Fakes still have their niche in China
By Ann Mah
International Herald Tribune
Published: May 31, 2006
BEIJING: Walk through the aisles of Silk Alley market and you’ll hear illicit whispers of “Prada? Prada? LV?” Stalls display generic leather bags, but a hint of interest will reveal a cache of brand name fakes, with vendors quickly unzipping suitcases stuffed with imitation Prada purses and opening cupboards that overflow with faux Gucci and Chanel.
With luxury retailers dotting the capital and fashion magazines trumpeting designer goods, China’s desire for brand name style remains strong, though the reality is out of reach for most consumers. Despite recent legal crackdowns against counterfeit goods - and heightened discretion among knockoff vendors - an unquenchable thirst for fakes has kept the market healthy.
“I think knockoffs will always exist,”said J.C. Ning, publisher of Madame Figaro, one of China’s leading fashion magazines. “It’s a special retail area that won’t disappear.”
In fact, some say it’s actually growing. Nicole Chen, the owner of NC Style, a local boutique that sells designer clothing, believes that the counterfeit market is ascendant. “Lots of people in China are starting to know good quality and appreciate beautiful expensive things,” she said. “They can’t afford the real thing, but still want the prestige of a name brand - so they buy fakes.”
Illegal shops, which sell high-quality counterfeit goods, called “A” level, are becoming more popular. “The rumor is that they steal the stuff from the real factory,” said Chen. “A-level shops are only for special customers - they’re really hidden and secret.” At these stores, knockoff bags retail for about1,000 yuan, Chen estimated, or the equivalent of $125. B- or C-level fakes, which are more widespread, “have a similar look but are made of low-quality materials,” said Chen. “They’re mostly sold at Silk Alley or other markets.” These bags are also less expensive, selling for about 400 yuan.
But luxury retailers are fighting back. In a joint complaint, Chanel, LVMH Moët Hennessy Louis Vuitton, Prada Holding, Burberry Group and Pinault- Printemps-Redoute’s Gucci successfully sued a Silk Alley landlord for copyright infringement. A Beijing court ruled that the landlord must pay 100,000 yuan in damages and assume liability for knockoff products sold on his property, according to local press reports.
“The case is currently on appeal,”said Joe Simone, a partner with Baker & McKenzie in China, who represented the group, which includes members of the Luxury Industry Working Group of the Quality Brands Protection Committee. “We expect a positive decision in the appeal, after which the brand owners will be targeting other landlords in Beijing, as well as other cities.”
The five luxury brands who initiated the lawsuit declined to comment for this article.
There is doubt, however, that legal crackdowns will boost sales for luxury retailers. “People who buy knockoffs are not in the market for the real stuff,” said Ning, the magazine publisher. “If the product is no longer available at the price they can afford, then consumers will turn to something else - maybe they’ll eat a Häagen-Dazs ice cream, maybe they’ll see a movie.”
Chen, the boutique owner, agreed. “Recent crackdowns are not affecting luxury brands positively or negatively,” she said. “My customers don’t like fake things. They want to spend their money on the good quality stuff.”
Rather, luxury retailers hope their legal efforts will help protect their stylish status. “Brand name products are selling the status that their label represents. Unless they start taking care of themselves, consumers will feel the brand doesn’t care enough to preserve its image,” said Ning. “Most major international brands are still building a name in China.”
During a recent visit to Silk Alley, one of the capital’s largest knockoff markets, business was bustling, despite prominent notices that prohibited the sale of counterfeit goods of 11 brand names, among them Prada, Fendi, Louis Vuitton and Chanel. At vendor’s stalls, customers flipped through photo albums of Louis Vuitton bags, which were stored in another location. “We have to hide the bags inside,” said one vendor, who asked to remain anonymous for fear of attracting police attention.
In the end, a growing selection of mid-priced brands may move consumers away from knockoffs. “I hope there will be a trend toward fewer fakes,” said Chen. “Right now, we only have the top fashion brands or the fake stuff, so we can only show people the most expensive brands in the world. There are no good quality mid-priced brands and no good local designers -but they’re going to be here.”
For luxury retailers, the legal struggle against copyright infringement remains an uphill battle. “The case is just the first step of a wider cleanup plan,” said Simone, the attorney. “The government has been cooperative and it is saying the right things. They clearly want to move gradually, and give pirates a chance to change their business models. But if they don’t move quickly enough, the problem could get even more out of hand.”