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Case Studies
Is China still the Wild West?

To many Western rights holders, China remains a mysterious market; but there is more going on than licensing associations and the media would suggest.

Although for many economists, the debate as to when China will overtake the United States and become the world’s largest economy looks set to continue, there is no doubting the market’s significance for global brands and rights holders.

As a result of higher disposable incomes, Chinese consumers have begun trading up from mass brands

to premium brands and have increased their spending on services thanks to their willingness to pay extra for a better experience. In many product and service categories, the growth of premium segments has outpaced that of mass segments. This is good news for Western rights holders, which are generally regarded as premium alternatives.

Lack of media coverage

Fuelled by a relentless appetite for Western intellectual property, licensing has been growing rapidly in China ever since the early 2000s. However, to many – including experienced licensing executives – China remains a mysterious Wild West.

One of the key reasons for this is inadequate media coverage by licensing trade associations and trade magazines in the United States and Europe. Most large Chinese licensors remain unknown in the trade, despite the fact that hundreds of millions of dollars’ worth of licensed merchandise is sold in China annually. An experienced Chinese licensing professional would likely agree that the list of the world’s top 150 licensors would have to be rewritten if proper account were taken of Chinese rights holders. Likewise, large Chinese licensees rarely if ever feature in trade coverage. Notable absences include Suning Group – a massive appliance retail operator which has licensed many top brands (including Whirlpool, Electrolux and Pioneer) and transacts hundreds of millions of dollars in retail sales of licensed electronics and home appliances annually.

This lack of knowledge contributes to apprehension and fear among Western rights holders, potentially losing them a significant number of business opportunities. Fortunately, this will likely be resolved over time as trade media gradually increases coverage of China and more Chinese licensors and licensees attend licensing shows in Las Vegas and London.