Trademark strategy, the hidden power of one of the most successful entrepreneurs in China

Apr 30, 2018 | Trademark Blog

You can easily find a whole bunch of inspiring stories about entrepreneurs. Someone starts their company in the garage, the basement of parent’s house, or a coffee shop and now they shape the world we live in today. In this post, we will tell you a famous rags-to-riches story and your China trademark strategy.

Here is one of my favorites: an entrepreneur who never had the chance to go school and can’t write or read. To make a living, she started her company at the age of 40 and now 35 years later, the annual turnover of her company is over 7 billion RMB and also helping one of the poorest provinces in China reach some of the country’s fastest economic growth. She is famous for using trademarks as a weapon to protect her brand and her company.

Her name is Tao Huabi. You may never have heard her name but chances are you may already have seen her face if you have ever stepped into a supermarket in China, Taiwan or any Asian supermarket. Her face is printed on the jars of the chili sauce “Lao Gan Ma”, which translates to old godmother. Born in a poor and patriarchal family in Guizhou, one of the poorest mountainous provinces in China, she never had the privilege to go to school, her job was to take care of the family and cook for them.

At the age of 20, she married a local government employee and a few years later she became a widow with two sons. To make a living she used to work till midnight and in the in the morning, carry over 50 kilograms of homemade food to sell in the market and the local school.

At the age of 40, she builds herself a little road stands to sell her special recipe, Liang Feng (Chinese dish) with chili sauce. One day she notices that her customers are more interested in the chili sauce than the food itself and all the restaurants nearby are buying her chili sauce. To get even more clients, she decides to sell her chili sauce instead of offering it on the table as a free condiment and this is when her life starts to make the big turn. Seven years later she had her first chili sauce processing plant with 20 employees, a year after that, in 1997, she upgraded the plant to a company named Guiyang Nanming Laoganma Food Co. with 200 employees. At this time she finally has the chance to learn writing her name 陶華碧for signing contracts.

In an interview, she said, “it is so difficult, I suffer so much, but if I am not strong, the whole family would suffer. I never think of giving up, once you give up, even if you restart again you will never succeed. If I have an idea I have to achieve it or people will laugh at me saying: now you do not even have food to eat. Being mocked that is something kills me.”

Step by step, the company grew to nearly 5000 employees, and now holds the highest market share in China and she has become the most famous self-made chili magnate in China.

As an entrepreneur, she protects her brand well and maintains a solid trademark strategy.

First, the word “Lao Gan Ma” (Old Godmother) had a weakness for being easily counterfeited. Soon after they launched the product and had their first success, countless of similar brand names popped up, like “old godfather”, “old god uncle” and “old big mother”. Some even use the same typeface and the same jar design.

In 2003, after the “Lao Gan Ma” trademark was application rejected, another company in the Hunan province successfully registered the word Lao Gan Ma. It took a marathon 3-year lawsuit for Mrs. Tao to get the other company’s registration canceled and win back her Lao Gan Ma trademark. Now the Lao Gan Ma company spent millions per year to fight counterfeits.

Although they only make chili, this company has 170 trademarks. By breaking down the list of the 170 trademarks, you can see a clear strategy.

First, they apply for the “Lao Gan Ma,” trademark in all 45 trademark classes. Normally a company will only choose to apply for the trademark class that has a direct connection to the product they manufacture. But the “Lao Gan Ma,” company choose to apply For all 45 classes, this mean even if it is a nuclear reactor you want to make, you are not allowed to use Lao Gan Ma as a trademark. It is the way to fully own the trademark and keeps a very strong brand image. The other benefit is you don’t have to worry someone may use the trademark in a contrary industry that will bring negative impact like using the Lao Gan Ma for selling pesticide. Also, it will keep open every possibility for the future development.

Second, they apply any possible combination of a similar trademark. They took a hard lesson from the past of fighting with the counterfeiters that try to hitchhike profit from using a similar name like old godfather or old aunt. Now they hold all kinds of combination that similar to the trademark “Lao Gan Ma,” (old godmother) like goddaughter, godson, old aunty, old grandma and old grandpa. This is the strategies that can effectively block the hitchhikers who try to confuse the customer by implying the two companies are affiliated.

The hidden power of Lao Gan Ma’s success story is that they focus on trademark protection. They have realized it is the cheaper than considering trademark protection as an operating cost. It is a good way to avoid potentially higher costs of counterfeiters and lawsuits.

With a proper plan, you can build up the force of trademarks that help you make a solid stand in the market and spend your energy on market share rather than being trapped in the mud with squatter and hitchhikers.


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