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In the news: Peugeot gives power to Dongfeng, Downton Abbey loses trademark race and China-Sri Lanka FTA nears completion

This week Peugeot sealed the deal with Dongfeng, local squatters beat “Downton Abbey” to trademark registration and Chinese and Sri Lankan foreign ministers accelerated FTA talks

Issue: March/April 2014

Keywords (click to search): peugeot dongfeng m&a downton abbey trademark ip china sri lanka fta

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Peugeot and Dongfeng tie-up
China's Dongfeng Motor Group and PSA Peugeot Citroen have agreed to a capital tie-up. Dongfeng and the French government will each inject 800 million Euros for 14% stakes in Peugeot, turning state-owned Dongfeng into one of Peugeot's largest shareholders. While Peugeot was founded two centuries ago at the dawn of the industrial revolution, Dongfeng is an auto industry newcomer, although the second-biggest Chinese auto maker has big plans for global expansion. The deal is expected to reverse Peugeot's sales slump, but it also results in one of France's oldest industrial dynasties losing control of a historical company. The Peugeot family will have its number of board seats reduced and Thierry Peugeot lose his chairman post. The French government, Dongfeng, and the Peugeot family will each have two board seats.

Sources:
Reuters
Financial Times
The Wall Street Journal

Although the French carmaker already has a successful JV with Dongfeng in China, the global auto industry race left them struggling behind in sales. While competitors like Volkswagen, Fiat and Renault have secured international markets, Peugeot has been criticised for clinging too tightly onto tradition and control, and for being unable to adapt quickly enough in the rapidly-globalising business. The family has failed to form transformative alliances, such as its aborted attempts to work with Mitsubishi and BMW. Meanwhile, Dongfeng produces the majority of its cars with partners like Nissan and Honda, and its Asia expansion will be bolstered by Peugeot's brand name and higher-end technology. However, having three equal shareholders may pose difficulties, given the language barriers and direct government ties to ownership.

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Law digest: Measures for the Administration of Strategic Investments in Listed Companies by Foreign Investors (Revised) (Draft for Comments)


Downton Abbey loses trademark race
Several Chinese entrepreneurs have been granted registrations for "Downton" and "Downton Abbey" for their wine, spirits, jewellery, and other merchandise, with perfume and make-up soon to follow. Despite high Chinese viewership, the creators of the TV series Downton Abbey failed to register a trademark in China before local businessmen took advantage of the first-to-file system. The current trademark law only allows holders of influential or well-known marks in China to petition to cancel an identical or similar mark in a dissimilar category of goods. However, the new trademark law, which comes into effect in May, allows owners of well-known foreign marks not registered in China to petition and gives them five years to contest dissimilar marks registered in China.

Source:
Intellectual Property Brief

There are no impressive changes in the new trademark regulations; the office remains conservative and implementation is still unclear. Foreign companies have long been victimised as their overseas fame is taken advantage of by local businesses that beat them in a race to the office. It can be difficult to attack these squatters - Article 31 of the implementing regulations states a certain level of market influence in China is required to file in bad faith. But 'bad faith' isn't defined, and neither is level of influence. Downton Abbey won a Sichuan Film Festival award and fuelled fashion and architectural trends in Shanghai, but is this is influential enough for the authorities to block the trademark squatters?

More from CLP:
Translation: PRC Trademark Law (3rd Revision)
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Seven years and still not right - New draft of Trademark Law fails to impress


China-Sri Lanka FTA to be finalised this year
Sri Lanka's foreign minister GL Peiris and China's vice president Li Yuanchao have announced an agreement to fast track negotiations to conclude the two nations' free trade agreement. The proposed FTA will help Sri Lanka reach its target economic growth of 7.5% per year and give it greater access to China's large and growing consumer market. China's increasing affluence and demand for gems will also lead to an immediate economic boost - Sri Lanka's gem industry is currently worth around $600 million in exports and is predicted to reach $1 billion by 2015. Political ties have also been strengthened via China's massive funding of infrastructure projects in Sri Lanka following the end of its 30-year civil war in 2009. The country is also moving toward diversifying its economy and greatly expanding its service, banking, insurance and IT sectors. The two countries aim to sign the FTA by the end of the year.

Sources:
Asia Briefing
Reuters
Xinhua

China is said to be one of the biggest contributors to Sri Lanka's economy in terms of development assistance (total $4 billion). The past four years for Sri Lanka have been a scramble for reconstruction and rehabilitation, but the country's economy grew 7.2% in 2013. It continues to reduce dependence on traditional agricultural exports and find new areas for growth such as in clothing, cinnamon and precious stones. Sri Lanka also expects greater Chinese tourism and the two are also in talks for a greater maritime cooperation. Its increasingly tight ties have unsettled India, Sri Lanka's traditionally closest economic partner and China's modern rival. China recently signed a series of FTAs with smaller economies like New Zealand, Switzerland and Iceland, but it is also negotiating more significant ones with Australia, South Korea and Japan. Maybe it is swinging its doors wide open after all.

More from CLP:
Government boosts regional investment
Is south-east Asia the next destination for outbound investment?
Lawyers welcome free trade talks between China and Australia
The ASEAN-China FTA and its impact on business