INSIGHTS

International Expansion: Why Branding And Intellectual Property Matter More Than Ever

17 May 2023

International Expansion: Why Branding And Intellectual Property Matter More Than Ever

SINGAPORE enterprises are eager to venture abroad once again now that travel has normalised, with a recent survey by DBS showing that over 60 per cent of small and medium- size enterprises (SME) are prioritising overseas expansion for this year.

As enterprises gear up to explore new markets, they are heading into a more challenging business environment with supply chain disruptions and rising operational costs among the more common fears.

Amid the various macroeconomic concerns, it is all too easy to overlook elements such as branding and intellectual property (IP) when businesses are spreading their wings abroad. As businesses make audacious plans to access global markets, expanding a brand extra-territorially without an IP strategy in place means increased exposure to the risks of counterfeiting and trademark infringements.

Last year, British luxury footwear brand Manolo Blahnik won its 22-year-long trademark dispute in China. Vogue Business reported that it was a landmark moment for IP rights in one of luxury’s biggest markets and should be seen as encouragement for brands to act and protect their IP rights.

Regardless of whether you are a small or large business, IP protection matters more than ever today, especially when first-mover advantage is important. In most parts of the world, whoever files for IP protection first would get stronger rights. Trademark squatting (i.e. where third parties register similar or identical trade marks ahead of the legitimate brand owner) can be an issue in some of the bigger markets. For this reason, meticulous due diligence and speed are often required to secure the necessary IP protection ahead of expanding into new markets.

Brands and IP as strategic assets

Audrey Yap, president of the Licensing Executives Society International, Singapore, recently said that while SMEs here are creative and innovative, many tend to overlook building a portfolio of IP rights to protect the very ideas that help them generate revenue and wealth.

There is much truth in those words. As SMEs expand out of Singapore and enterprises boldly venture abroad, IP rights need to be registered for protection in all the key markets of expansion–be they the country where manufacturing operations are based, or where consumers are located.

Given the possibility of similar or competing products or services that may not have arisen or surfaced in one’s home market, deploying an efficacious IP strategy must be part of an enterprise’s due diligence before venturing abroad.

An IP strategy can also help enterprises better manage supply chain disruptions and competitive capital-raising environments.

Nearshoring: Disruptions to supply chains over the past two years have motivated many brands around the world to strategically move from a “just in time” to a  “just in case” production strategy which may involve reshoring or nearshoring – moving business operations back to the company’s original country or to countries closer to home and with similar time zones.

In considering both strategies, there is a need to look at the strength of the IP regime and relevant IP protection in the target country or countries. Having a robust IP strategy that factors in IP management in both domestic and key neighbouring markets can give businesses greater flexibility in moving their operations and facilitate a more agile business growth strategy. It can also provide a foundation for a licensing paradigm that takes advantage of nearshoring production or intermediate assembly facilities.

Capital raising: The fundraising environment continues to be challenging, and for budding enterprises that need investments to finance their cashflows and operations to expand overseas, IP and intangible assets can be a differentiating factor to offer additional ballast for raising capital.

Angel investors and private equity funds tend to place great value on the number of trademarks, patents and intangible assets in an enterprise’s portfolio, as it provides them with greater certainty of a firm’s product value proposition in the global market and its prospects for expansion. In addition, it also provides enterprises with a yardstick to test uncharted waters and unlock potential revenue streams abroad through local partnerships, licensing and franchising agreements.

How IP has helped Singapore brands to expand globally

This week, Singapore hosts the International Trademark Association’s 2023 annual meeting, with a Singapore Pavilion exhibit and digital brand gallery (ipos.gov.sg/inta2023) by the Intellectual Property Office Singapore (Ipos), the Economic Development Board, Enterprise Singapore and the Singapore Tourism Board.

Hosting the meeting here is not only symbolic of Singapore’s status as a global brands, business and IP hub, but it also serves as a timely reminder that as our local enterprises explore new markets, IP management is a valuable tool that can elevate their businesses onto the global stage.

In recent years, home-grown brands such as Irvins and Razer have optimised their intangible assets to protect their brands and products to expand successfully overseas.

Irvins’ #DangerouslyAddictive salted egg flavour formula is a protected trade secret, and the distinctive IRVINS’ sign is a registered trademark in Singapore. Its IP protection strategy enabled Irvins to confidently expand to 15 markets of significance around the world, including the United States, Canada, Australia and China, with a formidable distribution network across large retailers such as Hmart and Yamibuy.

Razer has become a strong global technology business armed with an extensive IP portfolio, having filed over 3,000 patents, trademarks and registered designs since 2005. Dual-headquartered in California and Singapore, Razer has 19 offices worldwide, and leverages IP to generate new revenue streams and thrive in uncertain times.

Recent studies by Ipos found that enterprises that owned IP outperformed their peers without IP. Specifically, the studies found that in the past decade, businesses with trademarks have delivered more than a10per cent increase in profits, compared to businesses without registered IP. Additionally, businesses with both trademarks and patents delivered around two times more profits, compared to businesses without IP.

IP essentials for overseas expansion

Here are five strategies for those looking to utilise IP rights strategically to grow their business abroad:

■  Ensure IP management is part of the enterprise’s overseas expansion plans, especially if the business is in the creative or knowledge-intensive industry.

■  Use IP tools such as patent analytics or trademark searches to complement country research. Be aware of competitors’ innovations and branding strategies in this competitive landscape. This will help the management make informed decisions that can save time and money.

■  Work with IP lawyers who have the requisite regional and multi-jurisdictional experience to develop a cost-effective IP protection and management plan. As Singapore is a regional hub for IP services, there are myriad law firms that will be able to meet the needs of every enterprise.

■  Take full advantage of various international agreements and domestic IP schemes to help make the IP protection process more efficient. Ipos has consultants at its IP business clinics that can share more about the IP considerations for overseas expansion. International pacts such as the Madrid Protocol and various Asean work- sharing arrangements can also help facilitate overseas applications seamlessly.

■  Continuously evaluate the IP scene and monitor all developments in the relevant industry. As technology progresses, ideas and inventions will change at a faster pace. Protection and enforcement strategies will also adjust to changing market conditions. Increasingly, the tools for managing IP will grow in sophistication, enabling businesses to keep pace with the changes.

 
This article was written by Dr Stanley Lai for The Business Times Opinion and was published on 17 May 2023.

See the full article here.

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