the drink I am used to saying: Boss, a bottle of Wang Lao Ji please.”
Another Netizen named “xing yuan” said GPG sold its “newborn baby” to JDB and the latter raised it to become a very successful brand.
“And now GPG wants to take him back. Who do you think is right or wrong?”
According to local media reports, GPG argued that the trademark lease agreements were invalid as its former vice-chairman Li had received a bribe of HK$3mil (RM1.24mil) from JDB to secure the deal.
In 2005, Li was sentenced to life imprisonment for accepting bribes.
GPG said the company would restructure its production line and beef up its marketing for the Wang Lao Ji brand.
However, GPG did not say whether it would put more emphasis on its green packet version or the red-canned version that it has reclaimed.
Sales of the green packet version of the drink was only 1.9 billion yuan (RM893mil), far lower than the revenue generated by the JDB red-canned version.