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Business Expansion Issues: NZ/Australia/China – Part 1

Business expansion can be achieved in many ways, from online sales to partnerships, joint ventures, or overseas branches. New Zealand businesses typically establish themselves here in our relatively small local market before targeting larger, potentially more profitable overseas ones, such as Australia and China.

Business expansion can rapidly come unstuck if you don’t get it right in key legal areas. There can also be significant foreign legal and cultural differences to contend with.

Trade Marks

The first area to look at is business brands (also known as trade marks), as effective brand protection is crucial for all levels of business expansion.

The basic purpose of a trade mark is to distinguish a trader’s goods and services from those of competitors. Registration of a business’s marks is the best way to prevent competitors from taking advantage of the owner’s hard-won goodwill. All businesses should budget to register and maintain their trade marks.

New Zealand

Our trade mark registry is part of the Intellectual Property Office of New Zealand (IPONZ) and a wide range of helpful information may be accessed here. Business owners can deal direct with IPONZ if they wish.

Australia

If a business has a presence in the Australian market it should register its trade marks with AIPO.  This may be done direct from NZ, but a local address for service is required. Due to the much larger number of businesses trading in Australia, a major problem for NZ businesses can be the existence of confusingly similar marks already registered there. Product names can also become a trade mark issue due to our similar product lines with Australia, eg. Manuka honey.

China

Owning a registered trade mark in China is a pre-requisite before commencing retailing  on many of the large Chinese online trading platforms, such as Alibaba and Taobao.  Trade marks may be registered with SAIC, and a local agent is necessary.

However, due to the thriving local trademark-squatting industry, many famous international brands have already been registered in China, under the PRC’s long-standing “first come, first served” regime. Some well-known NZ brands to strike this problem include Cookie Time, Ecostore and Moa Brewing Company.

China being exponentially bigger than the NZ and Australian markets combined, genuine cases of confusingly similar brands are also common.

As well as the English version, Chinese character marks are desirable, ideally based on a combination of characters which sound like the English word(s) and have the appropriate meaning and connotations.  This can promote distinctiveness in this predominantly Mandarin speaking society, as well as a higher level of brand flexibility for the business owner. Fonterra’s Mandarin brand 恒天然has a similar sound (“Héng Tiān Rán”) and positive meanings of “permanent” and “natural”. Karicare 可瑞康 (“Kě Ruì Kāng”) in Mandarin not only sounds like the English version, but also means “lucky” and “healthy”.

For some not so successful examples see here. There is also the problem of Mandarin brand squatting, as New Balance experienced recently.

Overview

In New Zealand, registering a business trade mark can be a deceptively simple process. That’s fine if the owner has a short term horizon for the business.

However if the business has the potential to compete successfully in larger markets, a longer-term scoping exercise should be undertaken to ensure the branding is appropriate and can be successfully protected by registration in those markets, preferably before trading commences.

Too often business owners are focussed on immediate sales at the expense of forward planning.  However having to swallow the cost of rebranding in order to enter a potentially lucrative market is not an experience anyone would wish to repeat.

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