The last time I was in Beijing, in 1994, buying knockoff goods was still felt like a dirty business. Silk Alley was a series of outdoor tents, and buying pirated CDs involved following merchants into back alleys or peering at goods in concealed drawers. Today, selling knockoffs is legitimate business, sold in plain view with a legitimacy that's almost brazen. On my return visit to Silk Alley, I barely recognized it. What once was a ramshackle tract of ragged tents is now a five or six story department store. The tents remain, but they're housed in an air conditioned building with escalators and a food court. Policeman roam the halls there, but only to provide security, not to arrest any sellers.
The range of knockoff goods there was amazing. Designer purses and wallets, from Louis Vuitton to Coach to Gucci to Prada. Mont Blanc pens. Oakley and Armani sunglasses. Sneakers from Nike to Adidas to everything in between (Mike and I ran across one unfortunately named brand of shoes - Dike; I don't think they were Nike knockoffs). Titleist and Callaway drivers and irons. Designer clothes from Ralph Lauren slacks to Zegna shirts to North Face jackets. Fake Rolexes, of course. I was shocked that some booths even sold knockoff iPods and Sony PSPs, with packaging that resembled the real thing.
It used to be that knockoff goods in China didn't dare to claim authenticity. They were like cover bands, announcing their imitation as a form of flattery. Instead of Polo, a knockoff's brand would be named Bolo, the horse rider in the stitched logo holding an unopened umbrella instead of a polo stick. Instead of Prada, you could purchase a Pradu. That's no longer the case. These knockoffs not only resemble the real thing, they use the actual brand names. Christina explained to me that her Balenciaga knockoff handbag had several features commonly used to identify the real McCoy, but I had never heard of Balenciaga, nor could I identify one if a woman smacked me in the face with one.
The quality of the knockoffs varied. The few athletic shoes I tried on felt like cardboard on my feet, despite their cosmetic resemblance to the real thing. The Oakley sunglasses knockoffs didn't use the same high quality frame material. The clothing quality was decent. The purses must have passed my sister and her friends' quality inspection, though, because they snapped up several. At $5 to $15 for a designer leather purse, I suppose one need not set the quality bar too high. Most everything seemed to sell for about a tenth to a quarter of what the real thing would cost, and sometimes less.
I'm not much of a shopper when I travel, so I was at best an amused observer. One good that did catch my interest, though, was one that didn't exist during my last visit to China in 1994: DVDs.
A friend of mine who moved to China told me that the first time he tried to purchase some DVDs a year or two ago, he was told to go to a particular street and wait for someone to solicit him. He went to that street and stood around for a long time, walking around, trying to look like an interested customer. He felt like a criminal, sulking about, but eventually someone approached him and led him to the backroom of a storefront to peruse the goods. Quite a few of the DVDs he purchased that day ended up being duds.
Nowadays, pirated DVDs, like other knockoffs in China, are sold in actual stores, with return policies, cash registers, and receipts. The first time I strolled into one and encountered shelf after shelf of product was a real eye-opener. The store clerk offered to play any DVDs I was interested in on a DVD and TV in the store, before I walked out with it. It's possible to find fairly high quality bootlegs of current movies. If it's shot in a movie theater, it's an empty one, without audience noise and the silhouette of someone walking to the bathroom crossing the screen. The DVD will come with an actual menu, though it may consist of nothing but a handful of chapter stops and a trailer ripped off of the Internet.
It's the DVDs of movies already out on DVD somewhere in the world that are the real eye-openers, though. These pirated copies are actual pressed copies of the real McCoy, so you get everything: special features, menus, subtitles and alternate audio tracks, anamorphic widescreen, the works. I saw dozens of Criterion Collection DVDs, obscure foreign titles, and complete seasons of nearly every television show from the United States in gigantic box set packaging.
From Beijing to Xian to Guangzhou to Shanghai, DVD prices ranged from $0.40 each to $1.25 each. China puts a cap on how many foreign (primarily American) movies can be shown on the big screen in China. This means most people in China, locals and expats alike, consume the bulk of American movies through these pirated DVDs. At those prices, however, I'm not sure many of those people would see the movies in theaters even if they did screen. Perhaps someday the Chinese government will take intellectual property rights seriously, but for now it's a free-for-all. The whole situation reminded me of the scene from The Untouchables, when Malone tells Ness that everyone knows where the bootleggers are located, but no one will do anything about it.
