Click the image for details. In the early hours of today, Red Bull China and Hua Bin Group responded to the ongoing Red Bull trademark infringement case, once again putting Red Bull in the spotlight and sparking great interest among industry insiders and outsiders in the survival of Red Bull in the Chinese market. The Chinese people are adept at quarreling and fond of spectating, so it is inevitable that Red Bull has become a topic of casual conversation. Compared to previous complex corporate disputes, this lawsuit is relatively clear and simple. The media and professionals will continue to interpret the facts and regulations. Here, I only want to review with you what mistakes both sides made throughout the process. Let's also discuss what cards each side still has to play in this lawsuit. Historical Review First, let's look at TCP Group and the Xu family behind it, the Thai founders of Red Bull. When we review, we find that this family was really too careless. In 1993, the inventor of Red Bull, Xu Shubiao, established the wholly owned Hainan Red Bull. However, in the era when channels were king, as an overseas Chinese who had lived abroad, he did not understand the Chinese market, which destined his development to be extremely difficult. In 1995, the 72-year-old Xu Shubiao met another Thai, Yan Bin. Unlike Xu Shubiao, Yan Bin had gone to Thailand in 1970 and had maintained contact with the Chinese market. Subsequently, in 1998, Red Bull officially began to make efforts in the Chinese market, and to this day, it has become the market leader occupying the majority of China's energy drink market. Mr. Xu passed away many years ago, so we cannot explore how he and Yan Bin, who also came from humble origins, became close friends despite the age difference. However, he probably never read the "Lüshi Chunqiu," which contains a story: When Guan Zhong was dying, Duke Huan of Qi asked whether Yi Ya, Shu Diao, and Kai Fang could be trusted. Guan Zhong said these scoundrels must not be used. Why? Yi Ya killed his own child to serve as Duke Huan's dinner, Shu Diao castrated himself to serve Duke Huan, and Kai Fang did not attend his parents' funerals to serve Duke Huan. Guan Zhong said these people were not human, had no bottom line. Later, Duke Huan indeed trusted them. Why did I say "indeed"? Because as expected, Duke Huan died at their hands. Why do I tell this story? When Yan Bin recounted his early success, he proudly said that he used his hand as an ashtray for his boss; when the boss needed to stub out a cigarette, he would offer his hand, and even if the boss burned his hand, he would not show it. The boss lived upstairs, and at five in the morning, if the boss coughed, Yan Bin could deliver the spittoon within a minute. Doesn't that sound a bit uncomfortable? These behaviors, and the pride he showed when recalling them, make people think he is a ruthless character. In other words, whether forced by circumstances or not, at least this person lacks moral scruples. Of course, in business cooperation, we prefer talented people. However, gentlemen have their uses, and villains need to be guarded against. If anyone says that moral judgment should not be made in business, they should be dragged out and beaten. Finding a partner is a business act, and judging a partner's business ethics is crucial to the future cooperation method and results. Xu Shubiao not only chose Yan Bin but also gave him seemingly unreserved trust, which laid hidden dangers for the future. Over the years, the disputes between the two sides mainly include the following:

  1. The joint venture company has been established for 20 years, and despite obvious high profits, it refused to pay dividends, citing the development stage, and never held a board meeting.
  2. The majority of Red Bull beverage sales in the Chinese market come from production not from the joint venture's factory, but from three factories wholly owned by Yan Bin. In other words, Yan Bin used the joint venture's brand and product resources to expand his wholly owned companies. Although the Thai side had no equity in these three companies, the salaries of their executives were borne by the Thai side.
