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Forget CDs, fake a 5-star hotel

They have churned out billions of pirated CDs, DVDs, toys, designer clothes and trainers over the years but now China’s counterfeiters have expanded their horizons in spectacular fashion — faking a five-star hotel.

A 154-room replica Peninsula Hotel — using the logo belonging to the international Peninsula Group — has opened in the tourist hotspot of Yichang, at the head of China’s Three Gorges Dam.

From a distance, it resembles the Hong Kong Peninsula. Inside, however, any guest expecting international standards of luxury would be taken aback by the dartboard and the soft-drink vending machine in the lobby, and the curiously-worded brochure at reception promising guests “flirtatious expressions” in the hotel restaurant.

The Peninsula Group, which has hotels in New York and Beverly Hills in addition to the Far East, has hired lawyers for what promises to be a lengthy battle to force the duplicate hotel, built by a state-owned power company, to stop using its name and logo.

The international chain Toys ‘R’ Us — which plans to open stores in China soon — is facing a similar problem. Last week, its lawyers were alerted to a lookalike shop in the southern Chinese city of Dongguan. Starbucks is also preparing legal action against a chain of coffee shops in Shanghai that has adopted its name and logo.

The brand-name bandits are targeting young Chinese with money to spend. “These people do their research and they know who they want to attract,” said Gabriela Kennedy, a Hong Kong-based intellectual property lawyer who recently helped Adidas stop a Chinese company registering the name and logo of the sportswear giant as its own.

“Their audiences are well-off younger consumers who are aware of foreign brands. Ten years ago, we were dealing with bad fakes. Now we are dealing with people who are quite sophisticated, who have learnt about intellectual property law and are attempting to use it to their advantage.”

China enacted its first intellectual property laws 20 years ago when Deng Xiaoping introduced market reforms. Although the state intellectual property office says it dealt with 37,489 trademark violations last year, the fine for the offence is not much.

In China, unlike in other countries, there is no central companies’ register. This means that counterfeiters can legally register a brand name or trademark with one of the thousands of local company registration offices. The foreign company must then challenge the ownership in court, at great expense.

In some cases, foreign companies have tried to register their internationally known brands within China, only to find that a Chinese company has beaten them to it. Although the Peninsula Group’s trademark is registered, the hotel owners in Yichang have also registered their building under the Peninsula name with the local registrar.

Kennedy said it was increasingly difficult to tackle the counterfeiters. “These are fly-by-night operations. They are companies that register intellectual property rights — more often than not famous brands of multinational companies — and then have the gall to sue the multinational companies for infringement,” he said.

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