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Many countries have had to navigate the balancing act of keeping the economy alive versus protecting citizens from COVID in recent years. In China, patience with its zero-COVID policy – one of the world’s toughest strategies for dealing with the pandemic – are wearing thin among workers and students. Sporadic protests have erupted all over China in recent weeks, triggered by the deaths of ten people in a fire in an apartment block in Ürümchi, Xinjiang in November. But even with signs that restrictions are starting to relax across the country, including those that were outlined by China’s State Council this week, the impact on the all-important economy will not be as straightforward as the government in China might hope.

The conundrum for China is that the state has promised its citizens safety from the virus through its zero-COVID policy, which has led to large sections of the vulnerable population being unvaccinated. No government wants to concede it may have been wrong about something, but it is particularly important for the credibility of the social contract between the Chinese Communist Party and the people. The authorities guarantee social and economic stability and the freedom to get rich, in exchange for absolute power. But with the slowing of China’s GDP growth, rising graduate unemployment (youth unemployment reached 20 percent in July), and increasing economic hardship, China’s social contract is starting to unravel.

Chinese Decision Making

The upside of authoritarian governance is that decisions can be made quickly in times of crisis. The Chinese government was quick to react to the 2008 global financial crisis with a 4 trillion yuan ($573 billion) fiscal package. After a sharp fall in GDP in 2008, the economy grew by 8.7 percent in 2009 and over 10 percent in 2010. The rate of growth then settled at a healthy but sustainable 6.8 percent.

When dealing with the pandemic, after the initial confusion about its source and apportionment of blame, the government in China acted swiftly to lock down the economy and flatten the curve. The result was that only 5,233 COVID deaths had been reported as of December 2022, compared to 1.1 million in the U.S. But daily COVID cases in China were at 37,828 on November 30, 2022, which is higher than the peak in April when the economically damaging lockdown in Shanghai was imposed. And the nation’s GDP fell by 2.6 percent in the second quarter of this year before recovering with a 3.6 percent rise in the next quarter.

So, clearly there is a trade-off to consider between the economic and social cost of China’s zero-COVID policy and the health benefits for the vulnerable. This means it is important to consider the short-term cost of the lockdown, as well as any long-term consequences. The immediate costs have been the disruption to production and global supply chains, but the domestic service sector was also particularly hard hit. Economic growth has moved from a steady quarterly rate of 1.7 percent following the 2008 global financial crisis, to a collapse and recovery in 2020 and a second downturn in quarter two of 2022.

The likely long-term economic impact is the uncertainty caused by policy changes, which has affected domestic and foreign investment and caused supply chain disruption. Real GDP per capita (real GDP divided by the population) is projected to grow at 6.3 percent a year in China and, according to my calculations using Federal Reserve Economic Data and population figures from the World Bank, this would put the cost of long-term lost output at a massive 72 percent of real GDP per capita relative to 2018 GDP. This is a huge loss for the economy in China and research shows that output loss on this scale is rarely recovered in the long term. 

Foreign firms – including those in the fashion and broader retail space – are rethinking their supply chain arrangements and the all-important human capital brought by foreign workers to China has been heading for the exit. As with after the financial crisis, the pandemic could lead to a new, lower trend growth rate that will only emerge with time.

Other Economic Headwinds

Of course, repositioning supply takes time and China is secure in the knowledge it remains the workshop of the world for now. But there are other headwinds: debt to GDP rose to 270 percent in 2020 driven by credit advances to real estate developers and also to local governments for infrastructure spending. Central government debt as a percentage of GDP has also risen from 20 percent in 1998 to nearly 70 percent in 2020. Government debt is set to rise to 78 percent in 2022. These are large figures for an emerging economy. And if China is to keep to its promise of protecting its vulnerable citizens, higher spending on health for its aging population could cause this debt ratio to rise further.

The pandemic has raised government spending in China, as it has done in all countries. This has created business opportunities, but it has also highlighted a difference between local government decision making and central government edicts. Sometimes, an overcautious regional response goes beyond the guidelines set by central government – for example, when provinces enforce longer lockdowns than the recommended five days or impose centralized quarantines rather than asking people to stay at home. This also affects the economy in China and must be taken into account by the government.

