For foreign firms, a rose by any name may not smell as sweet

What's in a name?

When localizing operations in China, one of the first steps many multinationals take is to consecrate themselves with what they imagine to be a catchy, auspicious and culturally loaded Chinese name.

This looks easy but the path toward a new name is beset with cultural and legal ambushes. It only takes one misstep to be off on the wrong foot.

If the China International Import Expo is the success everyone expects, an influx of new foreign brands will stream into China and the issue will loom large in boardrooms around the world.

The history of this kind of rebranding is not an entirely happy one. A series of instances of supposedly carefully thought-out Chinese names have not only failed to resonate, but backfired, sometimes hilariously.

San Francisco-based Airbnb, the leader of the shared-home industry, got lost in “translation” when it decided to name its China operations Aibiying in 2017. If you twist your mouth appropriately (or can’t speak Chinese) the name can be made to sound a little like “Airbnb.” Despite a company statement interpreting it as “to meet each other with love,” it didn’t roll off the Chinese tongue or make much sense, really.

An even more ludicrous example was McDonald’s ham-fisted alteration of its registered company name to Jingongmen, or Golden Arch. The name change drew plenty of scorn on social media for its rustic connotations that were no match for the aura of a leading fast food chain.

With big-name flops like these, it is predictable that newcomers will be scratching their heads over the name game. Smart leveraging of Chinese cultural icons has been central to some brands’ formula for success. The first examples that come to mind are those of BMW and Mercedes-Benz.

According to Jiang Qingyun, professor of marketing at Fudan University, BMW, which stands for “Bayerische Motorenwerke AG” (literally Bavarian car factory), has not even the remotest association with the horse. But the company’s Chinese name, Baoma (prized horse), is truly a work of genius as it plays into the Chinese cultural fascination with the horse.

The same can be said of Benchi, a transliteration of Benz that in Chinese means “hurtle” or “zoom” — words befitting a car brand.

But perhaps years of mining this seam of cultural treasure have depleted the resources left for latecomers. Jiang understands why brands feel the need to go into overdrive to court local consumers. They must build emotional connections with customers and the communities they operate in, but in doing this, they need to watch out for cultural pitfalls. The slightest nuance could mean millions of dollars lost.

Know your market

And a good name involves the efforts of more than just linguists. Jiang advises foreign companies to research their market thoroughly by consulting an assortment of professionals, not just a marketing team. Intel once commissioned anthropologists from Fudan to develop a marketing strategy based on insights into Chinese social norms.

“Of course, experts are not always correct,” Jiang conceded. “If proven wrong, immediate adjustments are needed.”

As if the name game was not already befuddling enough, brands sometimes are assailed by an even thornier issue: trademark squatting. This refers to the practice of deliberately filing a trademark application for a second party’s registered trademark in a country where the latter does not hold a trademark.

By taking advantage of the “first-to-file” system, squatters are treated as the legal trademark owners but their intent is often nothing more than demanding money for releasing the trademark. The most notable victim is Tesla.

As early as 2006, a Guangdong businessman named Zhan Baosheng secured trademarks for “Tesla” and its logo in China. These were exactly the same as the US electric carmaker’s. When Tesla was confronted with Zhan’s shenanigans on entry into China, a legal battle ensued that dragged on for years. The two sides reached a compromise in 2014, and Tesla can now use its trademark and logo without fear of legal consequences.

Not all trademark disputes are triggered by the squatters, though. Ford sold its Mustang roadster under the name Yema in China, until Sichuan-based carmaker Yema Auto, registered in 1986, sued Ford for alleged breach of trademark laws. The court eventually ruled in Yema’s favor and ordered Ford to pay 1 million yuan (US$140,000) in compensation.

Both stories highlight the need for multinationals to be so prescient as to register their trademarks, logos and even URLs long before they plan to enter China. Early moves will insulate them from wasting money and time in squaring off with the squatters.

Unethical as trademark squatting may seem, it is nothing but a shrewd exploitation of the inadequacy of the “first-to-file.”

“Protracted legal battles and payment for releasing the brand are the dues foreign companies might have to pay,” said Jiang. “They are not totally avoidable.”

In Ford’s case, the company obviously didn’t exercise due diligence in market research about potential conflict of interests with another party.

This lack of foresight can be grounded in arrogance, which Jiang said he has noticed in a few American companies. They tend to disregard market variations, assuming that all markets should function according to standard US corporate principles.

“This shortsightedness can cost them the chance to detect early signs of trouble,” Jiang warned.