The recent controversy surrounding trademark overreach has been reignited by a public apology from a major company.

In the early hours of June 15, 2026, Song Qi, founder of the Hong Kong-listed noodle chain XIAO NOODLES (ASX: 2408), issued a formal apology on official channels. The statement, addressed to a small shop named "Yu Jian Xiaomian," apologized for a recent trademark infringement lawsuit and announced the company would gift the registered trademark for free to the shop owner and terminate its cooperation with the law firm involved.

This belated apology has brought renewed attention to the contentious practices of strategic trademark registration and excessive corporate enforcement. China's trademark ecosystem faces a dual challenge: large corporations allegedly bullying small businesses and merchants using wordplay to potentially mislead consumers.

A particularly concerning aspect is that among the numerous trademark disputes occurring daily, only those that attract media and public scrutiny seem to get resolved. Countless other issues continue unseen beneath the surface of public discourse.

The founder's response was prompted, in part, by consumer backlash, including membership card cancellations. Furthermore, the company's stock price had fallen nearly 50% from its IPO price by June 2026.

On June 15, shares of XIAO NOODLES (ASX: 2408) opened at HK$3.61, reaching a high of HK$3.78 before closing at HK$3.74, with a market cap of approximately HK$2.65 billion. The subsequent price pullback indicated investor caution regarding the founder's handling of the public relations crisis.

While the company may have had legal grounds, it lost the battle in the court of public opinion. In his letter, Song Qi called for a "scientific and sound development of trademark protection work," which can be seen as introspection on industry self-regulation.

The Dispute: "Xiao" Sues "Yu"

The incident began in early June when the listed company, through a third-party law firm, sued a small husband-and-wife noodle shop in Nanyang, Henan, named "Yu Jian Xiaomian" for trademark infringement, demanding compensation of 7,000 to 8,000 yuan. The shop, serving noodles at 8 yuan per bowl, became a symbol of a small business facing a corporate giant. A video of the shop owner's wife tearfully stating she would have to sell a thousand bowls to cover the claim sparked widespread public outrage.

XIAO NOODLES (ASX: 2408) withdrew the lawsuit on June 13 and announced a review of its processes. On June 15, Song Qi personally apologized, acknowledging the company also started from a small 30-square-meter shop and calling the lawsuit a major management failure that contradicted company values. He offered to transfer the "Yu Jian Xiaomian" trademark to the shop owners free of charge to help them operate without worry.

Legal experts noted to media that "Xiao" and "Yu" are different in form and meaning, with "Yu" being an abbreviation for Chongqing and indicating a regional cuisine. In the absence of likelihood of confusion, a large enterprise suing a micro-entity on such grounds raises suspicions of trademark right abuse—a typical backlash against the pattern of chain restaurants filing batch lawsuits against small shops.

Broader Issues: Trademarks Like "Qianhe 0," "Yihao Tu," and "Other Nothing"

If the XIAO NOODLES (ASX: 2408) case exemplifies excessive trademark enforcement, the market also sees common issues with trademark squatting and misleading registrations, often called "strategic trademarks."

A "Qianhe 0" soy sauce recently made headlines for containing cadmium. The brand, known for its "zero-additive" concept launched in 2007, has registered a series of related trademarks like "Qianhe Zero," "Qianhe 0," and "Qianhe 0+." Its common packaging features the small word "Qianhe" above a large numeral "0." The intent behind such registrations is clear. Following media exposure in 2026, the "Qianhe 0" trademark was under re-examination, with regulators finding it could mislead the public about product characteristics.

Similarly, Jian'ai Yogurt, under Pucheng Dairy, gained popularity with its simple ingredient list: "Raw milk, sugar, lactic acid bacteria, other nothing." However, the phrase "other nothing" on its label is also a registered trademark.

Pucheng Dairy applied for the "other nothing" trademark in 2015 for food products. While it holds this trademark in the food category, applications in other classes like beverages and medicine are mostly invalid.

Another example is "Yihao Tu," a registered trademark of Guangdong Yihao Food Co., Ltd., the company behind the well-known "Yihao Tu Pork" brand. The company first applied for "Yihao Tu" in 2007 for products like meat and eggs and applied for "Yihao Tu Zhu" in early 2026, pending review.

Other discoveries include "Shanli Lai De Tu" ("From the Mountains Soil") being a registered trademark for eggs, though this application was rejected. Haitian Soy Sauce has registered trademarks like "Only" and "6 Kinds of Original," and has even registered "1 Kind of Original" through "10 Kinds of Original" across multiple categories.

These practices extend beyond food. Consumers have reported buying "120W" chargers that do not actually deliver 120 watts of power—the name itself is the trademark. Similarly, products labeled "361 Closeout" have no relation to the brand "361°" but are registered under the "361 Closeout" trademark.

Online reactions criticize such "trademark tricks" as deceptive wordplay.

In response to strong consumer and media feedback, the China National Intellectual Property Administration cracked down on 1,127 deceptive trademarks in April 2026. Regulators clarified that registration does not equate to legal use; trademarks that combine with generic names or quality descriptions to mislead consumers can still be revoked and penalized.