But of course, this is not just about economic costs, people’s wellbeing and health must also be considered. And things may even be worse in China than observers realize – recent research suggests that autocratic governments can overstate economic growth by as much as 35 percent. China’s anti-COVID protests are more than about COVID. They are expressions of frustration with a system that is opaque and unaccountable. Relaxing the restrictions is a step in the right direction, the effect depends very much on the decisions the government makes from now on.


Kent Matthews is a Professor of Banking and Finance at Cardiff University. (This article was initially published by The Conversation.)

The prices being commanded by luxury brands are still going up. After boosting them early this year for things leather goods, fashion accessories, and perfumes, Louis Vuitton, for one, raised price tags again in October. Moncler similarly sent prices up (by 10 percent or so) for this season’s offerings, with the company’s management stating in a call with analysts last month that it plans to raise prices again for “at least the next two to three seasons.” These moves follow from earlier price-hikes implemented by Dior, Kering’s Gucci and Saint Laurent brands, and Richemont’s Cartier, among others, and ahead of plans for a sizable spike courtesy of Hermès, which recently revealed that its prices will increase by 5 to 10 percent in January 2023. All the while, Chanel has not been shy about sending price tags soaring on several occasions over the past couple of years.

Maybe more interesting than the price increases, themselves – which have become relatively commonplace over the past couple of years, in particular, and which appear to be normalizing to some extent – are the markets where these price tags hikes are – and are not – playing out. When it comes to differentiated increases, most are primarily focused on handful of markets, including the European Union and Japan, and notably exclude the U.S. and China.

Evening the Playing Field

Looking at China, the lack of price hikes from luxury brands like Louis Vuitton, for instance, seems to be a nod to the fact that prices are significantly higher there than in other markets, and thus, represent an effort by the world’s largest luxury goods brand to even out the price playing field a bit. (As of February 2022, when Louis Vuitton first raised prices this year, Exane BNP Paribas analysts said that the gap between the luxury brand’s prices in Europe and China “remained relatively unchanged,” at an average of 41 percent versus an earlier 40 percent.)

The result of Louis Vuitton’s varying increases last month – which did not include Mainland China, Hong Kong, the U.S., or Japan – is that “the widest differentials are slightly lower,” Jefferies analysts Flavio Cereda and Kathryn Parker stated in a recent note. “However, with the application of local taxes and European tax refund there would still be a more than 50 percent difference between a Chinese person buying at home versus in Europe.” 

Pricing distinctions are notably striking for Moncler, as well, with Jefferies analysts pointing out that the Milan-based outerwear-maker’s “price architecture” in Europe versus Asia is “abnormally high and is being addressed via differentiated price increases.” Moncler’s price increases over the next several seasons are slated to be highest for markets like Europe, Turkey, and Japan, with the company’s management confirming that it expects a 40 percent price gap between Europe and China in 2023, and is aiming for a 30 gap “in the long term.” 

Still yet, Kering’s management touched on the price gaps between markets in a Q3 conference call in October, characterizing the current differentials across regions as “unsustainable in the long term.” (Given the “complex macro situations in Europe,” Kering says it is not rushing to fix these gaps in the near term.)

Notable differences in prices for luxury goods sold in China are not exactly a novel phenomenon; as the Financial Times reported back in September 2017, citing Deloitte data, “Luxury goods are now on average 32 percent more expensive than identical items in France – compared with 41 percent [in 2016].” A softening of regional price premiums was “most pronounced for clothing and footwear,” the publication stated at the time, noting that products in these categories “were almost 50 percent more expensive in China [in 2016],” but fast forward one year and those goods were “carrying a premium of about one-third.” 

Deloitte pointed to a decline in the value of Chinese renminbi against the euro as helping to drive the normalization of prices between markets, with an analyst for the consultancy saying back in 2017 that brands and retailers “have so far been content to let changing forex erode the Chinese price premium.” 

More recently, in March 2019, Bain & Company data showed that “the Chinese government’s reduction in import duties and stricter controls over gray markets – combined with brands’ efforts to narrow the price gap with overseas markets – led more Chinese consumers to make their luxury purchases in China, instead of traveling to previous bargain locales, such as Hong Kong, Seoul, Tokyo and cities in Europe.” The consulting firm said at the time that it anticipated that brands would “continue to narrow the price gap with overseas markets.” 

