Copycats of the East

http://online.wsj.com/article/SB10001424053111904292504576484080863377102.html

“Made in China: Fake Stores”

We are all familiar with the traditional Chinese copycat companies, who market goods that are extremely cheap, extremely similar to the goods marketed by global brands such as Apple, and often do not last long. But have we heard of the new Chinese copycats: those who set up imitation IKEA furniture stores, imitation Subway outlets and imitation Dairy Queen ice cream outlets?

Sophisticated store owners are now recreating the store experiences of many global brands which have decided to enter China: such as IKEA, Apple and Subway, down to the nitty-gritty details like helpful store maps, coupons, shopping bag logos and employee uniforms. These stores so remarkably resemble the original brand stalls that it is very easy to confuse the original and the copycat. Sometimes the goods they sell aren’t even fake. In Kunming, China, a foreign blogger posted photos of a fake Apple store selling real Apple goods, such as iPads and iPhones, in an almost identical store setting.

I think this has benefits as it helps to raise awareness for the original stores. I have never heard of Dairy Queen before today, but now I think I will go try the ice-cream they sell, if they have an outlet in Singapore. Subway has undoubtedly become more widely recognized in China because of its copycat counterpart. The fake Subway stores even accept Subway discount coupons if customers confuse the two brands. In the case of the fake Apple outlet in Kunming, Apple also benefits from the sales of the iPads and iPhones as those are imported from its factories. For Subway, which is trying to encourage a type of food not traditionally consumed in China, the extra publicity actually helps many Chinese citizens to gain some exposure to Western style food.

However, it also has detriments. Apple is known to exclusively select its staff for its outlets in other parts of the world, but the Kunming outlet is not subject to such restrictions. It could tarnish the reputation Apple has worked so hard to establish and put many potential customers off Apple goods even before they buy the goods. Also, if this trend continues, the Chinese government will be regarded as powerless to stop rampant infringement of copyrights even in their own country, large though it may be. The Chinese Communist Party spends so much money yearly on internal defence to prevent riots and protests even before they are conceived. With a robust economic growth and vast financial resources, being the biggest creditor of the United States of America, it is hard to believe that China is powerless to even cut down on the number of such imitators, when it has proven to be so effective in controlling public sentiment via censorship of “anti-government” material.

Should these fake spinoffs of original brands be allowed to continue? Perhaps a more apt question is: can they be stopped? Every year, the number of ambitious copycat companies increases, and the trend has been showing no sign of slowing down, even during the economic recession when buyers all over the world became more cautious and thrifty. It is unclear what other effects this will have on China’s reputation as a global economic power, global brands and consumer sentiment in China. One thing, however, is clear: If China does not stop this trend, or at least attempt to, its reputation will be irrevocably tarnished.