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The Chinese Ministry of Commerce (“MOFCOM”)’s promulgation of the Guiding Opinions on Promoting Brand Consumption in China (the “Opinions”) on 17 December 2012.

Q: What are the Opinions mainly focusing on?

A: The Opinions are not particularly interesting for what they do but for what they signal as to MOFCOM’s attitude towards brands, and in particular the importance placed upon the building and developing of Chinese brands.

Q: Why did MOFCOM promulgate the Opinions? And what’s the background?

A: It is recognized by MOFCOM to date, that Chinese brands have failed to compete with their Western counterparts. The Chinese authorities are not content with China being relegated to producing for foreign brand owners or for producing no-name brand products. The “brand gap” exists for a number of reasons including a relatively late start for Chinese manufacturers and being poor at promotion.

Q: What’s the legal significance within the Opinions?

A: The Opinions do very little in and of themselves. Rather, their importance is serving as a guide to MOFCOM’s attitude towards the next stage of China’s commercial development, which reflects that MOFCOM considers the cultivation of Chinese brands, and also the encouragement of international brands within China, as an important piece in their strategy to develop Sino-foreign trade and international economic cooperation to a higher level.

Q: What has MOFCOM done to promote Chinese brands based on the Opinions?

A: MOFCOM has directed Chinese commerce departments at all levels to understand, from a strategic perspective, the importance and urgency of developing and cultivating Chinese brands.

Q: What’s the role of the State to build an environment conducive for brands to develop and flourish in China?

A: The authorities see themselves as having the following role:

Setting policy Improving legal protection for brands (including cross department law enforcement) Establishing a secure on-line platform where vendors and consumers alike are confident to trade Encouraging the consumption of branded products in China Encouraging basic research on branding Compiling Chinese brand development reports and indexes so as to gradually establish and develop a sustainable information service platform for China in relation to both domestic and foreign brands Encouraging Chinese enterprises to seek assistance from trade associations and intermediaries so as to gain a professional understanding of brands Encouraging Chinese enterprises to acquire foreign brands and sales channels

Q: Will market rule still be stressed under such State encouragement on Chinese brands?

A: Yes, the market is also seen as playing a vital role. The Opinions do stress that policy should be market orientated.

Q: What will Chinese consumers and Chinese brands benefit from success of branding in China?

A: Successful branding in China will benefit foreign brands as well from a more welcoming market, secure online platforms and better enforcement and protection of their rights, which in turn will lead to benefits in the long term development of China brands and Chinese consumers. Consumers should benefit from a greater range of products as well as prices which converge (i.e. gap in pricing between domestic and foreign products should be reduced). Chinese companies will be encouraged to engage in collective displays and have a concentrated promotion of Chinese brands from a number of perspectives.

Q: What shall companies do or plan to do in China for their brands under the Opinions?

A: It is the companies, not governments, create brands and innovation should be fostered in respect of brand creation and development. So enterprises need to build and develop brands which can help to be winners both at home and internationally. As for foreign companies or individuals who have or intend to have business in China, it is wise for you to give your products or services Chinese brands when manufacturing or serving in China to enjoy protection under current legal framework.

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