My first reaction is, what?
It doesn't have any remotely any connection to that at all.
The motif itself goes centuries back, right, to the Tang Dynasty when it was used everywhere.
I would call it a more assured sense of national identity.
It's a classic case of winning the battle, losing the war here.
There was a visible reputational damage to the brand.
It just means that their admiration is more conditional.
So brands are being judged not just on innovation, value and services, but also on the culture of behavior and how they use their power in the market.
Welcome to the chat lounge.
I'm Tuyen.
Joining me for a chat on French luxury brand Louis Vuitton's trademark dispute with Chinese milk tea chain Mali Tea, Jia Yuxuan, a research assistant at the Center for China and Globalization.
Subramania Bhatt, the founder and CEO of the Singapore-based marketing technology company China Trading Desk, and John Ghosn, professor of economics at the University of International Business and Economics here in China.
Welcome to the show, everybody.
So to begin with, John, could you briefly walk us through what happened between Louis Vuitton and Molly Tea, the Chinese tea chain?
Well, it's an interesting case.
I think in the trademark, this tea company uses one small little pattern in the oral trademark, the pattern, and it was sued for that.
I think it's a...
This is a very legal and intricate matter.
I'm really not an expert in that.
I think even a lawyer is probably difficult to make a judgment.
I think it's going to be leaving it to the court to decide whether this is indeed an infringement of the trademark.
It's an interesting case.
So that's my current understanding of this.
But as an average consumer, does the four-petal trademark of Mali tea, when you see it, does it remind you of anything related to Louis Vuitton?
Well, I...
Yeah, I don't represent all the consumers, but at least from my perspective, when I first read about this case, my first reaction is, what?
It doesn't have any remotely any connection to that at all.
So I'm actually, at least as far as I'm concerned,
I'm not convinced that I have any connection in thinking about these two brands.
At first glance, it's really, I mean, you can't even see this little pattern in a T trademark, right?
And so that doesn't remind me, doesn't have any connection in my mind at all.
Yeah, I'm sorry, but I want to add, according to actually available reporting, when the court was making this judgment, it was also considered more as his previous trademark applications.
Since, I think, 2022, the company has applied for 17 trademarks.
Containing similar full petal graphics, those applications were either rejected or invalidated because they were considered too similar to Louis Vuitton's earlier marks.
Let me make an assessment.
I mean, this is actually, you know, it might be true.
It may not be true.
I don't know.
But but but I think at the end of the day, you know, you can't make a judgment of infringement of trademark based on intent.
Right.
I mean, you have to have real action.
And indeed, resulting in damages.
I think that's more of a comprehensive legal assessment, in my view.
Right.
That's a legal question.
But to, you know, the reason why Louis Vuitton decided to bring this lawsuit.
Now, Yuxuan, do you have any idea or are you a consumer of Louis Vuitton's product?
No, no, that's way out of my pocket, unfortunately.
We do not know actually Louis Vuitton's exact internal reasoning.
It has only made a public explanation of his general position, I think, on the 27th.
So the group's chief financial officer says something very vaguely about intellectual property being a core asset of this company, but nothing more.
Su Bu, from maybe a third country's perspective, why do you think Louis Vuitton had to or decided to bring this lawsuit at this moment?
Yeah we we with a lot of luxury brands uh including lvmh brand so we do
We have been following this case quite closely so i think one of the key things is i think there are multiple factors why this would have come into face
Primarily because small E.T.
Was, I would say, quite small in the beginning.
It's had about 110, 120 stores.
But by Feb of this year, it's got over 2,200 stores nationwide.
And because they also increasingly overlap with what Louis Vuitton does.
Louis Vuitton also has Chinese registrations covering cafes and restaurants.
It has its own new cafes now opening up in Chengdu and Shanghai, and Moliti has also moved into coffee in April.
So considering that and its previous application for some of these patents, trademarks have been outright rejected before.
