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Choosing your company name in China

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Choosing your company name in China

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In the words of Shakespeare – what’s in a name? Well when it comes to setting up a business in China, the answer is quite a lot

Your company name reflects everything you stand for when you go to market, and if you think about it, it’s the very first thing potential customers get to know about you. In China, the company name registration process requires that names adhere to certain naming

stipulations. This is not to say it is a complicated process, but it can take time to find a name that is available and suitable to your business needs. Let us look at some of the main considerations:

1. In China, only the Chinese language name has any legal status. An English translation or transliteration of the company name is not required to be registered with the Administration of Industry and Commerce (AIC), but may have equal legal validity as a Chinese company name providing there is enough evidence to associate the English name of a company with its Chinese name, such as a bilingual company chop bearing the two names.


2. Chinese company names follow this rigid structure:

Company Name + [business type] + [City of formation] + [Company Ltd.]

An English equivalent of a typical Chinese company name would be: ABC Management Consulting (Shanghai) Co. Ltd.

The elements in [] square brackets are fixed by the local government. This means the only thing we need to determine now is the Company Name. Since as you can see, company names can get rather long, it is usually best to limit the Company Name part to 3 or 4 Chinese characters at most.


3. The company name must be different than any other company registered in your same kind of business. It is often surprising how many good names are already taken. For this reason, the local authorities require that AT LEAST five alternative names are submitted, and they prefer ten alternatives if possible

4. There are two approaches to selecting a Chinese company name. You can pick a descriptive name, or you can pick a name that has no meaning but is intended to reproduce only the sound of the parent company name. When descriptive names are used, investors often make the mistake of choosing names that are too long. As noted above, the name should be limited to three or at most four Chinese characters.

5. You will need a native speaker of Chinese to assist you in choosing the names. Some companies simply work this out with their current staff. Some companies hire a public relation or a branding company to work with them on the issue. Note that your Chinese company name will become your identity, so a careful choice is advised.

6. When you have chosen your names please submit them for a preliminary review. It is important to check and see whether there are any obvious conflicts with existing names.

Avoid

Guidelines restrict the content of names, forbidding the use of content that either misleads consumers or hinders fair competition, or damages or contradicts national unity, policies, social ethics, culture, or religion. Special characters, such as Arabic numerals, foreign symbols or alphabets, are not permitted, and certain words such as ‘China’, ‘Chinese’, ‘National’, ‘State’ or ‘International’ can only be used under limited circumstances. Companies should conduct market research on the naming strategy of industry competitors, thereby understanding the types of names that are typically successful. The name should be consistent with preexisting brand strategy, clearly reflecting the brand’s key attributes and appealing to its target demographic. Careful attention should be paid to the nuances of the Chinese language, with subtleties in character meaning or pronunciation potentially leading to a negative connotation and interpretation.

Going Global with your Name – Good and Bad Examples

There are numerous luxury brands moving into China these days. Some brands are so well known that there is no need to change the company name. Brands such as Gucci, YSL and Chanel have such a strong identity that they are known by their English name. These brands have Chinese names, but their brand is so well known that Chinese consumers rarely use the Chinese name.

But the Chinese government has recently attempted to protect the ‘purity’ of the Chinese language by trying to put a stop to the use of foreign words. Brands that have been in China for a long time are known by their Chinese name because when they entered the Chinese market the use of English was not as common as it is now. Below we will look at some good and bad examples of Chinese names for foreign brands.

Good Examples

Hopefully the examples below will help you to understand the complexities of translating a brand name into Chinese.

Heineken - The Chinese name 喜力 (xǐ lě) does not sound like the original brand and the Chinese meaning, happiness power, bears no semantic meaning either.

Audi - The well-known car brand chose a name that sounds the same in Chinese, 奥迪 (ŕo dí). But the meaning in Chinese, profound enlightenment, has no connection to the original meaning.

Colgate - This famous toothpaste brand went for a sound totally unrelated to the original brand, 高露洁 (gāo lů jié). The meaning on the other hand tells the consumer what the product does: showing cleanliness and happiness.

Coca cola - This must be one of the best Chinese brand translations ever. The Chinese name, 可口可乐 (kě kǒu kě lč), sounds just like the original. The meaning, tasty fun, again represents what the product is (depending on your opinion of coke of course).

Reebok - 锐步 (ruě bů) which mean rapid steps.

Nike - 耐克 (nŕi kč) which means to endure and overcome.

Apple - 苹果 (píng guǒ) which literally means apple!

Bad Examples

There have also been some mistakes, showing the perils there are when translating a brand name.

Best buy- The convenience store brand went down a strange route. The Chinese name 百思买 (bǎi sī mǎi) bears a similarity to the original sound. But the meaning, think 100 times before you buy, is not what you want your customers to do before they buy your products.

Bing - The search engine, rather unfortunately, has a name that sounds like the word for sick or ill in Chinese, 病 (běng). They attempted to use the same sound but change the meaning. The new name, 必应 (bě yěng), meaning certain to respond seemed like a good fit.

 

Company Name Pre-Registration Abolished (in Many Cases) making incorporation processes more streamlined and faster

On March 30, 2018, State Market Regulatory Administration (SMRA) released its very first Notice, to streamline company set-ups and abolish the traditional prior company name pre-registration in mainland China. By September 2018, it is the goal that in more than half of each province / municipality:

  • Generally, no more company name pre-registration is needed.
  • Instead, a new online pre-check of the desired company name must be carried out.
  • And, a new post-registration supervision attempts to ensure corporate compliance.
  • Initial experiences already exist e.g. in Shenzhen, Tianjin and Shanghai.

Shorter company set-up process

Investors applying for setting up a new company may then generally file for the company name jointly with the set-up application, abolishing one set-up step. Exceptions still apply if

  • a prior license is required for the company registration (e.g. food production license, medical device production license, work safety license), or
  • the company name pre-registration occurs in a different jurisdiction than the company set-up registration (e.g. name pre-registration on State level for company names including the word “China”).

Online check and applicant guarantee

The registration authorities must establish an online declaration system enabling the check of the availability of intended company names. This tries to increase the applicant’s flexibility in selecting company names. For instance, if an existing registered name is similar, the applicant may still be allowed to use the similar name but will be reminded of a potential infringement risk. The applicant will need to guarantee in writing to undertake related legal consequences.

Post-registration supervision, public shaming

But reduced governmental influence in selecting the company name initially, relates to a strengthened governmental supervision after the name has been registered. This can, for example, occur through an administrative order or court decision to correct or cease using an incompliant company name. Incompliances shall further be announced publicly in the National Enterprise Credit Information Publicity System.

Implementation in Shenzhen, Tianjin and Shanghai

Various locations have already introduced the process:

· Shenzhen and Tianjin started a similar pilot reform respectively in 2015 and 2017,

· Shanghai launched the reform in November 2016 in Pudong and in the China (Shanghai) Free Trade Pilot Zone; Shanghai also has started a “one-stop” online platform for company set-up registration covering name pre-registration, issuance of business licenses, tax registration, approval of stamp carving, reservation for bank account opening, etc. (“一窗通”) since March 31, 2018 throughout the entire municipality.

Outlook

We expect company establishment registrations to gradually become quicker and simpler. With fewer steps and formalities business might be able to be started in weeks rather than months. But incompliances, once discovered, may have both economic and reputational consequences. Investors should conduct even more careful prior research and intellectual property related homework before deciding on a certain company name, to reduce the risk of active and passive infringements and their related legal consequences. This also relates totrademark searches and registrations.

 

DISCLAIMER:All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.

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