Price-Related Risks

As brands continue to fine tune their pricing, especially with the Chinese market in mind, it is worth pondering what is driving these efforts. 

We have suggested in the past that there is likely an element of risk at play for luxury brands when it comes to prices in China. As Beijing continues to crack down on everything from big tech and crypto to celebrities, gaming and wealth inequality, one question worth considering is whether – and when – Beijing will take a hard stand against the consistently eye-watering mark-ups that are being thrust upon Chinese consumers on the mainland by non-native luxury brands. And since luxury players are so heavily reliant on China – and prized super-spenders, in particular – for revenue, the stakes when it comes to this market are especially high. (Bain puts China on track to nab the title of the largest luxury goods market in the world by as early as 2025.)

Putting COVID concerns to the side, Cereda and Parker echoed these risks back in October 2021, saying that “the real downside to the [luxury] sector” comes by way of “the threat of regulatory intervention,” including “possible intervention on the local price architecture.” Specifically, they suggest that this could come in the form of “increased pressure from the Chinese authorities on mall operators to accelerate the process [of narrowing the price premium for luxury goods sold in China] by putting pressure on brands.” While this is one possible scenario, it is not clear how likely it is to come into play. 

From a consumer perspective, they note that “there is a growing spotlight on price differentials now and the extent to which the Chinese consumer is perhaps being taken ‘advantage’ of,” which could fuel discontent among customers and Chinese officials, alike. 

Either way, the general consensus in terms of price disparities between Europe and Mainland China is that 20 to 25 percent is the appropriate figure, taking into account cost inputs, etc., according to Cereda and Parker. They note that “this is clearly where all brands will eventually end up in time.” Until then, brands benefit from their ability to generate sizable sums from the Asia-Pacific market, and especially, enduring demand from the Chinese mainland.

Non-fungible tokens – or “NFTs” – have consistently been in the news lately, first for their meteoric rise in popularity and then for their equally precipitous setbacks, which include falling prices, “rug pull”-prompted lawsuits, and probes by regulators like the U.S. Securities and Exchange Commission. While legislative activity and regulatory investigations have followed NFTs every step of the way, including in markets like the U.S. and China, it is worth noting that the market and regulatory environment for NFTs in China have evolved quite differently than in many other regions.

As of 2021, China completely banned the production and trading of cryptocurrencies. Because NFTs rely on the same blockchain technology and are often associated with cryptocurrencies, many observers expected NFTs to be lumped in with this ban, but that has not been the case. NFTs remain in circulation in China, and there are several prominent platforms for their minting and purchase (but not trading), always under the label of “digital collectibles” instead of “tokens” in order to emphasize their non-tradable and non-currency status. (Terminology is shifting to some extent in the U.S., as well, away from “NFTs” towards “Collectible Avatars,” “digital collectibles,” “virtual assets,” etc.) 

Although, the long-term legal status of NFTs in China remains somewhat ambiguous, and this has not stopped companies from successfully using NFTs in marketing campaigns, seemingly without legal issues.

Legal Environment

China’s regulatory regime for virtual assets is still evolving. On the one hand, virtual assets are clearly protected as civil property under the Civil Code, which serves as the legal basis for a Chinese resident to own digital assets, including digital coins and tokens. On the other hand, virtual coins/cryptocurrency initial offerings, trading, and speculation are strictly prohibited, under the September 15, 2021 Circular on Further Preventing and Handling the Risk of Speculation in Virtual Currency Transactions, issued by the People’s Bank of China, together with nine other governmental departments. This notice bans the use or circulation of virtual currencies in the market as currency, along with virtually all virtual currency transactions. It also states that it is illegal for overseas cryptocurrency exchanges to provide these services to Chinese residents.

However, this notice and other related laws do not directly address NFTs, and do not explicitly include NFTs within the scope of banned “virtual currency.” Moreover, general blockchain technology (without currency features) is allowed and even encouraged in China, along with other general use security and cryptography technologies, such as under the Administrative Provisions on Block Chain Information Services issued by the CAC on September 10, 2019. Those provisions define encouraged “block chain information services” very broadly as “information services provided for the public based on block chain technology or systems.” 

