Chinese State Guesthouse Sues Philips Over Advertisements for Air Purifiers

BEIJING-The Chinese government guesthouse that has hosted dignitaries from Richard Nixon to Vladimir Putin is suing Dutch electronics group Koninklijke Philips NV over an online advertisement.

The Diaoyutai State Guesthouse said in a statement posted to the website of Beijing's Haidian District Court on Tuesday that Philips used the guesthouse's name without permission in advertisements for air purifiers. The lawsuit alleges Philips used slogans such as "responsible for air purifying at the state guesthouse during APEC in 2014"--a reference to a regional leadership summit--and "used at the state guesthouse to serve leaders of every country" to promote its products on e-commerce websites.

The guesthouse is asking for compensation of 100,000 yuan ($16,101) and an apology from Philips, the statement said. The guesthouse never purchased or used the Philips products and Diaoyutai has sent a letter to Philips' lawyers requiring explanation, the statement said.

A Philips spokesman said the company is investigating the matter and cannot provide further comment. Faxed questions to the guesthouse seeking additional comment went unanswered.

The lawsuit comes on the heels of a rocky time for Philips in China. The Amsterdam-based company has struggled with declining sales in China in recent quarters. In 2014, sales in China declined nearly 11% to 2.4 billion euros ($2.6 billion) from the previous year. Last week, the conglomerate appointed a new chief executive officer for Greater China, Andy Ho, who will take over in November.

In September, China's new advertising law, which allows regulators to strengthen punishment for false advertising, goes into effect. Companies have been scrambling to understand the new law, which some business leaders say is vague. The government has said the law clarifies what constitutes a misleading ad, such as the providing of incorrect information on the performance, uses, size or function of a product.

Alyssa Abkowitz and Lilian Lin

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