Moutai trademark draws backlash from liquor makers

(Ecns.cn) -- Moutai, China's best known brand of firewater, appears poised to officially become the country's sole "national" liquor, a possibility that has churned up tension in the mainland spirits industry, China Economic Weekly reports.

Last month, the application by China Kweichow Moutai Distillery Co., Ltd. for the trademark of "national liquor" passed first review by the Trademark Office of the State Administration for Industry and Commerce. If no sustainable objections arise within the next three months, Moutai will become the only liquor company that can legally use the word "national" to describe its products.

On August 16, Yuan Renguo, general manager and board chairman of Kweichow Moutai, attended a wine industry forum where he deflected the issue by stressing the importance of protecting the country's national brands.

Such comments have done little to assuage other liquor makers, however, nearly all of which have expressed opposition to the trademark office's decision.

Among them, distillers based in Sichuan Province were the first to respond. Major liquor companies such as Wuliangye Yibin, Luzhou Laojiao and Jiannanchun even held a conference to discuss the issue a day after Moutai announced the news.

A national liquor should be good enough to represent or symbolize the whole nation, not just one enterprise, Tang Qiao, chairman of Wuliangye, pointed out at the meeting.

In terms of history, Luzhou Laojiao liquor dates back more than 400 years. Its "cellars 1573" are the best preserved in China, and Moutai can't compare despite its high reputation, said Zhang Liang, chairman of Luzhou Laojiao.

Henan-based Dukang Distillers has been one of the most vocal. The company posted an open letter to the public on its website on August 7, where it offered ten reasons for its opposition.

Dukang pointed out that national credibility is undoubtedly the best guarantee for any company, which means that Moutai receiving the honor will give rise to unfair competition.

All liquor makers should abide by market rules and compete based on their own strengths, so Dukang hopes the trademark office will turn down Moutai's application, said Miao Guojun, the company's general manager.

It's obvious that the liquor companies are so adamant because they know they will be unable to use the word "national" for their products, so Moutai's act could harm the whole industry, writes China Economic Weekly.

Not all have come out against the move, however; Anhui Gujing Distillery Company surprised the industry by showing strong support for Moutai. The company's general manager Liang Jinhui told China Economic Weekly that he agrees with the application because China's trademarks should protect domestic enterprises.

Liang said Kweichow Moutai is the leader of China's liquor industry, so it represents not only itself but the whole sector. Liquor firms should support each other on the basis of national interests and the development of the country's liquor industry, he added.

Because Moutai is profitable and the most famous enterprise in Guizhou, the province's vice governor Meng Qiliang has expressed confusion and dismay about the opposition, according to China Economic Weekly.

Meng said Guizhou needs national brands, which require support from society, and applying for a trademark is a normal procedure for any enterprise.

Yet many suspected Meng of promoting regional protectionism, which set off a heated debate.

The application for the "national" status is obviously a marketing strategy by Moutai, and it shows a hint of unfair competition, said an industry watcher.

The increasing number of fake Moutai products in recent years has also become a point of contention. Based on those grounds, some have warned that the government should not lend official credibility to certain enterprises.

Chen Mo, a liquor marketing specialist, said fake products will not only dilute the value of a famous brand, but also affect the government's authority and credibility if the products bear the "national" title.

Moutai has worked since 2000 to acquire the national status, during which time its brand image has been strongly promoted. According to a recent Hurun Report, Moutai was the only Chinese brand among the top ten most popular gifts preferred by mainland millionaires.

Due to strong revenue growth both at home and abroad, Kweichow Moutai's net profits surged 42.6 percent year-on-year in the first half of 2012, hitting a record high of 7 billion yuan (US$1.1 billion).