So I think Louis Vuitton did not
Have any choice but to actually go ahead with filing this suit because it's becoming more national the brand and there was also quite a bit of online you know suggestions about when monetary started prominently using this across its
Ecosystem and there were a lot of people talking about why the design looks like we like, and asking whether it was actually any equal operations, but that also started to increase the interest of the legal side and also public opinions for that.
And so I think the LV team did not have much choice, but to actually make sure that it doesn't infringe on that.
Right.
John, do you agree?
You know, it's something LV has to do.
Had it decided not to sue, could that have weakened its ability to, you know, enforce its intellectual property rights in future cases?
Well, I think it's really a premise upon the assumption that the infringement has indeed occurred.
You know, for any company, I fully understand their position.
This is something definitely they should do.
If they're a trading market, the conventional ideas that being infringed upon, of course, they're going to take actions, too.
Defend it.
You can't open the floodgate.
I guess that's the argument, right?
I'm not disputing that.
It's just that, you know, I think ultimately the substance of this case is really about whether infringement did indeed happen, right?
And that's an intricate matter, actually.
At least, I can imagine from a typical and an average consumer's perspective that any connection can be established with this little tea company and LV.
Again, I'm saying I'm not representing all the consumers, but...
For any casual untrained eyes, you know, I mean, I don't remotely even think about it.
You see this brand, this image for the first time, for example.
I mean, it's the widest imagination that a connection can be established between this image with LV.
Well, maybe people who are die-hard LV people, you know, they're intimately familiar with LV, and they probably can discern, you know, a little bit of a connection.
You see, you know, this little...
Is this a flower or something, you know, that's similar to the LV, the image, but not into LV?
Maybe for those people, you know, they have some idea about this.
Right.
But for an average person, especially a man, I don't have the slightest idea about that connection.
Right.
They target men as well.
But some people say it's partly because LV's performance in China is on decline, right?
So they want to try to find some compensation, if you will.
Yeah, well, I think it's a, somebody else said that, but I will say it's an absurd, absurd argument.
The fact that LV sales is in decline is because of a tea company's assets.
Doing very well?
No, no, no.
That's not the direct compensation.
It's that their performance in China is not that good.
Or in general, you're saying.
Right.
Louis Vuitton has won quite some trademark cases in China before, including some against the China National Intellectual Property Administration.
But none of them attracted anything like the attention this one has.
Why has this case struck such a nerve probably to Yushan first?
I think it also has to do with the scale of the pattern being used.
So as was mentioned, Molly Tea is not a small brand.
It has more than 2,000 shops nationwide.
The pattern has been used in shop fronts.
And merchandise and also on the cups, on the teacups.
So I think to perceiving the story as a
French luxury brand suing a local domestic tea brand who's dedicated to promoting traditional culture does strike a chord with Chinese audiences.
John, your take?
Well, my reading of the news is that people are astonished, shocked to see that.
I think a lot of people wake up to see what, you know, just the kind of reaction I'm describing for myself.
You know, actually, Chinese social media has been overwhelmingly supportive of Molly Tea, with countless parody videos mocking Louis Vuitton.
I think people are not objecting to intellectual property protection itself.
They believe Louis Vuitton is trying to monopolize a traditional Chinese decorative motif, right?
That's where this whole online sensation is all about, right?
I'm not sure if any of you have been following this.
Yep, yep.
Maybe Subu, you know, from marketing perspective or consumer psychology perspective, why has that narrative resonated so strongly, according to your knowledge of the Chinese market?
Right
Yeah i absolutely agree with you on that right
So it's a
It's a very broad stroke of what encompasses a trademark because the motif itself is it goes decades are not decades centuries back right into a strong dynasty when it was
Used everywhere.
I mean, I've seen videos on Zahang Show about, you know, this motif being on toilets and that's becoming a prominent parody video.
So it's gone into a very different direction of how people are reciprocating after the bed.
