China's Diaoyutai State Guesthouse sues Philips over alleged fake advertisements

Chinese State Councilor Yang Jiechi and U.S. Secretary of State John Kerry before a meeting at Diaoyutai State Guesthouse in Beijing.
Chinese State Councilor Yang Jiechi and U.S. Secretary of State John Kerry before a meeting at Diaoyutai State Guesthouse in Beijing.PHOTO: REUTERS

SHANGHAI (REUTERS) - A Chinese central government guesthouse, where Beijing has hosted leaders from former US President Richard Nixon to Russian President Vladimir Putin, has sued electronics maker Koninklijke Philips NV, claiming false advertising, a potential headache for the Dutch firm in one of its key markets.

The Diaoyutai State Guesthouse, linked to China's foreign ministry, said Philips had illegally used its name in Chinese adverts, according to a Beijing court statement posted online on Tuesday.

The venue is seeking 100,000 yuan (S$22,076) in compensation, the statement said.

Though a fine of that scale would be small change for Philips, which made 12 per cent of its 21.4 billion euro (S$32 billion) global revenue from China last year, getting on the wrong side of authorities in the world's second-biggest economy has had a magnified impact on Western businesses from GlaxoSmithKline Plc to meat supplier OSI Group LLC.

"We demand the defendant cease false advertising using the name of Diaoyutai State Guesthouse and offer up an apology," the notice on the Haidian district court website said.

The court filing said Philips' adverts in domestic media and online - still visible on the Internet - claimed the Diaoyutai venue had used its air purifiers "at the service of foreign heads of state" to promote its products on e-commerce platforms and social networks.

A China-based press official at Philips said she wasn't aware of the case and could not comment further.

Built in the late 1950s, the Diaoyutai State Guesthouse has been used for state meetings and ceremonies by China's central government and had hosted over 1,000 foreign heads of state by the start of this year, according to its official website.