  3. Since 1998, Yan Bin has registered a large number of Red Bull-related trademarks. Except for Class 32, all other Red Bull-related trademarks have been registered by Yan Bin. Seeing this, we sincerely feel that the Red Bull industry in China has been in a state of neglect, without supervision. Given these abnormal phenomena, it is surprising that the two sides only fell out today. The Xu family was indeed too careless. The Xu Family's Cards and Paths Taking Yan Bin to court will undoubtedly bring huge negative impacts to Red Bull. Regardless of the outcome, Red Bull will suffer significant losses. This is a lose-lose game. Knowing this, and looking at the cards in the Xu family's hand, we can roughly guess the direction of events. First trump card: The agreement favors the Xu family. According to the agreement, Red Bull China's brand authorization ended in October 2016, so any Red Bull produced after that is illegal. The lawsuit result may not come out until 2018, and the considerable amount of Red Bull products produced in the meantime will increase the amount in dispute. This increase does not put much pressure on the Xu family—it's all the same. For Yan Bin, it is very painful, and it is difficult to do or not to do. Second trump card: The legal inheritance of Red Bull's formula. Yan Bin once said that Red Bull's formula is easy to replicate, and we do not doubt that. However, it is meaningless. It's like if you got the real Coca-Cola formula, could you sell it well? Impossible, because the most important thing is not whether your formula is authentic, but whether consumers believe it is authentic. Some may say that JDB and Wanglaoji have each carved out their own path. However, JDB's inheritance of Wanglaoji has natural credibility. As a company that built its brand and products from scratch, without JDB, the Wanglaoji formula has no value. Red Bull is an international brand, and it is undisputed that the Thai company has the right to interpret the formula. A brand created by the Chinese company can never be considered authentic Red Bull. Third trump card: Red Bull's brand value. Red Bull has a high profile and is a fashionable topic, considered an international brand on par with Coca-Cola. The Chinese Red Bull's contribution in this process is actually limited. In contrast, Austrian Red Bull has played an important role. Red Bull has accumulated a lot of brand value in sports. Once Yan Bin is abandoned, the Xu family still holds the brand's internationalization. Based on these three trump cards, the Xu family has three paths. First path: Reconcile with Yan Bin. This is the strategy with the least short-term loss. The mature channels cultivated by Yan Bin are inherited, and Red Bull continues to dominate the Chinese market. The terms of reconciliation depend on the negotiation between the two sides. Since the Xu family has a more favorable position, the result of reconciliation will inevitably be more favorable to the Xu family than the current situation. In the long run, because the seed of distrust has been sown, Yan Bin will inevitably be constrained. Many decisions, even if beneficial to Red Bull, may not be smoothly implemented due to political struggles or simply for the sake of opposition. The entrepreneurial inspirational drama is likely to become a palace intrigue drama, and Red Bull's vitality in China will inevitably deteriorate. Second path: Break with Yan Bin, completely split, and find a new partner. This is more radical than the first strategy, and short-term losses will be significant. Both production capacity and channels will face a considerable period of suspension. If this happens, and Monster forms a strong cooperation with Coca-Cola and launches an offensive, taking advantage of your weakness, then Red Bull will either lose some market share or, at worst, its market leadership will be challenged. Third path: Do it themselves. Compared to 1993, the market now relies more on brands and less on channels. It seems that with a brand, channels are not a worry. However, given Red Bull's neglect of the Chinese market in the past 20 years, it is hard to imagine that they can do well in the Chinese market on their own. Conclusion: The Xu family has three paths, two look like viable paths, and one looks like a dead end. Yan Bin's Cards and Paths Now let's look at Yan Bin and his Hua Bin China. This businessman, who rose from the bottom, made his biggest mistake in underestimating Xu Xinxiong's dissatisfaction with him. If we say Yan Bin is just a partner of Red Bull in China, that underestimates his influence on Red Bull. In Thai Red Bull, Yan Bin holds 49% of the shares. Strictly speaking, Thai Red Bull is not solely owned by the Xu family. Therefore, his influence on Red Bull is not limited to China. Because of this, he was overly optimistic about the Xu family's attitude. Even in 2014, he gave the registered trademarks to the Xu family's TCP Group, which simplified the originally complex situation similar to the JDB-Wanglaoji dispute, establishing the Xu family's ownership of the Red Bull brand. This shrewd businessman, under unknown