Fri | Sep 22, 2017

Ivanka Trump | Business vs politics

Published:Sunday | April 23, 2017 | 4:00 AM

On April 6, Ivanka Trump's company won provisional approval from the Chinese government for three new trademarks, giving it monopoly rights to sell Ivanka brand jewellery, bags, and spa services in the world's second-largest economy. That night, the first daughter and her husband, Jared Kushner, sat next to the president of China and his wife for a steak and Dover sole dinner at Mar-a-Lago.

The scenario underscores how difficult it is for the president's daughter, who has tried to distance herself from the brand that bears her name, to separate business from politics in her new position at the White House.

 

FLOURISHING BRAND

 

As she crafts a political career from her West Wing office, her brand is flourishing, despite boycotts and several stores limiting her merchandise. US imports, almost all of them from China, shot up an estimated 166 per cent last year, while sales hit record levels in 2017. The brand, which Ivanka Trump still owns, says distribution is growing.

It has launched new active wear and affordable jewellery lines and is working to expand its global intellectual property footprint. In addition to winning the approvals from China, Ivanka Trump Marks LLC applied for at least nine new trademarks in the Philippines, Puerto Rico, Canada and the United States after the election.

Using the prestige of government service to build a brand is not illegal. But criminal conflict-of-interest law prohibits federal officials, like Ivanka Trump and her husband, from participating in government matters that could impact their own financial interest or that of their spouses. Some argue that the more her business broadens its scope, the more it threatens to encroach on the ability of two trusted advisers to deliver credible counsel to the president on core issues like trade, intellectual property and the value of Chinese currency.

"Put the business on hold and stop trying to get trademarks while you're in government," advises Richard Painter, who served as chief White House ethics lawyer under George W. Bush.

To address ethical concerns, Ivanka Trump has shifted the brand's assets to a family-run trust valued at more than $50 million, and pledged to recuse herself from issues that present conflicts. She is also no longer running her design business and has given day-to-day responsibility to Abigail Klem, president of the brand. Meanwhile, her husband has taken steps to distance himself from his sprawling New York real-estate business, divesting some of his business interests including his stake in a major Fifth Avenue skyscraper.

"Ivanka will not weigh in on business strategy, marketing issues or the commercial terms of agreements," her attorney, Jamie Gorelick, said in a statement. "She has retained authority to direct the trustees to terminate agreements that she determines create a conflict of interest or the appearance of one."

China, however, remains a nagging concern.

The first daughter and her husband have emerged as prominent interlocutors with China, where they have both had significant business ties. Last year, Kushner pursued hundreds of millions of dollars in real estate investments from Anbang Insurance Group, a financial conglomerate with close ties to the Chinese state. After media reports about the deal, talks were called off.

Publicly, Ivanka Trump has taken a gracious, charming approach toward Beijing. During the Mar-a-Lago meetings, her daughter, 5-year-old Arabella, stood in a gilded room and sang a traditional Chinese song, in Mandarin, for China's president, Xi Jinping. The video, which was lavishly praised by Chinese state media, played over 2.2 million times on China's popular news portal qq.com.

The week of the summit, 3.4 tons of Ivanka Trump handbags, wallets and blouses arrived in the US from Hong Kong and Shanghai. US imports of her merchandise grew an estimated 40 per cent in the first quarter of this year, according to Panjiva Inc, which maintains and analyses global shipping records.

Today, Ivanka Trump Marks LLC has 16 registered trademarks in China and 32 pending applications, along with a total of four marks granted preliminary approval since the inauguration, according to China's Trademark Office. Altogether, they cover a wide range of goods and services, including cosmetics, jewellery, leather handbags, luggage, clothes, shoes, retail, spa, and beauty services. There is no sign the recent approvals were particularly swift.

Whatever the future plans, right now sales are growing - helped, some argue, by the glow of Ivanka Trump's political rise.

The overall brand itself said revenues rose 21 per cent last year, with early February seeing some of the "best performance ever," according to a statement by Klem. Because it is privately held, the brand does not have to declare its earnings or where revenues come from. The actual corporate structure of Trump's retail business remains opaque. Kushner's financial disclosure form lists two dozen corporate entities that appear directly related to his wife's brand. Trump herself has yet to file a disclosure.

"You can't separate Ivanka from her role in life and from her business," said Allen Adamson, founder of BrandSimpleConsulting. "Her celebrity status is now not only being fuelled by her wealth and her family connection, but by her huge role in the White House. All that buzz is hard-wired to her products." That, he added, is a competitive advantage other brands just can't match - though it does come with risk.

Things could easily cut the other way for the first daughter. Ashley King, 28 of Calabasas, California, bought Ivanka Trump black flats and a cardigan several years ago. But King, who voted for Hillary Clinton, said she believes Trump's role in the White House represents a conflict of interest.

"This is bothering me more and more," she said. As for the Ivanka Trump items in her closet, she said, "I will be donating them."