Licensing business has market potential

License trading of trademarks like brand names and logos belongs to one facet of the intellectual property (IP) trading. The Angry Bird phenomenon provides an excellent example how IP trading (in the form of licensing) can spur various economic activities to create economic value.

The Angry Bird icon, developed by the Finnish Rovio Entertainment, is venturing out of the virtual realm and has evolved into a kind of global cross-cultural entertainment. The icon is being spun into various kinds of crossover businesses seen in retail stores, restaurants and theme parks.

Promotional Partners Worldwide (PPW), a global licensing agent, obtained the Angry Bird icon licensing right on the mainland. The PPW is rolling out a range of crossover businesses based on this icon this year. Angry Bird-related retail stores are planned to be opened in Beijing, Shanghai, Wuxi and Jinan this year. An Angry Bird-related theme park is also scheduled to be open in Jiangsu region this year too.

The licensing business is also venturing into the food industry. The PPW has already launched Angry Bird mooncakes on the mainland which were very well received by mainland consumers. The licensing agent also opened its licensed “Hello Kitty” brand restaurant in Beijing which also enjoys enormous popularity.

The licensed brands can also be applied to other current technological gadgets such as iPhone and Whatsapp.

The concept underlying the licensing business is that the owner of any one creative icon can sell their brands’ proprietary rights to other licensees so that the assigned licensees can manufacture concrete consumer products or provide invisible services based on the assigned creative icon.

“The licensing business is a very flexible industry as you can utilize the licensed brands to venture into every kind of concrete consumer products and even invisible consumer services, provided that you can partner with suitable licensing agents,” said Jacky Lee, managing director at Tobyhk Workshop which is a local creative company.

In fact, licensing is a cash-cow business as the brand licensors can be endowed with regular cash flows generated by product royalty incomes as well as service royalty incomes coming from the crossover businesses of airlines, credit cards and resort hotels and so forth.

“Licensing is different from franchising in that the latter only means the transfer of one stand-alone business. In licensing, the assigned business brands can crossover into various products and services,” Hong Kong Trade Development Council (HKTDC) Assistant Executive Director Raymond Yip told China Daily.

According to the research conducted by the HKTDC, China is now the world’s fastest growing licensed goods market, which has grown over 250 percent from $1.1 billion in 2005 to $3.9 billion in 2010. The per capita retail sales of licensed products on the mainland rose by over seven–fold from $0.4 in 2001 to $2.8 in 2010. With a market size of $3.9 billion, China was the second largest licensing business market in Asia, accounting for over 20 percent of the Asian market after Japan.

The Chinese licensors, including fashion, sport accessories and animation figures companies are increasing their interest to sell their creative brands to appropriate licensees. Approximately 16 mainland brand companies participated in the Hong Kong International Licensing Show held in January this year. Being the world’s third-largest and Asia’s largest, this exhibition showcased more than 200 exhibitors from 18 countries and regions with over 600 brands and properties, registering a 21 percent increase from a year ago.