But I think there's two different concepts here that we need to be aware of.
So one is the legal part, which is very much required for commercial operation of entities and to be protected by that.
And Chinese law is also very, very strict in that.
All right
So you can't go ahead and you know trade back a basic geometry or decorative form uh and it's also very difficult to uh when applies that
But then when you have a very specific way of putting it they have very different distinctive features that they have
Put in the trademark to say that this belongs to Louis Vuitton and they have been established for.
Decades right?
So we have been in China for a long time, but there is also an emotional resonance to this.
Design that that might look very similar to the old design uh but also again very distinct and we if you if you are a very uh if you look at it very very carefully right
So the application itself needs to challenge the precise design evidence and argue against why it is not right for a way to defend it.
But from a public perspective, it becomes, from a layman's perspective, it becomes more difficult because you look at two different, what there's two different designs and it looks, you know, maybe 90% similar.
So you would say that it is same.
While it is similar, it is not the same.
And again, when it comes to law and when it comes to distinguishing, there are different criteria where the court and the lawyers would argue that these things are different.
So, again, that's why it doesn't sit so well with the mass market and people, because to a normal person, it just looks very similar.
They're saying, why are you trying to trade something that's been used in China for centuries?
So we're not trying to explain this from a legal perspective.
I know none of us are lawyers, but from a social perspective, right?
But legally, the court's decision was based on registered trademarks, but much of the online debate has focused...
Instead on who the four-petal floral motif really belongs to.
So, John, what does that kind of a phenomenon or shift, if you will, in focus tell us?
Yeah, well, I think, again, I would characterize as people being shocked to hear it and to realize that, you know, this is very difficult to comprehend because of the peculiarity of the accusation here.
I understand that this is going to be a legal process and experts are going to work out a very specific legal question as to whether infringement indeed happens or not.
But just from a layman's perspective, you know, you ask this question.
About similarity, right?
I mean, to what extent they are similar?
I have a very simple methodology to answer this question.
You look at the elements that are similar to each other
And ask this question, what is the percentage of this thing that is particularly similar to the other one out of the total image you're seeing?
So you can easily ask this question, this little flower pattern, what is the area of this thing out of the total area of a bag
And I would say it's probably 1%, 2% of the total bag.
And that's the other question.
What is the percentage of this little sign out of the total area of that cup, of the teacup?
Yeah, maybe 10%, maybe 5%, right?
So 1% of A is similar to 2% of B, A being the bag, B being the cup of tea.
And on top of this, there's also the differences in color.
So you need to apply another discount.
From a very simple statistical probabilistic perspective, we're really talking about 1% times 2%
Times maybe another 50% discounting for the difference in color.
And then you're talking about a 0.00005 number.
This is the percentage of similarity between the two products.
As a trained economist, as a trained statistician,
I view it from that angle.
That's my answer to the question how similar they are.
We're not trying to explain why Louis Vuitton won this case or the technical issue, but the issue about why the public, the Chinese public, is in support of Mali tea.
Despite Louis Vuitton's win, and there is a huge row here in this country.
The methodology I described exactly answers your question.
I think people are shocked and outraged by this 0.0001% similarity between the two products.
That's why I think people are so shocked about this.
And so many people supporting this morality.
And some commentators actually say that nationalism amplified the public reaction.
Yuxuan, do you think that's a fair assessment?
Well, I will not exactly go straight and call it nationalism.
I call it a more assured sense of national identity.
And I think in recent years, many people have observed this trend on the Chinese internet, that people are becoming more aware of the cultural heritage.
They're starting wearing cultural, traditional Chinese costumes, using traditional handicraft.
And this example is also a reflection of that trend.
And the fact that I think people will say nationalism has a thing to do with it is because some of the posts are so viral and aggressive that I think just reflects people's outrageous instead of outright nationalism.
Indeed.