Notably, "strategic trademarks" often accompany "excessive enforcement." Many companies holding such trademarks, like XIAO NOODLES (ASX: 2408), have long-term partnerships with third-party law firms, often operating on a contingency fee basis from settlements.

Both types of issues stem from a distortion of the trademark system's principles of distinctiveness and good faith: one side weaponizes public resources or similar signs to pressure competitors or small businesses, while the other privatizes descriptive terms to exploit consumer trust.

The Company: A Capital-Fueled "Noodle Shop First Stock"

At the center of the storm is XIAO NOODLES (ASX: 2408), or Guangzhou Xiaomian Catering Co., Ltd., founded in 2014 in Guangzhou by three South China University of Technology graduates: Song Qi, Su Xuxiang, and Luo Yanling, focusing on Chongqing-style noodles.

On December 5, 2025, after 11 years, the company listed on the Hong Kong Stock Exchange, raising approximately HK$685 million and claiming the title of "first stock of Chinese noodle restaurants." From a humble street stall, it has expanded to over 500 outlets in cities like Beijing, Shanghai, Guangzhou, Shenzhen, and Singapore. Its 2025 revenue reached 1.622 billion yuan with a net profit of 106 million yuan.

Its menu has diversified from signature noodles and small-pot dishes to wontons, rice, skewers, and desserts. Signature items like Red Bowl Pea Noodles and Golden Bowl Sour & Spicy Noodles are popular, with an average price of around 22 yuan.

Before its IPO, the company secured multiple rounds of funding from prominent investors, including Hony Capital's Bifrost Holdings, restaurant chain Jiumaojiu (parent of "Tai Er Sauerkraut Fish"), and Country Garden Ventures. Angel investor Gu Dongsheng reportedly saw a 130x return on investment based on the pre-IPO valuation. Cornerstone investors during the IPO included Hillhouse Capital, Haidilao, and Junyi Capital, subscribing to approximately $22 million worth of shares.

The company holds 487 registered trademarks and 83 copyrights and is listed on Guangdong's Key Trademark Protection Directory.

Reflection: Returning Trademark Protection to Its Original Purpose

The settlement between the listed XIAO NOODLES (ASX: 2408) and the small "Yu Jian Xiaomian" shop adds a note of humanity to the narrative of corporate overreach. Meanwhile, the ongoing scrutiny of cases like "Qianhe 0," "Yihao Tu," and "other nothing" reflects regulatory zero-tolerance for misleading registrations aimed at consumers and a clarification of boundaries. The original purpose of the trademark system is to distinguish the source of goods and prevent confusion—not to serve as a "big stick" for large companies to suppress small businesses or a "fig leaf" for merchants playing word games.

Legally, there is a solid basis for such regulation. Lawyer Jiang Yongsong, a partner at Beijing Zhoutai Law Firm, explained that the Consumer Rights Protection Act prohibits false or misleading advertising. If a product's trademark uses wordplay to mislead consumers about its nature, it may constitute false advertising. The Trademark Act also prohibits marks that are "deceptive and likely to mislead the public about the quality or other characteristics of the goods."

Jiang added that "edge-ball" trademarks, like those incorporating "0" or "tu" (implying "local/organic"), should also be strictly prohibited as they may imply product characteristics and be misleading, leading to invalidation.

On March 27, 2026, the National Health Commission and the State Administration for Market Regulation jointly released the revised "National Food Safety Standard for General Rules for the Labeling of Prepackaged Foods" (GB 7718-2025). The new standard explicitly prohibits prepackaged foods from using terms like "no addition" or "zero addition" to emphasize ingredients. Claims like "none" or "free from" can only be used when a specific ingredient or component is at a "0" level in the final product.

On the day the new standard was released, Qianhe Flavor Industry stated its full support and committed to complying with the new rules as soon as possible within the two-year transition period.

China food industry analyst Zhu Danpeng noted that "zero-additive" soy sauces are typically 30%-50% more expensive than regular products. On social media, consumers frequently question why certain yogurts or snacks are so expensive, asking if it's solely due to claims of being "zero-lactose" or "zero-additive."

Zhu believes the new national standards meet the urgent need to clean up industry malpractices. He stated that the food industry has entered a phase of severe homogenization and internal competition. The "zero-additive" concept is a marketing-created pseudo-concept that serves to differentiate products and increase their perceived value and pricing power, essentially exploiting consumer fear of chemical additives to command a premium.

Lawyer Jiang Yongsong suggested that to truly protect consumers, besides stricter penalties and supervision, public service announcements and warning labels on packaging could clarify that "the compliant use of food additives is harmless," thereby reducing the blind pursuit of "zero-additive" products.

Consequently, it is likely that "strategic" or "edge-ball" trademarks like "Qianhe 0," "Yihao Tu," and "other nothing" will be changed, either voluntarily or by force.

When Song Qi handed the "Yu Jian Xiaomian" trademark back to the husband-and-wife shop in Nanyang, it may have represented a collective recalibration of trademark ethics in China's commercial society.