Transfer Pricing Associates

Chinese Counterfeit Stores Discovered Selling Apple, Ikea, and Starbucks Products

post Monday September 12, 2011

Tags: apple; counterfeit



When you can counterfeit an entire store, why faking a single product? After the discovering of the fake Apple store in Kunming, China by an U.S. blogger, many other fake brand stores are now under the spotlight such as fake Ikea and Starbucks stores. The Chinese counterfeiters are now replicating the look, feel and service of successful and famous Western retail concepts, hurting the brand values for companies like Ikea, Apple and Starbuck, Reuter Says.


The fake Apple store, now is shut down, was located on the Southern inland of China. The store, with an Apple store winding staircase, selling genuine apple products including iPod, iPhone and iPad, was an elaborate fake. The more interesting fact is the employees of fake apple store believe that they are working for the real Apple store. The 11 furniture, copies the major design of IKEA, the blue and white scheme, the mock up rooms and it also has a café restaurant which resembles the look of the restaurant in IKEA. The knock off stores indicates a new wave of counterfeiting trend in China. The counterfeits are no longer satisfied by the coping of luxury products or sports products, they are now replicating the entire store experience by copying the entire store. The fake IKEA and Apple are just two of the famous stores that have been copied. Faking Starbucks store had also been discovered in Harbin, located in the Northern China.


The presence of these fake stores is built to meet the growing desire of Chinese customers for the famous world brands. The majority of the brand stores are located on the Eastern coast of China, which provides the opportunity for the knock off stores to meet the needs of people from interior regions of China, such as Kunming. The existence of these knock off stores indicates the demands for the famous products and brand experience. These stores are undermining the brand valued of these companies. Apple or IKEA, has no control over the experience of the customers got from those knock off stores. And the knock off stores utilized the brand names to market itself without actually paying for the brand marketing.


China as the world’s second-largest economy races forward, the number of milldle class is expected to hit 130 million by 2020, a 61% growth compared to 2010. Many world brands have realized the market potential and are planning to further expand their business into the interior areas of China. Nike, Adidas and other world brands have already moved into inland area of China. However, the knock-off products are hurting the market share of the products and the companies. Moreover, it is very hard for the companies to cut off the knock-off products within China. Chinese law prohibits firms from copying the “look and feel” of other companies’ stores, but foreign companies must register their trademarks with China and enforcement isn’t very tight. Many Western countries are already complaining to Chinese government about the loose protection of intellectual property. U.S. and Europe governments have consistently asked Chinese government to strengthen its intellectual property protection efforts and eliminate the production of counterfeiting products such as DVDs and sport shoes. However, it will take a long time to really see the results of the efforts. “China has very low penalties. It’s almost considered a good business deal to get caught, and then move and set up shop again,” said Poole of the U.S.-China Business Council.


Build up brand presence in geographically large countries takes time and is expensive. Thus, many companies use licensing as a means to save up the cost. However, in China, companies don’t have much control over the licensees and as a result, create opportunities for fake products and unauthorized retailers. 

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