Ferrero Rocher dispute calls for diplomacy

Ferrero Rocher, the chocolate advertised as the perfect end to an ambassador’s reception, is at the centre of a diplomatic tussle in China.

Beijing’s supreme court will rule next month on whether Tresor Dore, another chocolate-wrapped hazelnut confection that the Chinese leadership gives out to impress dignitaries, has stolen Ferrero’s packaging and should be removed from supermarket shelves.

The case has dragged on for three years and Peter Mandelson, the European Union trade commissioner, raised it with Bo Xilai, the Chinese trade minister, last month as an example of the copycat culture and legal uncertainty holding western business back in China.

Susan Schwab, the US trade representative who visited China this week, has also criticised backsliding on reform and the rule of law.

Ferrero, a privately held Italian company that also owns the Kinder brand, lost an initial case against China’s Montresor (Zhangjiagang) Food in a local court in northern Tianjan, near the capital. It ruled that Montresor’s version was a better known name than Ferrero Rocher, which says it began importing into China in 1984.

In January, Ferrero won an appeal case but in May the Supreme court stepped in to order a retrial, scheduled for January 8.

Ferrero wants Rmb 700,000 (£46,000) in damages and Montresor products taken off the shelves.

Ferrero’s legal headache has become a totemic intellectual property rights case for foreign investors in China, portraying how difficult it can be to prove total ownership over brand image.

Alessandro Cagli, Ferrero’s European affairs director, said the process had been frustrating. “The road is not smooth,” he said. “There are forces that pull China back toward the old way of doing business.”

But Montresor, based in Jiangsu province near Shanghai, denies being a copycat. It has dispatched representatives to Beijing to prepare for the upcoming court proceeding.

It says it introduced Tresor Dore in 1990 after contracting a local company to design its packaging. Today, its many styles – including a heart-shaped box – bear a striking resemblance to Ferrero’s. Ferrero told the court it started selling in China in 1984 but there is a dispute over that, with Montresor claiming it only has evidence to prove it from 1993.

“At the time, we hadn’t even seen their product,” said Huang Bin, a manager sent to Beijing by Liangfeng Montresor’s parent.

Zhou Mian, Montresor’s lawyer, said the packaging Ferrero claims to own was probably conceived by another designer in the 1970s. “Who invented it, we’re not clear,” he said.

Tresor Dore is widely available in China’s cities, sometimes sold next to Ferrero Rocher.

Ferrero argues Montresor is engaging in unfair competition that confuses Chinese shoppers and denies it sales. It hopes to win before Chinese new year in February, when chocolate sales swell.

But Mr Huang said Ferrero was simply trying to take advantage of the government’s focus on intellectual property rights to crush lower-cost competition. “You have your target consumers, we have ours,” he said. “And our group is bigger.”

At one central Beijing supermarket were several other Ferrero Rocher look-alikes: another Liangfeng product called Golden Dream, Golf by a Beijing enterprise and Qingdao Abalone Flavour Chocolate.

A portly saleslady said: “Ferrero is still the best.”

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