One Village, One Brand

The majority of businesses in developed economies across APEC maximise the value of their products through branding and appropriate intellectual property (IP) strategies. But many farmers and producers in developing economies in the Asia-Pacific region lack the knowledge and capacity to do so, and it is the main reason why they do not receive the maximum price possible for their products.

How to establish effective brands and at the same time protect IP was the topic of a recent APEC-funded seminar in Seoul, Korea. The three-day "APEC One Village, One Brand" conference from June 23-25 was organised by the Korean Intellectual Property Office (KIPO) and included presentations and roundtable discussions on everything from branding strategies for local products to the various legal resources that can be used to manage and protect brands to how to penetrate export markets.

Experts from around the world gathered at the conference to share their experiences and explain to APEC participants how branding and IP strategies can enhance export income, boost economic development in local communities, raise standards of living and help create successful small and medium enterprises (SMEs).

Participants included representatives of non-governmental organisations (NGOs) specialising in fair trade; experts from the brand consulting industry; officials from IP offices and agencies supporting trade and local industries; as well as traders and distributors.

During the "APEC One Village, One Brand" conference, many ideas were exchanged and will provide food for thought for participants who hope to better use IP tools including trademarks, certification, collective marks, and geographic indicators to guarantee the authenticity of a brand promise.

Presenters from Peru, the Philippines and Hong Kong, China talked about how they have developed brands with the use of IP tools such as trademarks to raise their revenues. Mauricio Gonzales of Peru's Defense of Competition and Protection of Intellectual Property spoke about how certification marks, collective marks, and geographical indicators were used to promote its Altomayo coffee brand.

At the conference, Allan Gepty, Deputy Director General of the Intellectual Property Office of the Philippines (IP Philippines), talked about a priority programme called "One Town, One Product," which is designed to empower local SMEs by using client-focused IP seminars. The Philippines's Department of Trade and Industry (DTI) also promote branding and the registration of trademarks and IP Philippines has set up IP satellite offices across the country.

SME programmes in the Philippines include services such as marketing, technical and financial assistance. One strategy the DTI and the IP offices promote is for SMEs to organise and form associations or cooperatives and then design logos, brands or seals to represent their group and its product. That collective trademark is then protected by filing a trademark application with IP Philippines. The product is later commercialised through licensing, technology transfer, enforcement, merchandising, franchising, joint-venturing and benefits sharing.

A number of international certification schemes that can be useful for SMEs in brand development were discussed, including the Fair Trade Labelling Organizations International (FLO) which provides certification that a product has met fair-trade standards; GoodWeave, a certification that is given to handmade rug manufacturers in countries like India and Nepal that prohibit child labour; and certifications such as Ecologo and Certified Organic, which appeal to environmentally conscious consumers.

Marion Heathcote, a patent and trademark attorney representing the International Trademark Association (INTA), noted that there is a system in place to facilitate international trademark registration called the Madrid Protocol. It is administered by the International Bureau of the World Intellectual Property Organization (WIPO) in Geneva, Switzerland and could be useful for many APEC economies that are not currently members.

The Madrid system offers a trademark owner the possibility of having his or her trademark protected in several economies by simply filling one application directly with his own domestic or regional trademark office. 85 countries have signed up to participate but only six of APEC's 21 members have joined (Australia, China, Korea, Singapore, the United States, and Viet Nam).

"A lot of APEC member economies haven't signed up to the Madrid Protocol," Heathcote says, "and I was telling people at the conference to lobby their governments to become part of the Madrid system. It would facilitate these producers getting into other markets."

Heathcote also argues that greater education is needed about the value of trademarks and branding through an expansion of the mentoring programme or through an IP toolkit approach. "One of the things that came up was the need to educate small local producers about the benefit of producing a consistent quality product to enable them to build branding."

Malaysia for instance is not currently a member of the Madrid Protocol and that's a problem for Ishak Barisan, Managing Director of Desaku Trading in Malaysia, a company that sells 90 percent of its brand of virgin coconut oil products online. Following the conference he said he realised he would have to try to register his Bio-Asli brand outside Malaysia to protect it from duplication and is studying how to do so in Europe and North America.

But he conceded it would be a daunting exercise. "It's not realistic to try to register your brand in 231 different countries," he says. "Perhaps APEC can study the situation and improve it. They could try to make it easier to register trademarks globally - much like domain names are registered from around the world on the Internet."

Another strategy voiced at the conference was introduced by Jeffrey Neilson, a lecturer in economic geography at the University of Sydney. Neilson studies the use of place names along the global value chain for coffee, with specific reference to Indonesia.

He noted that the most successful cases of regional branding have been where international coffee companies have established tight relationships with producer groups and marketed their own brand using "places of origin" indicators, not necessarily IP. He emphasised the importance of downstream linkages with lead firms in facilitating skills transfers to producers in developing economies and the promotion of regional brands.

"People had this expectation that IP or a trademark would be enough to stimulate economic development [but] there is a real need to make sure that in any initiative IP is linked up as part of a broader package of branding," he explained in a telephone interview from Indonesia. "Regional branding can be driven by overseas buyers."