Then, John, does this controversy reflect something deeper about how Chinese consumers view international brands today?
I agree.
I think people are outraged in addition to what I just described, but also outraged by the fact that this symbol is definitely behind a rim of old Chinese tradition.
It's very symbolic.
Thing in the Chinese culture that also has a play I would say but I think you know you ask this question
If it's not this sort of very old Chinese thing you replace with something else
Replace with something maybe let's say belonging to the Japanese culture let's say okay make that assumption
And ask the same question, will people be as outraged at this time as they are being right now?
And my answer is that it may well be actually, you know, I think, you know, the sort of the national sentiment is a secondary reason.
The primary reason is just because of the
Peculiarity, and I would even argue it's the absurdity of the connection for this.
Of course, there are people out there who are very much driven by this sort of national sentiment, but I just don't believe that the overwhelming percentage of people are because of that.
Let's say, put it the other way, you know, if let's say the copying is like almost 90% copying, let's say, and then they ask this question, are people going to be, so many people are going to be outrageous because of this?
I don't think a lot of people will be outraged because, you know, it's copy is copy, 90% similar.
You know, even if it belongs to a sort of old Chinese culture, blah, blah, blah.
I just don't believe that a lot of people out there are still going to be outraged because of this.
It's a copyright thing legitimately, even if it belongs to an old Chinese tradition, Chinese culture.
And then, you know, 90% copying is almost like 100% copying.
I don't think a lot of people would be outraged because of this.
So I think the very fundamental thing is still very much because, again, the peculiarity and absurdity of this connection between these two products.
All right.
Subu, your take here?
Yeah, I think for me, Chinese consumers have become more confident and more selective, right?
So if you look at it from a consumer point of view, 10 years back, the prestige of a major European luxury house might have dominated the conversation.
But today, consumers are more willing to separate the product quality from what corporate behavior is and to challenge the idea that international heritage automatically gives a brand superior cultural standing.
So that notion is gone.
But this does not mean that Chinese consumers are rejecting international brands, right?
It just means that their admiration is more conditional.
So brands are being judged not just on innovation, value and services, but also on the culture of behavior and how they use their power in the market.
So taking their position as somebody who's powerful, who's big, and trying to squash all the small players would become very adversarial for the brand in Chinese consumer sites.
But to legitimately go out and fight and
It what they feel is this and clearly communicating that across to the chinese consumers would probably alleviate some of these problems
You've been listening to the chat lounge then in reality what may come next
That's right after the break
We'll be back in a minute
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Welcome back.
We continue our chat on French luxury brand Louis Vuitton's trademark dispute with Chinese milk tea chain Maliti.
Maliti has said it will appeal the ruling.
John, I understand you've represented some clients in Maliti.
IP disputes before.
So how do you expect the appeal to unfold?
Well, just a little correction.
I'm not a lawyer.
I understand that.
I do testimony in court because of economics matters.
And I've been involved in a lot of patent disputes or standard essential patents disputes, providing expert testimonies related to patent matters.
But this is a trademark case, so it's a bit different.
But again, you know, I think it has to boil down to some objective assessment of the question is how similar these things are.
Right.
And I think that's still very much fundamental to the validity of this case.
Now, the first instance ruling has already come out and the malady has appealed to the higher court.
According to China's law, the second trial will be the final trial, the final verdict.
And what I'm concerned is actually definitely there's going to be public pressure because so many people are so much outraged because of this.
The second thing I want to say is that the compensation is also related to the extent of damage to the plaintiff.
And on that matter, I think I'm qualified to say a few things.
I'm really puzzled as to how the success of this tea company
Can somehow slow down cells or impair cells at the LV side?
That's a very, very difficult question to answer, right?
We need to have some empirical evidence to establish the causal relationship
It's a result of this tea company adopting this K-Mark Sun.
LV could one day extend its business to, you know, drinks or beverages and they want to use this, right?
No, no, no.