In this context, several of China’s most prominent NFT issuance/incubation platforms, such as Jingtan and The One Art, have successfully applied to be recognized as qualified “blockchain-based information service providers” under those provisions. This is not definitive, but it does indicate some acceptance by the PRC authorities of non-currency NFT activities as legitimate.

Still, preventing NFT-related risks (especially trading and speculation) is a key concern for China’s regulators and related stakeholders. For example, on April 13, 2022, several industrial associations including the National Internet Finance Association, Securities Association, and the China Banking Association jointly issued Proposals on Preventing NFT-related Financial Risks, which prominently includes a commitment by members of these three associations to refrain from financializing or securitizing NFTs, and to refrain from providing trading services or related financial services for NFTs in any form. This is softer than a similar ban would be if embodied in formal legislation, butm nevertheless, it flags the government’s stance on this issue (NFTs shall not be traded or used as any kind of financial instrument), and the industry in China has largely aligned its practices with this norm.

At the same time, NFTs are also being promoted in other contexts, including as an IP protection tool. For example, Shanghai’s 14th Five Year Plan for Digital Economy Development (June 2022) includes support for companies researching the use of NFTs and related digital assets to enhance the global circulation of digital intellectual property and digital authentication of ownership.

The NFT Business in China

Given the regulatory regime, NFTs in China are created and managed differently than in the rest of the world. In almost all cases, they are labeled as “digital collectibles” instead of “tokens” in order to emphasize their non-tradable and non-currency status. Additionally, such NFTs are not operated on a public block chain, but rather on the private block chain of the respective issuing platform. Finally, these platforms explicitly ban trading or re-sale of the NFTs they issue, subject to a few narrow exceptions.

These limitations have presented challenges for some NFT platforms in China. Recently, Tencent’s NFT platform Huanhe announced that it would no long release any new digital collectibles and would continue to operate only as a legacy storage platform for existing users’ NFTs. It also said that existing users could continue to hold and display their current NFTs or request a refund from Huanhe.

Other platforms continue to operate and are trying to meet users’ demands for liquidity despite the general ban on trading. For example, the Jingtan app operated by Alibaba now allows users to “exchange” items in their collection by “re-gifting” digital collectibles after 180 days of ownership, with a two-year lock up (no sale agreement) applying to the recipient of the re-gift. This creates obvious opportunities for back-channel payments for such “re-gifting,” so Jingtian says that if it detects any evidence of payment for such exchanges, it will suspend or close the users account, which presumably also results in the forfeiture of any NFTs held in such account (since such NFTs would be held on Jingtian’s own blockchain, and not directly held by the user).

Marketing with NFTs

Although long-term legal status of NFTs in China remains somewhat ambiguous, this has not stopped companies from successfully using NFTs in marketing campaigns, seemingly without legal issues. Recently, Tmall hosted an online event it called the Metaverse Environmental Protection Auto Show, promoting the launch of eight electric vehicle brands, with users able to obtain NFTs of those brands by lottery as part of the promotion. McDonald’s also ran an NFT promotion, allowing customers to use points from the purchase of the Maimaikazi Crispy Chicken Thigh Burger (麦麦咔滋脆鸡腿堡) to redeem a related NFT through the McDonald’s app, WeChat, and Alipay.

Given this context, brands may still be able to use NFTs successfully in their promotions in China but should proceed with caution. 

Global approaches to NFTs will not work, and may be illegal, even while the unique Chinese NFT ecosystem presents new opportunities for creative marketing. Key guardrails for brands considering NFT campaigns in China should include: (i) use legally registered Chinese NFT platforms; (ii) describe NFTs in China as “digital collectibles,” not as “tokens” and never as “currency;” and (iii) do not allow or encourage any trading or speculation in NFTs, or imply that NFTs may increase in value or can be used as currency.


Justina Zhang is a Senior Partner at TransAsia Lawyers. She has extensive experience in the technology, media and telecom industry, as well as intellectual property protection and advertising. 

