It doesn’t take a professional economist to realize the rapid rate of growth in China. In the first quarter of 2018, the country’s GDP increased by 6.8 percent and the second quarter is predicted to see a further 6.7 percent growth.
But of course GDP is not the only metric by which to measure economic growth. From a business point of view, it can also be helpful to observe trademark filing activity, and to say this has boomed in China would be an understatement. In the past two years alone, the number of trademark applications made within China to foreign registers has doubled.
This finding comes from our latest report, entitled Chinese Brands Go Global, which assessed domestic and foreign trademark applications by Chinese brands, made between 2014 and 2017.
The statistic mentioned above is impressive on its own, but some context is necessary if we are to grasp its true significance.
China has the largest domestic trademark register in the world. In 2017, over 5.2 million applications were filed, a figure which makes it around 10 times the size of the world’s second largest register, the USA. To look in more detail: in the first week of September 2017 alone, more than 116,000 applications were filed on the Chinese register – a number that exceeds the number of trademarks filed with the European Union Intellectual Property Office (EUIPO) in the whole of 2016.
This dominance in the world of trademarks is nothing new. China has built a reputation as a country that sees more annual trademark applications than any other register in the world. In fact, it’s been doing it for over 20 years. It’s a market that is also hugely attractive to international brands due to its 1.4 billion consumers. Interestingly, despite mainland China being home to under 19% of the world’s population, the Chinese trademark register is responsible for over 50% of all global trademark applications. And this figure is one that continues to grow.
Branching out globally
While China as a trademark entity is obviously dominant domestically, it is also making major waves in international trademark registers.
In the short space of four years, Chinese brands have gone from number 10 in the world by filing volume to number two. If the rate of growth continues, it will surely be challenging US brands for the number one spot in the very near future.
In 2017, Chinese applicants filed almost 120,000 foreign applications. If we were to take this number and categorize it as a separate register, it would sit between Mexico (138,400) and EUIPO (118,762) as the eighth largest register in the world. Additionally, in 2017, one in every nine applications filled in the US was from a Chinese brand, equating to more than 50,000 applications in a single year.
Today’s Chinese trademark sector looks significantly different from how it did just four years ago. Back then, trademarks filed by Chinese applicants outside of mainland China to foreign registers were few and far between, and a relatively modest level of growth saw China ranked 10th in the world, behind the likes of the USA, Germany, UK, Italy and France.
This pales in comparison to the likes of last year, which saw China file nearly 120,000 foreign trademark applications. In fact, the number of foreign applications has nearly doubled in the last 24 months, and there are no signs of this slowing down.
There also used to be more geographic limitations on foreign trademark applications, with Chinese brands focusing more on areas in South East Asia. But this is no longer the case, and the US is a particularly large focus nowadays. North America is now the major market for Chinese brands, and the number of trademark applications filed in the region has grown at an incredible scale, from just 6,200 in 2014 to over 50,000 in 2017.
This growth is not limited to the US market, however. The volume of applications from China increased by over 40% in 2017 compared with 2016 on several major registers, including the US (+61%), Europe (+55%), Japan (+73%), United Kingdom (+122%), Australia (+139%) and Canada (+49%).
Bringing China into focus
While it is clear that Chinese brands are filing trademark applications at an unprecedented rate, the US still ranks in first place when it comes to filing foreign trademark applications outside their domestic market. China sits comfortably in second place, while Hong Kong takes third. Assuming that foreign trademarks applications from mainland China continue with the same rate of upward trajectory, we will see the region overtake the US by 2020.
We can also build a picture of the most important types of products being exported from mainland China by examining the most frequently used classes selected by Chinese brands when filing foreign trademark applications. For example, in 2017 the most used class for foreign trademark applications filed by mainland China applicants was Class 9, which includes electronics and electrical equipment and saw nearly 30,000 applications in total. The second and third most frequently used classes were Class 25, which includes clothing, headgear and footwear, and Class 11, which is covers lighting, heating, cooking and refrigeration apparatus.
The influence of China within the wider trademark world cannot be underestimated. It has grown from a minnow into one of the biggest fish in the pond, and it seems like it won’t be long before it moves into first place.
With 1.4 billion consumers and counting, China’s dominance should not be completely surprising, and its domestic trademark register has always shown strength. However, as heads turn increasingly towards foreign shores, Chinese brands must think hard about how they can overcome the challenges posed by different trademark registers around the world, while simultaneously protecting and enforcing their brand once it is registered.
The last four years have played host to significant change, and we can expect the same to be true for the next four. We are in the midst of a new era in the trademark world, and it’s an incredibly interesting time.
Image Source: Deposit Photos.