Unless they’ve omitted HindoDisney from my city guide book, I’m pretty sure Kathmandu has hardly any global brands doing business in its hospitality and services industries.
The only two I can think of in fact are KFC and Pizza Hut which boast just four restaurants between them and are owned by the same parent company in any case (see AFP‘s 2009 story “Nepal tucks into first international fast-food chain“).
I’m not sure whether there’s a gap in the market for McDonald’s or Marks and Spencer. During a ten-year civil war that claimed more than 16,000 lives Maoist rebels targeted foreign ventures including Coke, Pepsi and Unilever.
But that ended five years ago. Recently Kathmandu has seen rapid growth in restaurants, shopping malls and supermarkets. KFC, for one, seems to be doing pretty well, having opened a second franchise a few weeks ago. While Kathmandu remains a poor city it has its middle-class like any other and one cannot help but conclude that the big brands are being slow on the uptake rather than shrewd. (Aside: KFC is not dismissed universally as low-culture in Asia the way it is in western Europe. In China, for example, eating in one of its restaurants is an aspirational activity – something that makes you look more middle class).
One interesting corollary of the squeamishness over Nepal is that the multinationals just do not care about protecting their brands here. So familiar high street names which aren’t exactly what they imply have sprung up like Walmart mushrooms all over Kathmandu.
Try ordering a Caramel Frappuccino® Light in here, for example. Go on – I dare you. You’ll get blank looks.
And this place doesn’t sell Apple’s iLife software suite. It doesn’t sell any Apple software. Which is probably just as well, since it only stocks PCs.
In the first case, the shop has stolen the name but not the look. In the second case, the misappropriation involves the entire brand and you would be forgiven for thinking it was some new kind of Apple Store.
Then there are the cases where the branding just looks incongruous, even if it has been sanctioned by the big multinational. In some parts of Kathmandu, literally every fourth or fifth outlet is a shop or cafe decked head-to-toe in the livery of either Coca-Cola or Pepsi. In this example the cafe is displaying its own name too but in many cases all you see is Coca-Cola branding.
In many examples the lettering looks hurried and in some cases is a mix of Roman script and the Devanagari alphabet. We should presume that this is all above board and that these businesses are getting cash from soft drink giants for advertising.
But are the money men checking that the outlets on which they are advertising are fully on board with the brand message?
There’s nothing ‘unique’ about this cafe, except perhaps that its menu offers no soft, fizzy drinks at all, let alone Pepsi.
The fridges of this establishment, on the other hand, are stocked with all the cola you could drink. But it’s Coke, not Pepsi.
Starbucks is more vigilant in China, where it protects its brand with a diligence that verges on… well, good brand management, I guess.
In 2006 the company won a legal action forcing Shanghai Xingbake Coffee Co Ltd to pay damages and to change its name (Starbucks translates as “Xingbake” in Mandarin) – even though Xingbake registered its name before Starbucks had entered the Shanghai market.
Similarly, Apple has been the plaintiff in trademark and copyright infringement legal action all over the world (although the most notable cases have been against big rivals rather than small-time firms). These lawsuits include claims against Woolworth Ltd in Australia, the Victoria School of Business and Technology in British Columbia, Canada, and even New York City (that’s right – the Big APPLE).
The first question companies usually ask before launching legal action is: “Will this be worth it?” There is a long list of potential pitfalls to weigh against the advantages of protecting your brand.
One, obviously, is the cost. Trademark infringement lawsuits often end up setting the plaintiff back to the tune of between $250,000 and $750,000 if they have to prosecute all the way through to trial.
Another is that the legal position can be complicated and nebulous. How easy is it going to be to sue for trademark infringement in a market where you have no presence? How likely is it that the judiciary in a tinpot banana republic will uphold international copyright law? [Before I get complaints, Nepal is not a tinpot banana republic, by the way - although they do grow excellent bananas here. Banana Republic, however, does strike me as great name for a chain of milkshake bars.]
Thirdly, is there potential for doing more harm to your brand than good? A big firm might look like it is fighting the good fight if it stops a rival taking advantage of 50 years’ worth of hard-earned goodwill. But closing down a cafe with a similar name in a third world city risks making you look petty.
So how come Kathmandu gets away with it? Could it be one or all of the above reasons?
Or should we simply conclude that we’re just not on the radar here? If this is the thinking then it offers a rather depressing picture of Nepal’s business outlook: that – in the eyes of the big global brands – it’s not a viable marketplace now and probably never will be.