Energetic fight

Yan Bin: “relaxed” about dispute

It was an anti-climactic ending to one of China’s most convoluted business disputes. Last week, the Supreme People’s Court ruled that Jiaduobao and Wanglaoji must share the iconic red-can design that the two herbal tea firms have been fighting over for years (for a full rundown of the dispute, see WiC332).

While this case has finally closed, a potentially bitter trademark battle is brewing between the Thai owner of energy drink Red Bull and the beverage’s distributor in China.

Red Bull was created in 1975 by Chaleo Yoovidhya in Bangkok. The carbonated version popular to the Western world – served in blue cans – was born in 1987 through a partnership with an Austrian company.

According to National Business Daily, Red Bull’s global appeal spread to the Chinese market around 1995 after the China-born Chanchai Ruayrungruang, otherwise known as Yan Bin (see our latest 150 Tycoons book for a full profile of the businessman), signed a 20-year licencing agreement to produce and distribute Red Bull – in gold cans – in the country.

That deal should have come to an end last year, but neither Red Bull’s Thai owners nor Yan Bin have announced that the partnership will continue. And the rift between them became public in recent months after TC Pharmaceutical, a company controlled by the Yoovidhya family, sued a Shenzhen-listed firm which helps package Red Bull products in China.

The court case, Caixin Weekly reports, is part of a larger dispute between TC Pharmaceutical and Yan Bin’s Reignwood Group, which claims to be the rightful owner of Red Bull’s China franchise following two decades of investment and brand management.

In fact, Reignwood has been running a new marketing campaign that will end in December, leading some to assume that a settlement has been reached.

(To complicate things further, National Business Daily notes that TC Pharmaceutical and its Austrian partner have been marketing the blue-can Red Bull in China since 2014.)

Speaking to the Financial Times in June, Yan seemed at ease about his ownership of Red Bull China. “I am myself quite confident and relaxed about [the dispute],” he told the newspaper. “I personally invested all the money in advertising and factories. That’s what I care about the most, and that’s why everyone in China says that Red Bull belongs to Yan Bin.”

The Yoovidhya family are also keen to settle the dispute, asserting they “remain fully committed to maintaining our brand’s strong and vibrant presence in the Chinese market”.

Red Bull holds about 80% of the Chinese energy drink market. In 2015 it reached Rmb23 billion ($3.49 billion) in sales and it has fended off competition from local firms, such as Hi-Tiger and Wahaha’s Qili.

But new threats have been emerging after Coke-backed Monster entered China last year. Appropriately enough, that energy drink’s China debut came only after circumventing a drawn-out trademark dispute of its own: a Shanghai-based company had already registered Guaishou (Chinese for Monster) and sells a fruit drink under the name. Worse yet, Guaishou’s packaging is reminiscent of Monster’s own. Monster has registered instead under the Chinese name Mengshite and now expects it could snatch a 30% slice of the local market.

Red Bull also needs to see off the challenge from Carabao, now the second most popular energy drink in Thailand. Using a red buffalo as its trademark, Carabao started selling in China in 2007. The Thai firm is the sponsor for the English League Cup this season and it signalled an ambition to expand in China by hosting the football tournament’s draw in Beijing last week (though British media reckoned the marketing plot backfired as hardly anyone was paying attention).

Meanwhile the controversies surrounding Yan are not confined to Red Bull. As we reported in WiC306, he has upset members of the prestigious UK golf club Wentworth after he bought it for £135 million three years ago. In the latest dispute, the Daily Telegraph reported in June that new club rules warn that any member who criticises Reignwood either online or in a newspaper could face expulsion.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.