Chinese consumers have a well-established affinity for luxury goods. The robustness of luxury goods centric spending was clearly demonstrated in the RMB 471 billion ($73.59 billion) that consumers in China shelled out in 2021, a 36 percent year-over-year increase, according to Bain & Co., To put that growth in perspective even further, luxury goods sales in China more-than-doubled between pre-pandemic 2019 and 2021, rising from the 234 billion yuan that consumers spent on the Chinese mainland in 2019. The growth in luxury goods sales comes despite strict COVID-19 lockdowns and a corresponding “slump in Chinese retail sales overall since the pandemic began in 2020,” CNBC reported early this year, noting that the data from Bain – which puts China on track to become the largest luxury goods market in the world by 2025 – also clearly “reflects the growth of China’s domestic market as a destination for international brands.”

The draw of international luxury brands to consumers in China – from a deep-pocketed cohort of “super-spenders” to increasingly powerful Gen-Z shoppers – is particularly well-established in light of the fact that the Chinese luxury market “has yet to develop the widespread sophistication necessary to sustain demand for [homegrown luxury] brands,” McKinsey analysts asserted in 2019. And while this may eventually change, as evidenced by the rising demand for native sportswear brands, such as Li-Ning and ANTA, for example, and the rising interest among Chinese consumers (particularly those of the Gen-Z demographic) in “Made in China” products, the status quo remains that luxury purchases in China are dominated by goods from Western luxury, whether that be from Hermès, Louis Vuitton, and Chanel bags, Patek Philippe and Rolex watches, or Mercedes and Porsche cars.

Many of these Western luxury behemoths have a strong-hold on the wallets of Chinese consumers and the Asia-Pacific market more generally, thanks in large part to their world-famous reputations for luxury. And while groups like LVMH derive the bulk of their annual revenues from Asia (excluding Japan), success in this market is hardly a sure-fire win for all non-native entities. In fact, brands are likely to be underserved if they do not adapt specifically to the Chinese market – both in terms of the products, themselves, and their marketing of those goods. And beyond that, companies need to be strategic about their branding, which includes the names and other trademarks that they use. 

Chanel's Chinese website

Practically speaking, companies may be able to engage in seamless experiences in markets beyond their home turf by using their English language branding, but this practice is not necessarily applicable across the board, and certainly, does not translate neatly to the increasingly-important Chinese market, as even though figures of English-learners in China can reach up to 300 million, according to some reports, most statistics about English speakers in the country put the number closer to 50 million, which is less than 3 percent of the population. That is a significant statistic for luxury brands looking to effectively market to Chinese consumers. 

First-to-File, First-to-Name

With such striking figures at play, brand owners should be reminded of the importance of adopting – and protecting – Chinese language versions of their brand names. “This approach is not only effective from a consumer standpoint,” according to HFG Law & Intellectual Property’s Daniel Escudero, but it will also help companies “to protect and reinforce the strength of their trademarks and broader brand awareness in the market.”

Aside from serving as an essential part of any marketing efforts in China, it is also important for companies to adopt – and consistently use – a Chinese-language name because if they fail to use such branding and secure the corresponding trademark rights, it can result in a host of consequences. Among the common issues for companies that do not swiftly snap-up relevant trademark registrations in China, which awards trademark registrations on a first-to-file basis (subject to bad faith filing provisions that have been included in the China’s amended trademark legislation). This is the phenomenon of registration piracy, which refers to instances where an unaffiliated third-party (or third parties) register a company’s branding often in an attempt to piggyback on the established appeal/reputation of that brand or as part of a scheme to hold on to the trademark registration and extract a settlement from the brand owner, thereby, resulting in lengthy and expensive disputes for the non-native brand owner. 

There is also a risk that if brands do not select Chinese names for themselves, consumers will inevitably do it for them, and will use the name(s) they choose when they refer to the company and its products, potentially resulting in names that companies do not approve of. It is not uncommon for “Chinese netizens to collectively assign a Chinese name if a brand becomes popular enough” and lacks a specified Chinese name, says Schwegman Lundberg & Woessner’s Aaron Wininger This can be problematic, he contends, if the consumer-chosen names are not “on-brand” and/or “do not carry the connotation” that the brand aims to embody in the market.  