[As a humorous aside, the copy on the pirated DVD packaging is always a bizarre mess of English. It seems almost purposefully absurd, as no digital translation engine could come up with some of the odd copy. The tagline for Mr. and Mrs. Smith?
The degree of this quarter must the fire explode the most crazy and wild most intense emotion.
Yep, that sounds like Brad and Angelina alright. The back of the box read:
Turn over to clap from the rare area ram of old make. The cloth pull virtuous- skin especially and Anne Smith's husband and wife from whom the - ZHU LI4 play are a rightness of husband and wife who make person envy in the outsider eyes, but two peopleEach from effect in a secret organization, and concealed the oneself's body of the" occupation cutthroat" each other. Until assassinate the mission same alike once, both the husband and wife the result of the dark isNobody wins-----"]
Being in China, you are both figuratively and literally closer to the true cost of goods sold (COGS) of so many goods consumed in the U.S. As finished goods move from the factory line to the designer store on Fifth Ave. in NYC, their prices swell. A markup for shipping. Another one for marketing and advertising, including fees paid to the superstar athlete or model who wears it in print and on television. Another markup for general brand prestige, and depending on the product, for intellectual property rights. And of course, a markup to provide the profit margin. An $8 pair of sneakers in Guangzhou turns into a $125 supermodel in a U.S. Niketown. But when goods move from the factory line straight to a stall on the streets of China, those steps are skipped. The $8 pair of Lebron James sneakers starts at $16 at Silk Alley, to be negotiated down from there.
Those Lebron shoes are marketed on massive billboards throughout China, but ironically, the demand fueled by Nike's marketing campaigns drives most people to purchase the pirated rather than legitimate versions of the sneakers, because that's all they can afford. The middle class in China is growing, but for most Chinese, premium goods remain too expensive. The vast pirated goods market is the only way they can own a reasonable facsimile.
The same types of factories that churn out the products we pay hundreds of dollars for in the U.S. can easily be copied and charged with churning out pirated versions. The excess pool of cheap labor in China is massive. Mix all that in with a culture that's grown comfortable with piracy and it's difficult to imagine things changing anytime soon. When someone there asks you if something you own is real or fake, it's not immediately clear that one answer is better than the other. Often a high-quality fake is taken as the smarter buy. It's not going to be an easy gig selling media products or software at any sort of profit in the Chinese market, no matter how large it is, until authorities crack down on piracy.
But perhaps you're on vacation and would prefer to leave the larger issues of piracy aside so that you can snag some gifts for friends and family back home. Here's how to bargain for goods in China once you've located something you want:
- Your expressed enthusiasm for the product should be inverse to the vendor's. The more interested they are in making the sale, the less interested you should appear in buying the product, and vice versa. Your visible interest in the product should never exceed a moderate enthusiasm, never fall below complete and utter indifference.
- Have the vendor quote a price first (I prefer this to starting the negotiations with a lowball bid). When they do, express shock and outrage at the audacity of the seller for even suggesting such an outrageous price. Ask them for the real lowest price they can offer. Then come back with a counteroffer that brackets your target price halfway in between. If you want to pay 20 and are offered 30, counter-propose 10.
- If the seller balks, cite a better offer from another vendor, whether or not such an offer truly exists. The fact is that most items you want will be available from a dozen other sellers, sometimes as close as two tents over if you're in Silk Alley. Almost everything is a commodity, leaving you in a strong negotiating position.
- Cite quality issues and point out that the goods are pirated, not the real thing. Many sellers will insist that the goods are real, but don't let them think for a moment that you're under that misconception.
- To bridge the gap to your final price target, if all your haggling isn't working, just walk away. Most times the seller will chase you down and acquiesce with a lot of good-natured grumbling about how you're killing him.
- If you don't get your target price, don't necessarily walk away in a huff. If you don't live in China and the product is something you want and can't get back home, cough up a few extra bucks. There's more to vacation than squeezing every last drop of blood from a local vendor.
Of course, not everyone is comfortable bargaining for goods, and some consider it callous and greedy to dicker (literally) over nickels and dimes on goods that are already priced far below U.S. prices. Personally, I find negotiating to be such a part of the market culture there that's it's almost a standard communications protocol. A bit of give and take, as long as it's good-natured in spirit, seems to leave both sides thinking they've ended up with more money in their pocket than they should, a happy outcome in a zero-sum game.