He noted that regional branding can occur through two different processes: One from the region itself, for example where a local group of tea or coffee producers get together and brand their product with a geographical indicator (GI) or an IP tool then take it to market; the second approach is where an international buyer comes into a particular region, establishes a regional presence, then markets the product.

The beauty of the second approach is that companies can avoid some of the heavy costs of protecting their own IP and marketing, and capture instead the opportunities offered by international buyers that can get access to global markets faster, Neilson explains. This kind of strategy can be successful and is particularly appropriate in areas where public funds are not available to introduce international marketing strategies.

Mohammed Garad, Senior Vice President of Light Years IP, a non-profit organisation based in Washington, D.C., used illustrations from Africa to demonstrate how APEC economies can have similar success by branding and developing the intangible, distinctive value of their intellectual property.

He argued that IP tools such as patents, trademarks and licenses are some of the most powerful ways of leveraging a product's distinctive value in order to bring about a shift from a commodity price structure to a negotiated higher and sustainable price, thus gaining effective marketing power.

It was a successful IP-based business strategy, he explains, that enabled the Divine Chocolate Company of Ghana to gain a significant share in profits. In the 1990s, Ghanaian cocoa farmers set up their own cooperative business called Kuapa Kokoo, which then helped set up Divine Chocolate, a fair-trade chocolate marketing company.

The strategy involved creating strong distinctive branding that emphasised the quality of Ghana's cocoa as well as its fair-trade credentials, and used traditional Adinkra symbols on its packaging to convey the chocolate's Ghanaian roots. The strategy also involved giving farmers ownership of the marketing company. Today the Divine brand of chocolate is sold internationally.

Ethiopian coffee is another example. Ethiopia produces some of the finest Arabica coffee in the world. But for decades coffee producers labouring in remote parts of the country earned just 5-10 percent of the retail price distributors and retailers were earning in places like Europe, North America, Japan and the Middle East.

Ethiopian fine coffees would retail for up to US$20.00 per lb. in retail stores abroad, while Ethiopian export prices were only US$1.00 per lb. or around 5 percent of the coffee's true retail value.

That didn't change until a coalition of growers, exporters and government representatives with the help of Light Years IP, set up the Ethiopian Fine Coffee Trade-marking and Licensing Initiative, which registered the trademarks of Ethiopia's three most famous coffees in about 30 countries. The initiative required international distributors to obtain licenses to sell the coffee.

The Trade-marking and Licensing Initiative, along with new brand management policies, boosted the overall retail value of Ethiopia's coffee and helped producers in the landlocked nation in the Horn of Africa obtain export prices that truly reflected the value of their coffee.

Today Ethiopia has more than 110 licensees in eight countries and income has increased by 100 percent for about four million Ethiopian coffee farmers and small traders.

"It's a win-win for everybody," Garad says in a telephone interview. "It not only raises the standard of living for coffee producers but governments too can earn more in terms of income taxes."

Garad, a lawyer with 30 years experience in international trade promotion and business investment in developing markets, emphasised how important it is that APEC-based producers design strategies that incorporate IP tools also.

"It may sometimes be a question of establishing a wholesale distribution company in a foreign market, like we did with the Divine Chocolate stakeholders, or helping them with branding," Garad says. "Quite a few people came up to me after my presentation at the conference and asked if there was any way we could collaborate - even on just one or two aspects of our work."

"Unfortunately, we haven't worked on any APEC products [yet]," Garad says. "I am sure there are good examples of successful branding of agricultural or rural heritage products, apart from the great Asia-Pacific brand success stories such as fruits, health products, electronics and cars that are now competing in a big way. They started small but used IP tools effectively to control the distribution of their products and manage their brands."

In an increasingly competitive and global marketplace, when producers are compensated sufficiently for their products, they will be encouraged to produce their brand in a sufficient quantity that will satisfy the market, and they will also pay greater attention to things like packaging and quality control, he argues.

Once Light Years IP concludes through scoping and feasibility studies that it can work with a given producer to develop its brand and IP, it can then assist with developing a strategy by working to secure grants from different organisations and government bodies, Garad notes. Once the project reaches the implementation stage Light Years IP then works toward finding social investors - typically large foundations - that are willing to invest capital and become temporary partners backing the product.

And as soon as a foundation's capital is returned, it ceases to be a shareholder. If the product fails, the foundation relinquishes any claim to its invested funds. "It is a great way for these foundations to contribute to international trade," Garad explains. "And you give the producers and stakeholders in the developing economy the power to manage their brands and the global control of distribution of their products."

Participants from APEC welcomed the conference. Nguyen Thi Anh Hong, Director of the Viet Nam Tea Association's Center for Tea Market Research and Development, said she had no idea how important IP tools could be prior to attending the conference and plans to post the information she has learned on her organisation's website to help Viet Nam's 600 tea producers and their 100 brands.

She also wants to organise training sessions with IP experts. "We need to build a database that explains what IP means," she says. "We have to help people understand how to apply for certification."