You just can't fake it any more
By Emily Ford |
May 22, 2012, Tuesday
|
Print Edition
Print Edition
CHINESE consumers are starting to turn their backs on counterfeit luxury products. With rising salaries and a positive outlook about the future, Chinese shoppers are increasingly happy to spend for the genuine article. Emily Ford reports.
In the lanes behind Shanghai's shopping thoroughfare of Nanjing Road E., a parallel retail universe is running a brisk trade. A succession of narrow staircases leads to a dimly lit Aladdin's cave, where rows of fake handbags are neatly arranged.
There are rooms selling Jimmy Choos, others selling Burberry, Gucci, Prada and the ubiquitous Louis Vuitton - a secret shopping mall masquerading as the real thing.
"We don't bring Chinese customers here because so many are working undercover for the police," the store's owner explains.
At another store selling counterfeit goods in a sidestreet near the Bund, the owner says he avoids French tourists for the same reason - because many of the brands are from France, they tend to employ French as undercover agents.
He has just reopened after three months after the latest crackdown and is not sure if he will still be there next month. "Before, the crackdowns were only three or four times a year but they are becoming more frequent," he says. The punishments are also getting harsher. "Before they would fine us, now they throw us in prison for up to a year."
Chinese authorities seized counterfeit goods valued at 5.3 billion yuan (US$847 million) last year, according to China's General Administration of Quality Supervision, Inspection and Quarantine.
Fake luxury goods still exist in Shanghai, but pushed to the fringes of the city or to the online stores of Taobao, they are getting harder to find. Gone are the days when sellers distributed their wares with the audacity of one flogging dumplings on the street.
The closure of Shanghai's famous Xiangyang Road market in 2005 ripped the beating heart out of the city's counterfeit world. Since then operations have been relegated to a few choice spots, an underground station in Pudong or the backstreets of Nanjing Road Pedestrian Mall.
While foreigners still flock to buy fakes, there are signs of changing attitudes among Chinese consumers who prefer the genuine article. A survey last year by China Market Research, a leading research firm in Shanghai, found that 95 percent of Chinese women between 28 and 35 said they would be embarrassed to carry counterfeit handbags.
"It's a question of money. Consumers don't really like counterfeit products right now - it's really that they buy it because they don't have money and as soon as they have enough they buy the real thing," says Shaun Rein, author of "The End of Cheap China" and managing director of China Market Research.
"Five years ago they would mix and match a real LV handbag with fake accessories, now they are going for real goods. Slowly we are going to see fakes disappearing. It's always going to sell to foreigners, and counterfeit DVDs or Ralph Lauren polo shirts will keep going because they are easy to replicate. But no one's talking about fake luxury - if it's finely woven leather or PVC you can tell the difference," Rein adds.
Sandy Chen, senior research director at TNS China, a research firm, says there has "definitely" been a decrease in fakes.
"The main factor that stops Chinese consumers from buying genuine luxury brands is affordability," she says. "The massive popularity of brands arises because people associate luxury goods with status, achievement, and aspirational lifestyle. It is more the emotional reward symbolized by a luxury brand that they are paying for."
This kind of emotional payoff is only real when it is a genuine luxury brand. No one would brag to her friends about a fake LV bag. As Chinese consumers earn more, they would be more likely to buy into genuine brands, and they are already starting to do so.
Sunny Huan, an associate at Ogilvy, the advertising agency, says she would spend between 5,000 yuan and 10,000 yuan on a bag and would not buy fakes. "One or two real ones in the classic styles is what matters. I would rather buy a second class or unbranded bag than buy a fake bag," she says.
A few years ago her friends would buy fake bags, but this has changed as their earning power has increased, Huan says. "Our salaries are rising and people feel that their families are getting better and their incomes are increasing so they would like to buy genuine bags.
"If I buy a genuine one I feel more confident. I feel different in myself, otherwise my inner voice is saying 'this is fake, this is only a copy'," she says.
Despite decreasing interest in fakes among the middle-class consumers, there are still plenty of blue-collar workers from poorer cities willing to buy counterfeit items. One young woman says her ayi (domestic helper) carries a fake Louis Vuitton handbag and takes fake handbags home for her family in Anhui Province as gifts.
