In China, A Growing Taste for Chic
But Fakes Also Vex Developing Market
By Peter S. Goodman
Washington Post Foreign Service
Monday, July 12, 2004; Page A01
SHANGHAI -- Beneath the high ceilings of the Plaza 66 shopping center, a temple of consumption in China's most materialistic city, Nicole Jiang steps through the glass doors of Louis Vuitton.
Christian Dior sunglasses tinting her view and an Omega watch glinting from her wrist, the 30-year-old entrepreneur exemplifies the new-money mentality that has made China the world's hottest market for purveyors of expensive chic. Vuitton, which opened its first outlet in China in a Beijing hotel in 1992, now has nine. Armani opened on Shanghai's riverfront promenade, the Bund, in April -- and plans 30 stores by 2008.
"China is the market with the fastest growth in the world," said Giovanni del Vecchio of Prada, which has 10 stores in China and plans 20 more by the end of 2005.
Jiang is doing her part. After a half-hour at Vuitton, she has added to her repertoire a new wallet, a passport case and a canvas handbag -- about $1,500 in all. She estimates that she spends $4,000 to $6,000 per month on luxury items. "These famous brands have been in business for so long," she says. "Their designs are classic, and their quality is very high."
But the scene just a few blocks away reveals the flip side of China's influence on the global fashion trade. At the open-air Xiangyang market, vendors hawk counterfeit Vuitton wallets laid out in plain view for as little as $4. Merchants offer high-quality fake Gucci and Prada handbags, most accompanied with forged certificates of authenticity. Salespeople express willingness to ship their wares to points around the globe.
China's small but growing nouveau riche have become an increasingly significant market for luxury products, giving fashion executives visions of duplicating the staggering growth they enjoyed in Japan in the 1980s and '90s. But at the same time, China's factories and merchants are growing more sophisticated in counterfeiting and exporting many of those same products. Nearly three-fourths of all counterfeit luxury goods seized last year at ports in France and Italy originated in China or Hong Kong, according to customs authorities in Europe.
The same attributes that have enabled China to acquire wealth -- cheap labor and a swift assimilation of new manufacturing practices -- menace the brands trying to capture it. The concept of intellectual property is relatively new and widely disregarded. In addition, corruption remains rampant among China's customs officials, enabling counterfeits to be shipped worldwide.
A shopkeeper in the center of Shanghai offering charcoal-gray suits with Giorgio Armani tags for less than $200 said she routinely ships such goods to the United States and Europe. "We can take the buttons and labels off and you can put them back on at the other end," she said. "That way, you will have no problem with customs. That's what most people do."
Most counterfeits are sold on street corners from New York to Rome to people who know they're not real. But in recent years extremely high-quality fakes have penetrated legitimate distribution channels and landed in reputable U.S. and European shops, selling to customers who think they are buying the genuine article, according to the authorities.
In a series of investigations between 2000 and this spring, Italian customs officials seized more than 200,000 watches -- most of them counterfeit Rolexes -- bound for boutiques in northern Italy, Marco Fanti, chief of the anti-fraud department at the Italian Ministry of Finance, said in a recent interview in Rome. The watches were so well made -- including the internal identifying marks stamped inside real Rolexes -- that even Rolex had trouble distinguishing them as fake, Fanti said.
© 2004 The Washington Post Company