Bringing a unique Canadian brand to China
North Vancouver sits at the foot of the North Shore mountains, just minutes away from skiing, climbing, and harsh mountain environments. It provides a unique setting for a city and the perfect crucible for innovative, purposeful outdoor designs. A perfect location for the origin of Arc'teryx.
Founded in 1989, Arc'teryx is an innovative design and manufacturing company specialized in technical high performance outerwear and equipment. Arc'teryx leverages its strong brand recognition through its 32 brand stores globally, including 16 in North America. The company's products are also distributed through more than 3,000 retail locations in 40 countries.
According to Tom Herbst, Arc'teryx's Global Legal Director, intellectual property (IP) is "fundamental to our business." In addition to patents and trademarks, the company has relied for many years on trade secrets in the form of manufacturing know how as a source of competitive advantage. In fact, Arc'teryx is built on the principle of obsessive, precise design and production. Its unique in-house manufacturing and design centres allow the company to constantly evolve and build products the right way. Timeless quality, intuitive design and simplicity result in unrivaled performance when it is needed most. Put simply, unique designs, production know how and brand is "what Arc'teryx is known for."
Doing business in China
After completing extensive market analysis, Arcteryx found a growing community of extreme climbing enthusiasts in China and felt that their Canadian product geared toward the serious outdoor adventurer would lend itself well to this foreign market. Arcteryx has since been selling products in China for more than 15 years, first directly using a local sales agent and then through distributors. In 2012, as the business scaled, the company decided to directly oversee its China operations, rolling out multiple sales channels and directly managing consumer engagement. They have a Commercial Manager in China and have opened flagship stores in Shanghai and Beijing in addition to a flagship store e-commerce platform T-Mall. Arc'teryx currently oversees about 240 physical points of sale in China, including the independent merchants it sells through and model brand stores.
Its business strategy targets high-end consumers who pay more attention to the value of the product and the premium shopping experience. According to a 2016 article on amersports.com, Arc'teryx's parent company, "Arc'teryx has a very high brand equity index in China, and is considered the No.1 international outdoor brand according to a study by Nielsen in 2015."
Building a brand in China
Trademarks are essential to a company's ability to build its image and brand. For Arc'teryx, owning its brand name and logo in China was an extremely important component of its IP strategy. Arc'teryx first registered its English name and logo with China's Trademark Office (now part of China's National Intellectual Property Administration) in 2003 as soon as the company started selling in China. Initially, they sought to protect their brand in the categories (classes) of products which they produced or planned to produce in the near future. The timing of trademark registration was an important consideration for Arc'teryx. As Tom Herbst explains, "obviously, we did not want to lose our brand and it was easier to get registered before we were known in China and would likely attract (as we have seen since) others to register the mark."
In China, consumers usually recognize brands through their Chinese name. The choice of a Chinese name is important to ensure it reflects your brand's desired image. If a company is not proactive, consumers may come up with their own Chinese name for your company.
Arc'teryx chose 始祖鸟, which is the Chinese equivalent of Archaeopteryx, and started marketing products under this name in China. While this conscious decision was made early in their China venture, the company waited until 2009 to register their Chinese name as a trademark. In hindsight, Arc'teryx recognizes that such a delay created unnecessary risks and that registration as soon as possible in China is important.
As China is a first-to-file jurisdiction, any entity can register a trademark, whether or not they use or intend to use it, as long as they are the first to apply. Waiting to register a trademark can leave a company vulnerable to trademark squatters or other bad faith entities looking to benefit from a brand's recognition or registration of trademarks by individuals who then try to sell the names back to companies. Thankfully, no prior registration had been made and, by 2009, Arc'teryx successfully secured the trademark rights for their Chinese name.
However, the story does not end there! As their products gained popularity in China, so did the value of owning a trademark for Arc'teryx and their logo. In 2016, Arc'teryx made the decision to extend their trademark rights to other product classes for defensive purposes to prevent others from registering their brand. This defensive strategy helped protect unclaimed areas by protecting incremental enhancements to their product-line which blocked and continues to block similar designs and potential infringement suits from competitors. Monitoring the use of their trademarks and taking proactive action against piracy continues to be a critical step in their IP strategy to ensure they retain control of their brand's image.
For Canadian companies looking to enter the Chinese market, Amy Gu, Senior Legal Counsel for China, has these words of advice: "Register everything you can in as many classes as possible! Be sure to keep good records of your advertising and marketing efforts; it helps to establish your brand's presence in China."
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