Aside from consumers potentially choosing names of their own, that may be off-brand and that deprive companies of the ability to exert “control over their brand narrative” as a result, companies stand to be damaged if one group of consumers adopts a Chinese language name for a brand, while others make use of a different name for the same brand, which could ultimately cause confusion and “dilute the strength of a brand’s trademark,” according to Escudero. 

Picking a Name

These risks and others are driving forces behind why many major Western companies looking to expand into the Chinese market select separate Chinese language names and other branding, which in many cases are not merely a simple translation from their English language monikers, and make their Chinese-language names known early on. Because “Chinese trademarks as a whole are fanciful terms with no specific meaning in the dictionary,” CCPIT Patent & Trademark Law Office’s Hongyan Wang asserts that brands often select their Chinese names by way of “a combination of transliteration, translation, and adaptation, while also factoring in the features of the goods [and services]” that they offer. 

With this in mind, Wang states that brands commonly select Chinese names that “correspond closely” with their original trademarks and that have “a clear pronunciation, relevant meaning, and high level of consumer recognition.” The Chinese trademark for cosmetics giant Estèe Lauder, for example, is ‘雅诗兰黛’ (YA SHI LAN DAI); the Chinese trademark of Chanel is ‘香奈儿’ (XIANG NAI ER); and for Lancome, it is ‘兰蔻’ (LAN KOU). “All of the selected Chinese characters relate to beauty, elegance, poetry, flowers, or perfume,” he contends, noting that all of the marks “are similar to the [brand’s English language] trademarks in pronunciation; and all are easy to read.” 

Bulgaria's Chinese website

Still yet, Wininger says that Hermès uses 爱马仕 (Àimǎshì) – a term that “roughly translates as ‘loves horses,’” a nod to its roots as an equestrian brand – on its Chinese website in conjunction with Hermès name. In most cases, brands will use their English language names on their brand.cn websites and in ad campaigns along with their Chinese language branding, which appears to be a reflection of how famous Western brands are working to strike a balance between showcasing their well-known names (which are, in fact, known to consumers across the globe), while also specifically catering to Chinese luxury consumers. Meanwhile, LVMH-owned brand Bulgari opted for a Chinese language name that approximates its English pronunciation, 宝格丽 (Bǎo gé lì), as did Armani, which uses the “阿玛尼” (“A MA NI”) name in China, Nike 耐克[nai ke], adidas 阿迪达斯 [a di da si], and GUCCI, which has registered at least three Chinese marks with similar pronunciations, 古驰[gu chi], 古慈 [gu ci], and 古奇 [gu qi].

All in all, Wang encourages companies that are entering the Chinese market for the first time or that have already done so but have not established specific Chinese names and branding to “consider the features of Chinese characters and Chinese market, properly translate their brand into Chinese, and timely apply for registration of both their English and Chinese trademarks.” Doing so, he says, “can ensure the protection of your brand and lay a solid foundation for the marketing, promotion and success of your brand in China.” 

At the same time, it is worth noting that the stakes may be even higher when it comes to adopting the appropriate branding, as Western luxury giants continue to maintain sizable price differentials between Europe and China, which results in Chinese consumers paying as much as 50 percent more for products on the mainland than if they were to buy those goods in the brands’ stores in Europe, and as Beijing and Chinese netizens continue to take stands in instances in which they feel as though they have been wronged. (Dolce & Gabbana’s ad campaign snafu comes to mind, as does human rights-related backlash against the likes of H&M and Nike, and the many examples of Chinese authorities taking issue with brands and retailers’ labeling of places like Taiwan as distinct from China.) Taken together, these elements should likely prove to be additional impetus for brands to consider how they operate in China, including from a branding point of view.

Chanel was recently handed a loss by the Japan Trademark Office (“JPO”) in its quest to shut down the registration of a trademark that consists of two interlocking “C”s on the basis that it is likely to confuse consumers. In the opposition that it waged on April 30, Chanel asserted that the trademark that Japanese entity HIC Co., Ltd. filed for use in connection with restaurant services should not be registered in light of the “remarkable degree of popularity [of] and the reputation” associated with Chanel’s own double “C” logo, and the resulting likelihood that consumers might be confused into thinking that the two companies are related or that Chanel has authorized HIC Co.’s services. Beyond that, Chanel argued that given the similarity between the two companies’ marks, HIC Co., Ltd. must have adopted – and sought to register – its logo in order to unfairly trade on the reputation and goodwill associated with Chanel’s well-known trademark.

