International Law

Drop in Purchase of Fakes II

By Stan

An interesting comment to yesterday’s post on the drop in purchases of pirated goods. I thought this warranted a separate post:

Very interesting entry! A few things:

-How much is the fall of the mainland market affected by the lowered number of tourists this year? If it’s only SZ and HK, then this isn’t a factor.

-Silk Alley did unbelievable business during the Olympics, can’t remember the stat, but something like an 80% rise in business over last year.

-Your Americans example: I’ve seen articles where people have claimed they are regular J. Crew shoppers but have upped to NM instead of dropping to Wal-Mart, because sales have brought prices at NM into the realm of J. Crew.

-Chinese are becoming more like Japanese, not buying fakes and saving up for 1 big purchase a year

-the fake markets that get all the attention (especially in SZ) are frequented by HKers and foreigners, very few mainlanders buy there, so it probably has little to do with mainland belt tightening.

(from A Modern Lei Feng)

Comments on the comments:

1. Effect of tourist traffic — very good point, particularly since the original article was talking about Shenzhen. Lots of HK and other tourists make up a big chunk of foot traffic. Of those groups, I would say that the economic downturn is not going to stop a lot of folks from going to Shenzhen from HK. For non-HK tourists, I bet the numbers will drop, or perhaps have already dropped.

2. High end/low end and price reductions — to the extent that high-end brands are marked down during a recession, I could see a counter-trend towards the higher end stuff as opposed to fakes among the middle class. However, with the U.S. example, the price difference between J. Crew and Neiman Marcus is probably a lot less than the difference between a real Rolex and a knockoff. So maybe a limited effect here?

3. Taste — if general tastes are moving away from fakes, then this could certainly skew things. I bet those trends vary among products quite a lot (think software vs. handbags). Very difficult to untangle this if we have so many different influences on the market.

Biggest takeaway: foreigners make up a big part of Shenzhen purchases of fake stuff, and if sales drop, that says more about people from HK and elsewhere (tourists) than it does about mainland incomes.

I’ll go along with that. So instead of being bummed out about the PRC economy, I will now proceed to be depressed about everywhere else.

Full post as published by China Hearsay on December 09, 2008 (boomark / email).