This is not a valid point.
I mean, you can't, based on damage compensation, based on the idea that, you know, this infringes or somehow damages the prospect of
Future sales right that in chinese court that doesn't hold at all
You have to be establishing a case that up until now by adopting this sign by the tea company somehow empirically there is evidence to show
That the sales of LV bags or LV other products are being impaired.
And how do you prove that?
I mean, let alone getting data and establishing a causal relationship and the different kinds of causality here.
And we're talking about a very strict legal causality concept.
It's almost like you walk out of a grocery store and sip over a banana, right?
And you fell down.
And this is a causal relationship.
Because of the banana,
In front of the grocery store, you fell down and you got damaged, right?
This kind of a causality.
In other words, because of adopting the sign at the tea company, your sales are being adversely affected.
Right.
You should ask this question to the judge of the Suzhou Intermediary Court.
And the result is or the outcome is actually Maliki lost that case, right?
And similar disputes involving Louis Vuitton's floral motives have been actually heard in European Union, Japan, Singapore, and even France, where Louis Vuitton is headquartered.
And in almost all those cases, Louis Vuitton ultimately lost.
So...
There comes another question.
Why was it able to prevail in China, Zhang?
That I don't know.
That I don't know, actually.
I'm not in the court proceeding.
I wasn't there.
But I'm also very curious, actually.
How can they lose this case?
You know, having gone through, you know, numerous cases in the IP domain and, you know,
I thought this actually should be quite easy to establish.
Maybe they should hire some expert, I guess, to establish, first of all, the tenuous connection between these two things.
Second, the even more tenuous connection because of the causality of assumed infringement.
On the cells of the other side.
Do they have any empirical evidence?
Did they do any empirical analysis?
You know, even without doing an empirical analysis, just from a very intuitive perspective,
I mean, the first question I want to ask is, what is the cross-demand elasticity between these two products?
This is actually an economic term, right?
Product A and product B.
Because of more attractiveness of product A causing the sales decline of product B.
So there is some kind of a demand elasticity across these two products.
So the economics term would be called cross-elasticity of demand between these two products.
What are these two products?
One is a bag, one is a tea.
What is the cross-elasticity between these two products, the demand for these two products?
You know, intuitively, I would say zero.
I mean, you ask this question.
The tea tastes much better, looks much nicer.
Are you more incentivized to go out, buy less of a bag?
You know, that's such an easy question to answer.
Well, I think Google has some answer to the question why LV lost similar lawsuits in those countries or regions.
It's because that basic geometric...
Cordial lobed or floral shapes are common in the marketplace, and the judges emphasize that basic shapes cannot be overly monopolized.
As exclusive property, unless clear, distinct imitation or consumer deception across specific product categories is proven.
I think it's more or less related to your argument.
But what we have now is that Louis Vuitton has won this case in China, right?
And no matter what compensation it can get, there is this question, is it going to pay bigger price?
Even if Louis Vuitton ultimately wins the legal battle, some people argue Louis Vuitton may already have lost public goodwill because we've seen calls for boycotts on social media.
And some second-hand luxury retailers say LV products that once sold quickly have become harder to move.
Then maybe this question goes to Yushan first.
Have you noticed any reaction like this?
And how much of a commercial impact could this controversy actually have?
Well, I think the immediate commercial damage is difficult to gauge.
We've seen, of course, reports that second hand dealers saying that it's been harder to sell Louis Vuitton bags, but some also say it's a seasonal change.
But from what I observe, there is a visible reputational damage to the brand.
And I think long-term speaking, that's the most detrimental part to the brand image because a luxury brand sells more than a bag.
It sells aspiration, taste, and some kind of symbolic authority.
If younger Chinese consumers begin to regard Louis Vuitton as a culturally arrogant, over-aggressive or disconnected from Chinese society,
The company may gradually lose part of the symbolic value that allows it to charge luxury prices.
