Wong Lo Kat Brand Dispute in China: Who Moved My Red-Canned Herbal Tea?
Posted by: Labbrand Consulting Co., Ltd.
Date added: Fri 17 Aug 2012
The right to use the Wong Lo Kat (hereinafter referred to “WLK”) trademark, which is estimated to be worth 108 billion RMB is later ruled to GPH. During the dispute, both companies claim to own the right to use the WLK trademark in mainland China. There was even the “coexistence” of the red-canned WLK by the JDB Group and the green carton version by GPH. GPH accused the JDB Group of illegally using the WLK trademark under an invalid contract signed under bribery. In this regard, an interesting question arises: how did this domestic herbal tea company build its brand equity?
The recipe for the Wong Lo Kat herbal tea was invented by Zebang Wang in Guangdong province about 180 years ago. In Southern China, particularly Guangdong and Guangxi, the unbearable heat in the summer made herbal tea a popular drink that would sweep away symptoms such as drowsiness and thirst. However, the JDB Group, after taking over the production and distribution rights of WLK herbal tea in 1997, realized that the domestic market further north represented huge opportunity given the market saturation in the south.
After conducting comprehensive market research at the end of 2002, it was found that for the B2C market of WLK, consumers perceive drinking herbal tea as a way to prevent the internal heat from occurring, especially when having hotpot, Chinese BBQ, and fried food. With this concept, the JDB group quickly opened up previously overlooked domestic markets in 2003, targeting specifically on the dining industry with extensive advertisement campaign on China Central Television (CCTV) that cost the JDB group 100 million RMB. The ad slogan “Afraid of internal body heat? Drink WLK!” soon became well known all over the country. Thus the JDB Group successfully created WLK’s own brand association with a healthy lifestyle, a move that differentiated itself from many competitors in the herbal tea industry. Furthermore, this ongoing campaign has illustrated that how a brand can build its product relevance to a large population, even with considerable demographic disparity regionally.
In addition, the JDB Group also demonstrates leadership in corporate social responsibility (CSR), notably during the 2008 Sichuan Wenchuan Earthquake. The company donated 100 million RMB to the affected area on May 18, 2008, surpassing all other private enterprises. Customers began to respect the brand and purchased more WLK to show their support to the company who cared about the people’s livelihood. Together with other CSR campaigns, the JDB Group has increased its brand value tremendously by managing brand esteem carefully over the last few years.
The JDB group has already changed the name its red-canned herbal tea to JiaDuoBao, this time bearing the company’s very own name. To further protect its brand, new TV ads shown on CCTV carry the following lines:
“Afraid of internal heat? Now drink JiaDuoBao. The red-canned herbal tea with leading sales in the country has changed its name to JiaDuoBao. The same recipe. The familiar taste.”
The JDB Group indeed once managed to leverage on the traditional values associated with the WLK brand; however, as a result of the bribery scandal, it was forced to give up the WLK brand that it had nurtured. With a little more care and due diligence, the JDB Group could have avoided losing the right to use the trademark. With the name change of the herbal tea produced by the JDB group and the old WLK name still in the market, initial confusion seems inevitable. Consumers still need time to fully comprehend what happened to the little red can. Whether or not the new JiaDuoBao herbal tea can replicate and surpass the miracle that the JDB once created for WLK remains a question to be answered.
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