With a salary of 15 yuan an hour, she is hardly the French fashion house's target customer - yet the brand is on her radar, suggesting Nanjing Road's secret shopping mall will have customers for some time to come.
In the lanes behind Shanghai's shopping thoroughfare of Nanjing Road E., a parallel retail universe is running a brisk trade. A succession of narrow staircases leads to a dimly lit Aladdin's cave, where rows of fake handbags are neatly arranged.
There are rooms selling Jimmy Choos, others selling Burberry, Gucci, Prada and the ubiquitous Louis Vuitton - a secret shopping mall masquerading as the real thing.
"We don't bring Chinese customers here because so many are working undercover for the police," the store's owner explains.
At another store selling counterfeit goods in a sidestreet near the Bund, the owner says he avoids French tourists for the same reason - because many of the brands are from France, they tend to employ French as undercover agents.
He has just reopened after three months after the latest crackdown and is not sure if he will still be there next month. "Before, the crackdowns were only three or four times a year but they are becoming more frequent," he says. The punishments are also getting harsher. "Before they would fine us, now they throw us in prison for up to a year."
Chinese authorities seized counterfeit goods valued at 5.3 billion yuan (US$847 million) last year, according to China's General Administration of Quality Supervision, Inspection and Quarantine.
Fake luxury goods still exist in Shanghai, but pushed to the fringes of the city or to the online stores of Taobao, they are getting harder to find. Gone are the days when sellers distributed their wares with the audacity of one flogging dumplings on the street.
The closure of Shanghai's famous Xiangyang Road market in 2005 ripped the beating heart out of the city's counterfeit world. Since then operations have been relegated to a few choice spots, an underground station in Pudong or the backstreets of Nanjing Road Pedestrian Mall.
While foreigners still flock to buy fakes, there are signs of changing attitudes among Chinese consumers who prefer the genuine article. A survey last year by China Market Research, a leading research firm in Shanghai, found that 95 percent of Chinese women between 28 and 35 said they would be embarrassed to carry counterfeit handbags.
"It's a question of money. Consumers don't really like counterfeit products right now - it's really that they buy it because they don't have money and as soon as they have enough they buy the real thing," says Shaun Rein, author of "The End of Cheap China" and managing director of China Market Research.
"Five years ago they would mix and match a real LV handbag with fake accessories, now they are going for real goods. Slowly we are going to see fakes disappearing. It's always going to sell to foreigners, and counterfeit DVDs or Ralph Lauren polo shirts will keep going because they are easy to replicate. But no one's talking about fake luxury - if it's finely woven leather or PVC you can tell the difference," Rein adds.
Sandy Chen, senior research director at TNS China, a research firm, says there has "definitely" been a decrease in fakes.
"The main factor that stops Chinese consumers from buying genuine luxury brands is affordability," she says. "The massive popularity of brands arises because people associate luxury goods with status, achievement, and aspirational lifestyle. It is more the emotional reward symbolized by a luxury brand that they are paying for."
This kind of emotional payoff is only real when it is a genuine luxury brand. No one would brag to her friends about a fake LV bag. As Chinese consumers earn more, they would be more likely to buy into genuine brands, and they are already starting to do so.
Sunny Huan, an associate at Ogilvy, the advertising agency, says she would spend between 5,000 yuan and 10,000 yuan on a bag and would not buy fakes. "One or two real ones in the classic styles is what matters. I would rather buy a second class or unbranded bag than buy a fake bag," she says.
A few years ago her friends would buy fake bags, but this has changed as their earning power has increased, Huan says. "Our salaries are rising and people feel that their families are getting better and their incomes are increasing so they would like to buy genuine bags.
"If I buy a genuine one I feel more confident. I feel different in myself, otherwise my inner voice is saying 'this is fake, this is only a copy'," she says.
Despite decreasing interest in fakes among the middle-class consumers, there are still plenty of blue-collar workers from poorer cities willing to buy counterfeit items. One young woman says her ayi (domestic helper) carries a fake Louis Vuitton handbag and takes fake handbags home for her family in Anhui Province as gifts.
With a salary of 15 yuan an hour, she is hardly the French fashion house's target customer - yet the brand is on her radar, suggesting Nanjing Road's secret shopping mall will have customers for some time to come.
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