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Cablegate: Vietnam: Chanel Concerned About Export of Fake

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS HANOI 002665

SIPDIS

SENSITIVE

STATE FOR EB/IPC WILSON AND EAP/BCLTV
STATE ALSO PASS USTR BURCKY/ALVAREZ AND BRYAN
STATE ALSO PASS USPTO FOR URBAN
STATE ALSO PASS LIBRARY OF CONGRESS FOR TEPP
USDA FOR FAS/FAA/AO HUETE
USDOC FOR LASHLEY AND 4431/MAC/AP/OPB/VLC/HPPHO
USDOC ALSO FOR ITA/TD/OTEA/JJANICKE AND ITA/TD/SIF/CMUIR

E.O. 12958: N/A
TAGS: KIPR ETRD ECON VM IPROP
SUBJECT: VIETNAM: CHANEL CONCERNED ABOUT EXPORT OF FAKE
COMSMETICS AND FRAGRANCES FROM VIETNAM

1. (U) This cable includes sensitive business information.
Please protect accordingly.

2. (SBU) In a meeting September 22 with Econ/C and Econoff,
three representatives of Chanel voiced concerns that a
Vietnamese company may be producing and exporting
counterfeit cosmetics and fragrances to the United States
(and possibly other markets). Robin Gruber (from Chanel
USA), Bernard Lehmann and Catherine Cruse (both from French
Chanel) explained that Chanel had recently seized
counterfeit fragrance and cosmetics products in the United
States. Their subsequent investigation traced the products
back to what they believe is a factory belonging to the
Saigon Cosmetics Corporation (SCC) located in Can Tho
province.

3. (SBU) Chanel's Gruber told Econoffs there are only three
legitimate points of sale for Chanel products in Vietnam:
the duty free shops in both the Hanoi and HCMC airports and
a duty free shop in downtown HCMC. However, while in HCMC
the day before, they were able to purchase very convincing
fake Chanel lipsticks in HCMC.

4. (SBU) Chanel is disturbed by the sale of fake products
locally for health and safety reasons, as well as because
Chanel eventually plans to market its products more
extensively in Vietnam. However, Chanel is more concerned
that Vietnamese companies may be venturing into exporting
counterfeit goods. Gruber stressed that Chanel is
interested in addressing the issue of exportation before it
becomes a bigger problem in Vietnam. In addition to the
meeting with Econoffs in Hanoi, the Chanel reps met with an
attorney (who specializes in intellectual property rights
cases) at the firm of Baker & McKenzie in HCMC to discuss
their concerns.

5. (SBU) Gruber asked Econoffs for guidance on how Chanel
should proceed and the best way to raise their concerns with
the GVN. Econoffs suggested Chanel proceed with finding
local counsel (either an attorney or an IPR agent) to
assemble the facts of the case and identified the National
Office of Intellectual Property (NOIP) under the Ministry of
Science and Technology (MOST) as the GVN agency in charge of
trademark issues. Econoffs also provided the names of
several additional experts on IPR issues in Vietnam;
encouraged Chanel reps to meet with appropriate officials at
the French Embassy and EU Mission in Hanoi; described USG
technical assistance to the GVN on IPR enforcement; offered
to provide Chanel with more information about the Saigon
Cosmetics Corporation; and offered to provide assistance in
pressing the matter with the GVN.

6. (SBU) Comment: SCC was established 20 years ago and
exports a variety of cosmetics to Asia, Europe and the
United States. SCC was a state-owned enterprise but is now
a holding company. Its shares are over the counter rather
than in the stock market. The General Director of SCC has
been a member of Vietnam's National Assembly since 1998.
SSC products are produced in Ho Chi Minh City alone; SCC has
only a representative office in Can Tho, the alleged source
of the counterfeit goods. If there is a connection to SCC,
it could be through an employee rather than the company as a
whole.

7. (SBU) Comment continued. Lack of effective IPR
protection remains one of the biggest challenges for
Vietnam's trade and investment relations with the United
States. Despite GVN efforts to improve Vietnam's legal
framework for IPR, a couple of high profile police raids,
and significant USG technical assistance, pirated and
counterfeit products abound in markets throughout Vietnam.
The Chanel case is even more worrisome, however, because it
is the first time a company has complained to us about
allegedly counterfeit goods of Vietnamese origin being
exported to the United States rather than sold in the
domestic market. End comment.

MARINE

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