---
title: "Nine Years of Legal Battle with Guangzhou Pharmaceutical: Who Did JDB Really Lose To?"
description: "The long-running trademark dispute between JDB and Guangzhou Pharmaceutical over the 'Wong Lo Kat' brand has taken a new turn, with the Supreme People's Court ordering a retrial. Despite this, JDB has suffered significant setbacks in the market, facing financial, marketing, and distribution challenges."
author: "林川"
publisher: "New Distribution"
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published: "2019-07-12"
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# Nine Years of Legal Battle with Guangzhou Pharmaceutical: Who Did JDB Really Lose To?

> The long-running trademark dispute between JDB and Guangzhou Pharmaceutical over the 'Wong Lo Kat' brand has taken a new turn, with the Supreme People's Court ordering a retrial. Despite this, JDB has suffered significant setbacks in the market, facing financial, marketing, and distribution challenges.

Click to read the original article for details.

The trademark dispute between JDB and Guangzhou Pharmaceutical Group over the "Wong Lo Kat" brand has new developments.

On July 1, the Supreme People's Court ruled that the evidence accepted by the Guangdong Higher People's Court in the first-instance judgment had major defects in both content and form, and could not be used as the basis for determining the facts of the case. The court ordered the original judgment to be overturned and the case remanded for retrial.

Although a retrial does not necessarily mean the verdict will be changed, regardless, JDB is likely to be weeping with joy at this result!

Because in this long trademark dispute, JDB has long lost its former glory. So, behind the disputed trademark, who did JDB really lose to?

**The "trademark battle" was just the trigger**

The trademark dispute between JDB and Guangzhou Pharmaceutical had its seeds planted long ago.

In 1995, Hong Kong-based JDB Company leased the right to use the "Wong Lo Kat" brand from Guangzhou Pharmaceutical Group for a period of 20 years. Two years later, JDB's investor, Hong Kong Hongdao Group, signed an agreement for the use of the Wong Lo Kat trademark.

In 2000, the two parties signed another contract, extending the trademark license to 2010!

**Under the planning of Hongdao Group, "Wong Lo Kat" became one of the best-selling beverages in China. Whether in barbecue restaurants, hotpot restaurants, or shopping malls and supermarkets, it could be seen everywhere.**

However, disputes followed.

Although in 2003, Hongdao Group and Guangzhou Pharmaceutical signed a supplementary agreement extending the trademark lease to 2020, the legality of this supplementary agreement was questioned because the then deputy chairman of Guangzhou Pharmaceutical Group, who was responsible for the contract, was sentenced to life imprisonment for accepting bribes.

In the second year after the trademark usage rights expired, Guangzhou Pharmaceutical Group filed for arbitration with the China International Economic and Trade Arbitration Commission. In May of the same year, the Wong Lo Kat trademark case was filed.

Thus, a legal dispute spanning nine years officially began.

**From a "trademark war" to a "packaging war," and finally to an "advertising war." As for the results, JDB can be said to have hardly won any.** Even JDB's official Weibo account self-deprecatingly said:

"Sorry, it's our incompetence. We can sell herbal tea, but we can't fight lawsuits."

But in my view, this is definitely not a reason for JDB's total defeat!

**The Price Trap: "Price War" Led to a Cash Flow Crisis for JDB**

JDB President Li Chunlin once said:

"Before 2012, JDB had never borrowed from banks or dealt with financial institutions. We never used their money to do business."

That is to say, **the former JDB simply did not lack money!**

Perhaps life was too comfortable, or perhaps the rapid development masked the contradictions. But as the company encountered setbacks, various troubles followed.

The first to bear the brunt was the price war.

Before 2011, JDB's wholesale price could be maintained at 72 yuan per case, with quarterly rebates of 0.8 to 1.2 yuan during the off-season. However, starting in 2011, Wong Lo Kat initiated a "price war."

To protect its market share, JDB chose to follow suit.

