Leaving their mark

Leaving their mark
Nov 16, 2018 (WiC 432)

Relations between Beijing and Washington have darkened because of the trade war. Yet the sour mood has not affected the business interests of Donald Trump’s daughter Ivanka in China. According to CNN, she has been granted approval for 16 trademarks in her name for consumer goods like shoes and handbags.

Ivanka’s success is a rare one. Foreign brands have typically struggled to protect their intellectual property rights, particularly when it comes to the Chinese versions of their brand names. Former NBA superstar Michael Jordan and sportswear firm New Balance, for example, have both been mired in legal tussles with firms that operate under their Chinese identifiers.

Added to the list recently was Japanese retail chain Muji. Its Chinese name wuyinliangpin, ironically meaning “good products with no trademark”, is one of the best known Japanese brands in China. The problem is that local firm Beijing Miantian registered the wuyinliangpin characters almost 15 years ago, long before Muji opened its first store in the country.

Miantian now sells household goods with a minimalist style similar to Muji and a court ruling in Beijing late last month ruled in favour of the local firm, meaning that Muji can no longer identify itself under the Chinese characters of its Japanese brand name (unless it buys Miantian, of course).

Some of the Chinese media outlets were surprised to see Muji losing out, although there have been plenty of other cases in which international firms have been too slow to protect their trademarks from local applicants. Over in Taipei newspapers took a different view, speculating that Muji did itself no favours this year by listing Taiwan as a country in its company literature…

Ice on the runway

Ice on the runway
Nov 9, 2018 (WiC 431)

China is building eight new airports annually and according to the World Economic Forum that will take its total to 260 by 2020. However, the trickiest and most unusual airport the country is building is not in China itself. Instead it is situated at the South Pole.

Last week a Chinese expeditionary team took off on its special Antarctic plane the Snow Dragon to begin work on a permanent airport 28km from China’s Zhongshan Station scientific facility. China uses the site in Antarctica for meteorigical research and has said the new airport will make it easier for personnel to get to and from the station. “The new airport allows medium and large transport aircraft, like Boeing planes, to take off and land in the South Pole, shortening transport time as well as enhancing efficiency,” Zhang Xia, director of the Polar Strategy Centre at the Polar Research Institute of China, told the Global Times.

Building a suitable runway in Antarctica is not without its engineering challenges, but the Global Times points out that China is not the first to build an aiport at the South Pole. It says there are more than 50 air fields in the Antarctic continent, 10 of which have runways longer than 3,000 metres. The US owns 13 of them, with Russia ranking second with eight, according to the newspaper.

A trillion at a time

A trillion at a time
Nov 2, 2018 (WiC 430)

There was plenty of fanfare when Apple and then Amazon announced they had surpassed market capitalisations of $1 trillion. Over in China another trillion-figure milestone has been reached too: carmaker FAW has received credit lines from 16 local banks totalling Rmb1.015 trillion ($146 billion).

The Nikkei newspaper described FAW’s borrowings as a record for a single company and added that the debt equates to five years of profits for the entire Chinese car industry.

FAW said the loans supported a “solid financial undertaking” as the company pursued the country’s Made in China 2025 goals in areas like electric vehicles and autonomous driving. It added that they would also underpin the growth of its homegrown brands, such as the Hongqi (Red Flag) limousine used by President Xi Jinping on state parades.

Of course, FAW makes a lot less from the Hongqi than from its key joint ventures with Volkswagen, Audi and Toyota. Jilin-headquartered FAW-Volkswagen has been a particular cashcow, though the Chinese partner will watch with interest how BMW has taken a groundbreaking 75% controlling stake in its own joint venture with Brilliance China. Audi has already irked FAW management with its move to shift some of its production to another VW joint venture with Shanghai-based car firm SAIC (see WiC416).

The backdrop to the loan is a realisation that the state-owned auto giants in China need to do more to wean themselves off their reliance on sales via their foreign JVs and invest more in new energy cars, which promise a new avenue for growth.

China’s passenger car sales have actually declined for three consecutive months – the largest setback for seven years. According to data from the China Automobile Association, in September a total of 206,500 passenger cars were sold, down 12% year-on-year. But the slump may be about to reverse, reports Bloomberg, as the government looks for ways to stave off the effect of the Sino-US trade war. It says Beijing is eyeing a 50% cut in vehicle purchase taxes to bolster demand for cars with engines no bigger than 1.6 litres, which accounted for about 70% of sales last year.

The last time that the tax was cut significantly in 2015, sales surged. The upbeat news was enough to see a 5% spike in the shares of FAW’s European partner Volkswagen on Monday.