Ethno-commodity is a very strange thing indeed. Flying in the face of many conventional assumptions about price and value, its very appeal lies in the fact it seems to resist ordinary economic rationality.
Ethnicity, Inc. is indeed a strange little pamphlet. One shall dive into it on other occasions. Let’s pick up where we left off with Fiji. Good place would be to again raise a good question:
If a company’s intangible assets are taken into account during its appraisal, why shouldn’t the same be done when considering local partnerships? Precisely because those intangibles have a lot to do with their local partners.
IP colonist’s deed, you see, is a refined affair, kind of like a white collar crime. It’s clear what happens to you if are caught with a minor possession of drugs, less so if you dabble in derivatives.
Even the First World startup dreamer understands that outsourcing her manufacturing to an Indonesian supplier who rules their industrial zones like Turkish jails is her part of the Faustian bargain with the Dark Side. She can go elsewhere and probably encounter the same situation (if she wants to learn too much, that is) and also know that her former supplier already replaced her orders with someone else’s.
She will spend her life making sure that anyone and anything showered with her affection does not get anywhere close to it. But to change what troubles the conscious would require a kumbaya suspension of reality, changing the world and all that. It’s business, hunny bunny, and this is how it’s done. Her crime is just one of modernity’s side effects; like, say, her son’s depression. Leave the meditation on those items for other people’s grad school papers and silly degrees.
An IP colonist, however, does not have that escape route. Fiji, David Gilmour and the Resnicks, show why.
If Fiji wanted to embark on what China has its sights set on, or Ethiopian fine coffee producers are struggling to put together, it would stumble upon its intangibles already half seized.
Fiji, the brand, has already been taken. It’s owned and managed by a Los Angeles couple. Fiji is, of course, no Sweden, a motherboard and a country-brand with many global ingredient brands. But it doesn’t even have the option to tread on that path. It’s a country in service of one private brand.
IP colonist is nothing if not thorough. What started out as a trademark application for the phrase “From the islands of FIJI,” without a claim to the word Fiji itself, has slowly gotten even better, even sharper:
Fiji Water … has trademarked the word “FIJI” (in capital letters) in numerous countries. (Some rejected the application, but not the United States.)
The company got itself regional marketing-channel managers, Fiji’s foreign service:
“Learning from the lessons of products, we must brand ourselves,” Fiji’s ambassador in Washington told a news site for diplomats in 2006, adding that he was working with the Resnicks to try to increase Fiji Water’s US sales. A Fiji Water bottle sits at the top of the embassy’s home page, and the government has even created a Fiji Water postage-stamp series—the $3 stamp features children clutching the trademark bottles.
The ‘bitter-sweetest’ of ironies is Fiji, the country, going after these targets, while the IP colonist sits on top of the page:
…rival Fijian bottlers daring to use their country’s name for marketing. “It would have cost too much money for us to fight in court,” says Mohammed Altaaf, the owner of Aqua Pacific water, which ended up taking the word “Fiji” out of its name.
Actually, with threats of lawfare, others are muscled into limiting association with Fiji to small print on the back of products, specifically to prohibit the association to act as a shelf-talker.
For instance, read this short little news item. The last sentence is interesting:
In the suit, which was scheduled to go to trial June 24, Island Chill owner Jay Prakash Dayal asked a federal judge to determine that the company is not infringing on Fiji Water’s trademark by advertising its water as being from Fiji and that the company is not engaging in unfair business practices.
But the companies settled, and Island Chill agreed to remove the flower from the bottles label, and only reference the waters source, Fiji, on the back of the label.
The idea behind settlement was to stop war between the companies and let everybody continue to compete fairly and sell water, said Marc Hankin, Island Chills lawyer.
Island Chill told the Fiji Times the change in trademark is only for its US market.
But it’s not just about the nuts and bolts of formal IP ownership. There is other intellectual capital, too. If they get a call from Resnicks, their liaisons or lawyers, Western retail chains, say 7-11, will run from any distribution agreement with a small untested Fiji producer, be it water, soda, chips, or face lotion, if it smells like complication and unnecessary trouble.
Pretty nice partnership, from the company’s perspective, wouldn’t you say?
Fiji got 300 jobs. Which is good. For people working those jobs, phenomenal.
To think this is anything close to appropriate – considering what local partners brought to the table, a motherboard of intangibles – would require local partners to not know their Rubies in the Orchard.
And that’s exactly how IP colonialism works.
There is one source of headache for the company that usually gets talked about when it gets bad press: the supreme irony of Fiji Water bottles in every U.S. supermarket while people around the company’s water plant, and Fiji in general, have no clean, safe water supply. Hence:
[T]he company created the Vatukaloko Trust Fund, a charity targeting several villages surrounding its plant. It won’t say how much it has given to the trust, but court proceedings indicate that it has agreed to donate 0.15% of its Fijian operation’s net revenues; a company official testified that the total was about $100,000 in 2007.
Notice that this not the Sbux brand-equity-compassion machine where this is directly being written into brand architecture. Fiji Water has no plans to scream on a bullhorn how wonderful it is. (Remember, it’s a people-free brand.) This is strictly to keep things orderly around the plant. Just for comparison sake: in 2008, Fiji Water’s marketing budget alone was at $10 million (Brandweek). When it likes something, it goes for it:
It recently dropped $250,000 to become a founding partner of the new Salt Lake City soccer stadium.
But perhaps the height of the you-should-not-know-your-rubies-in-the-orchard moment came late last year. The audacity of such a bluff can only happen when you think the other side is so clueless that you can say anything. Here is how the story came on your favorite channel:
Fiji Water reopened its operations in the South Pacific nation of Fiji on Wednesday – just two days after closing its bottling plant and laying off 400 workers in a row over a major government tax increase.
The U.S.-owned company said after meeting with Fiji’s leaders it has agreed to “comply” with the hefty tax hike imposed on it by Fiji’s military-led regime.
The prime minister, Commodore Frank Bainimarama, said earlier he was ready to call tenders from international groups interested in taking over the artesian water bores that Fiji Water uses to extract one of the world’s most popular bottled water brands.
On Monday the company, owned by California entrepreneurs Lynda and Stewart Resnick, said it was closing its facility in Fiji, canceling orders from suppliers and putting on hold several construction contracts in the country.
After its lawyers met Tuesday with Bainimarama and Fiji’s Attorney General, Aiyaz Sayed Khaiyum, the company said it a short statement that “Fiji Water will reopen its bottling plant, effective Wednesday morning, Dec. 1, at its regular start up time of 8 a.m. Through our discussions, we have also agreed to comply with Fiji’s new water tax law.”
Since the company’s beginning with David Gilmour in 1995, it has enjoyed a tax-free status. From a friendly military junta he got both the 99-years on the land and tax free-status that at the time was justified because, Mr. Gilmour claimed, the whole project was a risky business proposition and Fiji had nothing to lose, only to gain. Once cornered to pay, after almost 15 years of tax-free status, Fiji Water threatened to leave. It let rumors spread that it was considering New Zealand as its new home.
An old-school colonist would have probably done that. Labor is labor. An IP colonist has a bit harder time separating from assets that underwrite her retail value. Continue reading IP Colony: A Short Story