Going to court might be the wrong strategy in China - Shaun Rein

Shaun Rein

New England shoe company New Balance is suing a competitor in Guangzhou for using its brand name. The case does not lead anywhere for the US company, and business analyst Shaun Rein explains in Fortune why legal action sometimes can be counterproductive in China. Fighting for China to change might not work.

Fortune:

The reason New Balance didn’t settle or change names traces back to the brand’s desire to fight for change in China. “In the end you have two choices,” says Dan McKinnon, the company’s head of global brand protection, who is based in Boston. “You play by what’s fair and ultimately get to the point to fight the fight. Or you try to play by the Chinese rules, which make no sense in the context of global trademark laws. Just because someone claims they own our house … sorry, this is ours.” In other words, settlement isn’t in New Balance’s DNA.

That way of thinking works well in developed markets like the U.S., where trademark laws are old and backed by a mature court system. But it can backfire in China. “Taking a legal aggressive strategy like people do in the U.S. sometimes doesn’t work very well” says Shaun Rein, founder of China Market Research Group in Shanghai. “You have to adhere to the Chinese codes, not what the international norms are. The questions in China are: Do you want to prove you’re right? Or do you want to make money?”

More in Fortune.

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