And that kind of reputational damage is more difficult to measure and we will have to wait and see.
Then what would you say could be the highest cost for Louis Vuitton?
The damage of its brand image or any longer lasting consequence?
Well, there are precedents for this in the Chinese market.
If a luxury brand is, I don't want to name names, but if a luxury brand is regarded as culturally arrogant, the end result could be
A drastic fall in sales or closure of shops in China, a commercial impact could be long-lasting.
Subu, from your perspective, could this prove to be another short-lived social media storm or do you see any long-lasting impact?
Yeah, I agree with what Jushman was saying.
You know, the largest cost could be loss of the cultural goodwill and the benefit of doubt for a big brand rather than just
Immediate sales.
So luxury brands like Louis Vuitton sell more than just materials and craftsmanship.
They sell the symbolism, the aspiration, and the social meaning of owning a Louis Vuitton bag.
So, if we billions to represent cultural arrogance or, you know, disproportionate, uh, corporate power, uh, especially to the younger generation and the consumers.
It's going to become harder to generate organic advocacy on different.
For the price increases or or make that exclusivity and build credit for cultural collaboration.
You know, temporary issues like this and social media hashtags is manageable.
You can either be quiet about it or try to, you know,
Engage in conversation to point out your story.
But losing the cultural permission to command a premium is going to be far more expensive.
And over the long run, it might get more difficult for them to climb back up if this animosity continues further.
And John, from a business perspective, if Louis Vuitton continues to take an aggressive approach to trademark enforcement, particularly over designs that many Chinese consumers regard as a part of their traditional cultural heritage...
What does that mean for the brand's future in China?
Well, there are three issues here, in my view.
One, of course, is we've extensively discussed.
That is the, you know, the validity of the infringement, right?
In my view, the course is valid, but, you know, I think it's kind of a tenuous argument here.
And the public opinion probably most likely agrees with me.
The second issue is a classic case of winning the battle, losing the war here.
In other words, people are outraged because of this tenuous connection, because of, again, the absurdity of the connection here.
And even if the first cry instance delivers a win for the company, for LV, the public's outraged.
Some of them are going to boycott buying LV bags or other accessory products.
And some people are still going to buy, I guess.
And from that perspective, you can make the case that the company has won the battle, even assuming they're going to keep winning in the second trial.
They have lost the war.
People are outraged by this, right?
The third matter, I have a little problem with the third issue here.
The third issue seems to be suggesting that LV is basically, well, according to some experts, LV is saying that it's running out of things to trademark.
And because the argument is that it's so easy that it can be a challenge.
And to the extent that it has potential damage to its reputation, to its ability to trademark these things, to come up with interesting designs, blah, blah, blah, that kind of argument.
And from that perspective, it actually damages the company.
Now, I have a huge problem with this argument.
I mean, this is basically saying that LV is running out of things to trademark?
And to the extent that in the future, it's going to limit the company's creativity and then the brand reputation.
Come on, who are you, LV?
Why are you so certain that you should be able to monopolize all these geometric signs?
I mean, this is such an arrogant argument.
It's unbelievably arrogant argument.
And I think, you know, if the company takes that position, it's going to be keep challenged and it's going to keep winning.
Even if it's winning these battles, it's going to keep losing the war.
If the company takes that position, I don't have any sympathy for this company at all.
The company itself is not doing well, so be it.
It's all their own asking for it, if that's the case.
That's all I have to say about this thing.
Right.
I think you just mentioned it could be some seasonal slowdown in the sales.
Right.
But some argue or some see this could be a turning point for the brand in China.
John, do you also see it that way, or do you think it's just overstated, this impact?
Well, my gut feeling is that these things are being overstated.
I think there might be a general trend, a broader trend here that the Western or the French luxury brands are
Are not as dominant in the Chinese market as they used to be.
I think the younger generation are more open.
Sometimes people go out and buy other products
Higher priced products of the national brands.
