Please read and answer the two questions. 3-a) Discuss the concept of property r
ID: 396574 • Letter: P
Question
Please read and answer the two questions.
3-a) Discuss the concept of property rights protection and why it is so important to companies. What does the court ruling against Xing Ba Ke mean for other companies that are already doing business in China, or are considering entering the market?
3-b How important is the Chinese market to Starbucks? Does the presence of look-alike companies like Xing Ba Ke deter firms from entering the market?
Start X Citat X C Secure https://player /epub/sn_4d09eepubofi0%2F6%2F 60e%2F4%2F98%SBdata-uuid-c4a2 16d706f 14 7af Starbucks Wins Koy Trademark Case in China Starbucks has big plans for China. It believes the fast-growing nation will become the company's second-largest market after the United States. Starbucks entered the country in 1999, and by the end of 2012, it had opened more than 400 stores. But in China, copycats of well-established Western brands are common. Starbucks faced competition from a look-alike, Shanghai Xing Ba Coffee Shop, whose stores closely matched the Starbucks format, right down to a green-and- white standard Chinese translation for Starbucks. Xing means "star," and Ba Ke sounds like "bucks. In 2003, Starbucks decided to sue Xing Ba Ke in Chinese court for trademark violations. Xing Ba Ke's general manager responded by claiming it was just an accident that the logo and name were so similar to that of Starbucks. He claimed the right to use the logo and name because Xing Ba Ke had registered as a company in Shanghai in 1999, before Starbucks entered the city. "I hadn't heard of Starbucks at the time," claimed the manager, "so how could I imitate its brand and logo? However, in January 2006, a Shanghai court ruled that Starbucks had precedence, in part because it had registered its Chinese name in 1998. The court stated that Xing Ba Ke's use of the name and similar logo was "clearly malicious" and constituted improper competition. The court ordered Xing Ba Ke to stop using the name and to pay Starbucks $62,000 in compensation. While the money involved here may be small, the precedent is not. In a country where violation of trademarks has been common, the courts seem to be signaling a shift toward greater protection of intellectual property rights. This is perhaps not surprising because foreign governments and the World Trade Organization have been pushing China hard recently to start respecting intellectual property rights Sourses M. Dicke, "Starbacks Wins Case agunt Chinese Copycat Fisncial me January 3, 2006, p 1 Starbuck Chinese Count Backs Compsy v pe here to searchExplanation / Answer
3-a) Discuss the concept of property rights protection and why it is so important to companies. What does the court ruling against Xing Ba Ke mean for other companies that are already doing business in China, or are considering entering the market? As companies spend millions on building brand and differentiation in terms of building their property, if the logos, symbols, slogans are not protected the brand goes for a toss. It might get maligned and others might want to take advantage of their property, which is not a good sign for any business market. It means any one is owning a brand property, others need to respect that and blatantly copying is restricted by the authority, so that doing business in the market is lucrative. The ruling establishes that any company tryinng to copy would have to stop using the property of trademarked brands, which makes China attractive for bigger players and at the same time prevents copying others property there by making the market more mature and bad for fakes. 3-b How important is the Chinese market to Starbucks? Does the presence of look-alike companies like Xing Ba Ke deter firms from entering the market? Chinese market is believed to be one of the fastest growing, and Starbucks wants to make it 2nd most important market after US,hence they need that support from the reglatory authorities. If blatant copying and using trademarked proerties is not prevented then a lot of their brand building will get washed away and will deter their efforts. With cheap options they might lose some of their market share, which will slow their progress and growth in CHina. Hence its not a huge factor but prevents many small competitors from copying and maligning their brand and so helps in gaining market share faster.
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