In the end, **the wholesale price per case dropped from the initial 70-plus yuan to just over 40 yuan!**

On the other hand, due to various lawsuits with Wong Lo Kat, the compensation amounts were substantial. As a result, JDB's cash flow faced serious problems.

In 2015, JDB stopped growing. By 2016 and 2017, it experienced severe regression.

**Marketing Trap: Over-Reliance on TV Advertising and Variety Shows**

JDB has always been generous in its advertising spending.

In 2012, JDB spent over 60 million yuan to sponsor "The Voice of China." Even in the second and third seasons, when the amount rose to 200 million and 250 million yuan, JDB continued to be enthusiastic.

Objectively speaking, relying on the show's popularity and unprecedented audience, this expenditure was not expensive for JDB.

But, **as the saying goes, "Success by advertising, failure by advertising"!**

Shi Yuzhu said in his "My Marketing Insights":

"I never believe that advertising costs will bring down a company. If that happens, then there must be problems elsewhere."

On one hand, JDB lost more than 20 lawsuits, with compensation totaling nearly 3 billion yuan; on the other hand, the compound growth rate of the herbal tea industry also began to slow down.

In 2017, JDB's net loss was 580 million yuan. But even so, JDB continued to increase its advertising investment.

**At the beginning of 2019, JDB's advertisements once again appeared in the prime time slot before "News Broadcast," and also aired around high-rated news programs such as "News 30 Minutes," "Legal Report," and "Evening News."**

That is to say, JDB did not hesitate to go into debt to place advertisements!

As fewer and fewer viewers watch TV, JDB's traditional "TV advertising + variety show" marketing approach has become increasingly ineffective.

**Channel Trap: Distributors Can't Receive Goods, and Consumers Can't Buy Products**

In terms of product taste alone, there is almost no difference between Wong Lo Kat and JDB. Therefore, besides packaging and advertising, channels have become an important competitive factor.

In 2012, Wong Lo Kat followed JDB's channels and launched large-scale distribution nationwide.

However, although JDB's channels were breached by Wong Lo Kat, for distributors, it had not yet reached the point of "having to choose between JDB and Wong Lo Kat."

The real crisis occurred in 2018.

Starting from the second quarter of 2018, **CPMC stopped supplying packaging cans to JDB, which immediately led to serious production capacity problems, and the market experienced widespread stockouts.**

Due to the stockouts, factories had to stop production, and many distributors could not get goods; without products, distributors were not only unwilling to pay in advance but also demanded repayment of debts on a large scale, further exacerbating JDB's cash flow pressure.

**Helplessly, many shopping malls, supermarkets, and restaurants chose to remove the gold-can JDB from their shelves!**

Take JDB's JD.com self-operated flagship store as an example.

Even nearly a year after the "CPMC supply suspension" incident, the store's new gold cans and red cans still showed out of stock.

**Marketing Reflection: Who Should Bear the Blame for JDB's Failure?**

It should be noted that cash flow issues are always just a surface problem. Because once a company has problems, they often manifest as financial issues.

And once funds are tight, various problems will follow!

**Like Coca-Cola and Pepsi, the core competitiveness of beverage companies is not the product itself, but the brand, followed by channels.**

From this perspective, JDB's emphasis on advertising is not unjustifiable. But the problem is that JDB's marketing methods are too singular!

In contrast, Wong Lo Kat, leveraging the attention of new media, frequently engages in brand crossovers and creates trending topics, invisibly increasing brand exposure while also gaining more public favor.

Lower cost, but better results.

Any brand crisis is caused internally, and the accumulation of external factors exacerbates the severity of the crisis. **Before 2010, JDB lacked strategic thinking about the herbal tea industry; after 2010, it was busy dealing with various imminent crises and had no time to consider other matters.**

Of course, it must also be acknowledged that JDB encountered a competitor that had awakened!

Source: Brand Head (ID: ceozhiku)


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