But the automobile market is a perfect example, right?
I think the, you know, you're regularly seeing, you know, more and more Chinese brands, automobiles, new, for example, priced in the 400,000, 500,000 price range, yuan price range.
And I think the brand image, I mean, not the brand, the brand value, the product's value, say Audi and Mercedes-Benz are crushing now in China, are crushing now in China.
You can go out and buy an Audi brand car, that's 150,000 yuan, you know, a little bit over $20,000.
For a brand new, already branded car in China these days.
Think about it, right?
And I just can't imagine why the same thing cannot happen in the accessory market, in the bag market.
This could similarly happen as well.
You know, I think it's quite possible in the future.
Right.
Subu?
Yeah, I think if you ask me if it's a turning point for LV, I would say it's not reached that point yet.
One single controversy is
Really going to change the trajectory of a brand, especially one as established as Louis Vuitton.
The backlash would need to persist.
It needs to affect influential creators or clients and become attached to further disputes
Then maybe the product desirability will go down and it becomes truly a commercial turning point for them.
LV already has an opportunity to contain this issue.
It can clarify
That it is protecting a precise commercial identifier, which is a trademark, rather than claiming ownership of a geometric on a four pattern imagery.
But also at the same time, they should acknowledge the wider cultural sensitivity and probably have a more engaging conversation with the general Chinese public.
And it becomes a turning point
If we treat the first instance statement as sufficient proof that it has nothing else to address and becomes like what John was mentioning, becomes a bit arrogant, then I think there's potentially more problem.
A court victory can settle a legal claim, but it does not settle what the brand claims.
Are now represented to the public.
So the public opinion is different from a legal opinion.
This has been the Chat Lounge.
Louis Vuitton isn't the first international brand to spark controversy in China.
After the break, we'll look beyond this case and explore what it means for global brands operating in the Chinese market.
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Welcome back to the chat.
Then let's discuss something beyond this case.
Yushan and Tsubu already mentioned about probably you can call it arrogance with some international brands.
Actually, we've seen several international brands run into this.
Public backlash in China in recent years over cultural controversies or advertising campaigns or public relations missteps.
Then, Zhen, why do you think those brands keep making similar mistakes?
Does it only reflect arrogance toward the Chinese market or it's simply because they lack understanding of this market?
It's probably more because they lack understanding.
Because one reason is, of course, organizational distance.
A decision can be made remotely in headquarters.
And not necessarily adequately localized and sometimes global
Brand teams focus too much on consistency
Commercial teams will focus on sales
Legal teams focus on protecting rights but they do not always have enough authority to influence the original decision
And sometimes it's another reason is just companies do not prepare for the social media narratives after legal disputes.
And by the time the senior management responds, the dominant narrative may already be fixed.
Right.
John, do you agree it's just a lack of understanding?
I agree.
I agree.
I think, you know, the headquarters in Paris is right.
But they have a team here in China, I guess, the top management here in China.
But I'm not sure what other decisions.
They've been here for decades.
Well, I mean, it can be the case that major decisions are still made in Paris, and the local management does not have much of a say in this.
Honestly, I think from a strategic management perspective, from a company's overall strategy perspective, I find it very interesting.
Hard to believe that the company takes such a position.
I mean, they clearly, you know, even from the first trial instance, it's a case of losing the war, right?
I mean, even if you're winning the legal battle in the court, but, you know, potentially can affect their sales.
Even though probably, you know, that effect may be short-term.
Nevertheless, it's, at least at this point, you look at a public opinion, it's not much in favor of the company, right?
So, you know, clearly it's not a winning strategy in my view, right?
It's a winning strategy for the company lawyer, but not so much a winning strategy for the company as a whole.
That if you're saying that because of a lack of understanding, what would you say could be the biggest lesson, you know, for international brands?
Or they can take away from this case, you know, against the backdrop of a slowing growth in the global luxury market and increasingly...
