End to endorsing famous brand removes govt hands from market

IN AN INTERVIEW with the China Central Television last week, Zhang Mao, head of the State Administration for Market Regulation, said that the administration has stopped the evaluation and appraisal of so-called famous trademarks and brands. Yanzhao Metropolis Daily comments:

The long-awaited reform marks another step forward to reduce the government's interference with market activities. The government now only operates a blacklist of enterprises with bad credit records.

The shortcomings of the government-organized trademark and brand evaluation are obvious. The government's endorsement of certain brands is risky as it directly bundles the government's credit with that of the companies concerned, which is absolutely unnecessary in a market economy as the market can tell which brands are popular.

The melamine scandal involving almost all "famous brands" of domestic dairy products a decade ago is case in point. It not only affected the whole industry, but also destroyed people's confidence in the government. This scandal still takes its toll as shown by people's suspicions of the government's response whenever some food safety incident occurs.

But the "famous brand" endorsement has evolved into an honorary title and marketing tool for enterprises. It has even become an excuse for enterprises to obtain preferential policies from the government.

Although the revised Trade Mark Law banned "famous brand" advertising in 2013, some companies are still superstitious and continue to believe in the power of the term, which dates back to the planned economy when governments were keen to award the title to State-owned enterprises, which also matched the wishes of some officials, who took it for granted that the power in their hands should be transformed into money in their pockets in a consensual way.

The economic gain from the brand evaluation, which was via both legitimate and gray channels from the enterprises, explains why it took decades for the government to give up the outdated mode that put its creditworthiness at risk.

The government is obliged to improve the business and consumption environment. It should not assume the role of being a player and a referee at the same time in the market economy.