In a decision dated September 30, as first reported by Osaka-based trademark attorney Masaki Mikami, the JPO Opposition Board agreed with Chanel that its interlocking “C” logo has acquired “a high degree of reputation among relevant consumers,” noting that the brand generates revenues that are greater than 50 billion JP-Yen in Japan each year ($340 million), and that it has spent 5 billion JP-Yen ($34 million) on advertising in Japan each year since 2014. 

Chanel logo and the the lookalike mark
Chanel’s Double “C” logo (left) & HIC Co., Ltd.’s logo (right)

Even against that background, the Opposition Board sided with HIC Co., Ltd., determining that the two marks simply are not similar enough to give rise to a likelihood of confusion. Specifically, the Opposotion Board found that while the two trademarks “share a similarity in that they are both figures with two ‘C’-shaped curves placed back-to-back on the left and right sides so that parts of the curves overlap,” the parallels end there given that two the interlocking “C”s are presented differently by Chanel and HIC Co., Ltd. With that in mind, the JPO dismissed Chanel’s opposition and will register HIC Co.’s mark. 

(The decision comes over a year after the Fourth Board of Appeal of European Union Intellectual Property Office dismissed an opposition that Chanel lodged over an interlocking logo that Chinese tech titan Huawei’s sought to register for use on computer hardware and software programs.)

The Japanese Luxury Market 

While Chanel – and other similarly situated brands – are no strangers to globe-spanning opposition efforts, at least part of the bigger picture here is the robustness of luxury goods sales in Japan, and luxury brands’ increasing pivots to focus on the Asia-Pacific markets, primarily China, Japan, and South Korea, as key drivers of growth going forward. 

China is, of course, the main focus, for brands, with luxury goods sales there doubling between 2019 and 2021 to more than $74 billion, per Bain & Company data, keeping the country on track to become the world’s largest luxury market by 2025. Not to be overlooked, though, Japan is a vital market, with luxury goods sales amounting to $22 billion in 2018, and according to McKinsey analysts, such sales are expected to rise by approximately 4 percent through 2025, with such growth coming from domestic shoppers, specifically younger and wealthier demographics. 

Reflecting on luxury goods’ 2021 results, Japan was a notable market, with LVMH, for instance, reporting that for the full year, sales in Japan represented 7 percent (4.38 billion euros) of its total annual revenue (64.2 billion euros). In terms of individual business groups, the Japanese market drove a cool 11 percent of jewelry sales and 9 percent of the group’s prized Fashion & Leather Goods group, which generated revenues totaling 30.8 billion euros for FY 2021. For Kering, the sales in Japan amounted to 6 percent of its total 17.6 billion euros in FY 2021 revenue, and 6 percent of Gucci’s sales for the year and 10 percent of Bottega Veneta sales. (Gucci generated 9.7 billion euros in global sales in 2021 and Bottega’s sales topped 1.5 billion euros.) 

And finally, Hermès reported that for FY 2021, the sales in Japan amounted to 977 million euros of its total 8.8 billion euros. (Chanel does not break out sales beyond the Asia-Pacific market.)

More recently, LVMH reported that for the 3-month period ending on September 30, it saw “sharp” sales increases in Europe, the United States, and Japan, thanks to “solid demand of local customers,” as well as “the recovery in international travel.” Hermès similarly cited notable Q3 sales in Japan, pointing to a 21 percent increase compared to Q3 2021 and “the regularity and solidity of its growth, thanks to the loyalty of local clients.” Still yet, Kering’s sales in Japan were up by 31 percent year-over-year, which the group characterized as “particularly outstanding,” especially compared to growth in the North America market, which was up by just 1 percent. 

Other counties in the Asia-Pacific region are expected to play a bigger role when it comes to luxury spending, but analysts anticipate that China and Japan will continue to be the biggest markets (and brands will continue to be heavily reliance on them for growth), making it integral for luxury companies to amass and enforce their brand-centric assets there.