Rational, value conscious Chinese consumers.
Yeah, well, I think the public opinion, the public relations management is particularly important for luxurious brand because the entire business case is built on reputation.
It's built on perception, public perception, right?
Why don't you go out and buy an ALV bag?
Is it because it's more useful?
No, it's not because it's more useful.
Because if the people think that elevates your status, that's the idea, right?
That's the whole idea.
But if the public approves your brand, this whole argument just collapsed.
There's no reason for buying LV back anymore, right?
Why would you buy something and carry out and walk on the streets with something that is being abhorred by the public?
There's no case for that.
So I think from a luxurious brand perspective, you know, these things, these matters are particularly important.
You have to be very sensitive in public opinion.
This is not like going out and buy a cutting-edge 5G chip or AI chip.
It's totally different.
It's storytelling, basically.
People are buying the story, basically.
And, you know, it's very vulnerable, in my view, if you're not being careful.
Right.
And Subu, do you think, you know, those big international brands, they have any urgency to change or to maybe improve their operation here in the Chinese market?
Yeah, absolutely.
I think, you know, as John mentioned, I think it's just a starting point.
The strong legal right is just a starting point.
But I think Chinese consumers are also accessing whether the product justifies its price, whether the brand is still innovating, whether it's
When it contracts proportionately to the status it enjoys.
So, while heritage remains valuable, it no longer removes the need to prove that relevance is important, contemporary relevance is important.
Before taking any major public action, I think the brand should understand how the issue will look outside of legal department.
Again, it cannot be very siloed discussions.
Is the right clear to an ordinary consumer?
Just because you have legal authority over your trademark, does it sit well with ordinary consumers?
Is the remedy proportionate?
Can the company explain its position without appearing dismissive of Chinese history or public sentiment?
All this would matter and in in a fast-growing market maybe you can skip some of them because i know some reputation mistake can be observed by expanding in men
But in selective slower market and and especially in value conscious luxury markets consumer concentrates spending among fewer brands and
A small shift in desirability becomes quite commercially significant for these brands.
And then Yushan, what kind of advice would you provide for those international or big brands, especially from a younger generation's perspective?
After all, you are the generation that could decide whether those international brands can be or can continue to be successful in China in the future.
Yes, because as we see with Louis Vuitton and other luxury brands, their previous localization campaigns have been focused on using Chinese celebrities
Celebrating chinese festivals or simply adding traditional chinese visual elements to an advertising campaign but from now on i think it is time that they realized
Real localization also means understanding how Chinese consumers interpret questions of history, cultural ownership, and it's about time they paid enough attention to the question of power and fairness.
Right.
And the last question, maybe loosely related to this, but some actually see this kind of cases or disputes as an opportunity for Chinese homegrown brands to strengthen their competitiveness.
So John, what are the chances?
I think there's an overall trend happening already.
I think, you know, from a design perspective, from a business perspective, you know, there are quite a few indigenous companies that have made great strides in their market development.
Participation may be quite successful.
So I think this is the greater context here.
And for foreign companies, especially luxurious brands operating here in China, this should be cognizant of the changing environment here.
And the strategy should be taken into consideration of this broader trend.
And this is an irreversible trend in my view.
And you would expect that in an economy that keeps developing, living standards keep rising, the younger generation consumers are getting more and more sophisticated.
And I also agree that a certain degree of national sentiment among these young generation, next generation consumers as well.
Right.
Hopefully your advice can be heeded by those big brands.
And on that note, we wrap up our chat for this session.
Many thanks to John Gonn at the University of International Business and Economics, Jia Yushun from the Center for China and Globalization, and Subramanian Bhakt with China Trading Desk.
Please tell us what you think of the topic and the show.
Drop us a line at radio at cgtn.com.
I'm Tuyen.
Thank you for being with us.
Join us again for more chat at the chat lounge next week.
Till then, take care.
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