circumstances, made such a decision that put himself in an absolute dilemma. Let's see what cards Yan Bin holds: First trump card: 49% equity in Thai Red Bull. Even if the Xu family is prepared to completely abandon the Chinese market, they still have to face the problem that his compatriot Yan Bin owns half of Thai Red Bull. The Chinese market is the chariot, but Thai Red Bull is the king. Once the Chinese market breaks with Yan Bin, the Thai side will inevitably cause huge turmoil. This is also the reason why Yan Bin dared to give the trademark to TCP. If the Xu family does not want an avalanche in Thai Red Bull, they will inevitably be cautious. Second trump card: Channels in the Chinese market. The Chinese market was built by Yan Bin, and there is no doubt about that. Without Yan Bin, Red Bull would have no existing channels in the Chinese market, and could only hope to develop new increments. It may not be too difficult, but for a leading enterprise with over half of the market share, completing the reshuffle of channels requires not only methods but also time. If Monster causes trouble during this process, Red Bull will be attacked from both sides. Third trump card: Red Bull's production capacity in China. The vast majority of Red Bull beverage production capacity in China comes from three factories under Yan Bin's Hua Bin China. Once these three factories are gone, Red Bull's production capacity will drop sharply. Moreover, in the joint venture factory that the Xu family can control, Yan Bin also holds nearly half of the shares. Once turmoil occurs, the complete collapse of Red Bull's production in China is not an exaggeration. So how many paths does Yan Bin have? Unfortunately, he has only one path. That is to continue cooperating with the Xu family and continue to do the Red Bull brand. It's simple: for 20 years, even though he used many tricks openly and secretly, one thing Yan Bin said is correct: it was all for the Red Bull market in China. The contradiction with the Xu family is only about interests, but for the Red Bull brand, both sides treat it as their own child. As Xu Xinxiong said, without Red Bull, Yan Bin's assets would become negative. So, what remains is bargaining. On the surface, the Xu family is clearly at an advantage because they have at least two viable paths, while Yan Bin has only one. But Yan Bin's biggest bargaining chip is precisely the fact that without Red Bull, his assets would become negative. In such a situation, because he has no choice and would lose everything if he leaves Red Bull, during the transition period, he must make people believe that he has enough determination to spit in the soup. And if Yan Bin goes down the path of illegal production and shuts down all Red Bull production capacity, it would be a disaster for the Xu family—if you make me lose everything, then we'll go down together. Moreover, Yan Bin also has 49% of Thai Red Bull shares, which is a nuclear weapon and a factor that the Xu family fears. As for the outcome of this lawsuit, I personally think reconciliation is more likely. As for the palace intrigue drama after reconciliation, it is not something we can speculate now. (Special note: The information in this article comes from online articles, without strict verification, and the authenticity is not judged.) Chen Yafeng: Chairman of Beijing Meisi Meiyu Management Consulting Co., Ltd. Dean of Beijing Furuidun Business School Senior Researcher at China Wine Industry Brand Research Institute Supply chain management expert, new marketing expert, distributor problem expert, internet innovation practitioner, chief consultant and columnist for several well-known marketing magazines. Twenty years of FMCG experience, successfully leading well-known enterprises in business, consulting, education, and other fields. In the past three years, he has focused on new marketing supply chain integration services and innovative business models. He is known as a framework designer and landing commander integrating enterprise management, culture building, brand planning, channel marketing, and customer guidance. This article is reproduced with the author's authorization. Click the image for details. The 3rd (CFIC) China FMCG + Internet Conference will be held in Chongqing in October 2017. At this conference, New Distribution has invited 1,000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to participate. The theme of this conference: New Forces, New Ecology. We will invite well-known domestic B2B industry experts, mentors, and B2B platform founders to discuss the following topics:

********How can the FMCG industry leverage B2B to achieve new growth opportunities

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********Alibaba, EAS, Best Store Plus, GLP, Unilever, Hd, and other well-known enterprise leaders in various fields will give speeches and share pioneering views. October 17-18, 2017 Chongqing Exhibition Center Registration is now open. Long press the QR code below or click "Read Original" to register. Early bird tickets before September 15 enjoy a 30% discount! Add friend and note "Conference Registration" -END-