Not only is China the source of millions of dollars worth of counterfeit goods, it is also home to numerous fake stores which convincingly imitate some of the world’s biggest brands including Apple, Ikea and Disney.
Far from a being a new phenomenon, fake stores have been popping up across China since 2011. These unauthorized stores have been found to sell both counterfeit and legitimate goods while posing as the official retailers of famous brands - everything from Nike to Starbucks. The extent of the problem was highlighted again last year when a number of knock-off Apple stores took advantage of hundreds of impatient consumers willing to pay double the retail price to get their hands on the latest iPhone 6S model.
The scope of the fake stores problem
In September, reports emerged that China's fake Apple stores were thriving ahead of the new iPhone launch. In the southern city of Shenzhen, despite Apple only having one official vendor in the city and 5 authorized sellers in the area, more than 30 ‘Apple’ stores were found - most of them along the 1 kilometer popular shopping corridor. Many of these unauthorized stores were actually selling genuine Apple products but making huge profits as demand in China outstripped supply for the newest smartphone model.
Reuters reported that staff working at these fake stores were not only buying iPhone models in China to then resell, but also smuggling them from overseas markets such as the US and Hong Kong. The inside of these fake stores bears remarkable resemblance to the real Apple shops including copycat logos, the same dress code as that of actual Apple employees and almost identical shop layouts and fittings. The initial discovery of these fake Apple shops came after an American blogger, living and working in the Yunnan province of China, posted photos and exposed the self-named ‘Apple Stores’ where even some of the staff were convinced that they were working for the US tech company. An investigation followed and Chinese authorities found 22 fake Apple stores - some were more easy to spot than others with obvious misspellings including ‘Apple Stoer’.
Apple is not alone
That same year a, fake IKEA store was discovered, which although set up under the name 11 Furniture, was more or less a 10,000 square meter replica of the genuine IKEA furniture store - complete with an identical colour scheme, mock-up rooms and miniature pencils. Despite 11 Furniture actually selling made-to-order products and not flat-packed furniture as IKEA does, the Swedish manufacturer was nonetheless concerned at the imitation of its brand and image. A spokesman for China IKEA said that as one of the biggest home furnishing companies in the world, "protecting IKEA’s intellectual property rights is crucial."
Chinese authorities are stepping in
The Chinese Government has made some efforts to address the problem of unauthorized stores and it was suggested earlier this year that fake Apple stores were in decline across China. However, imitations of other retailers and American fast food franchises have become increasingly popular in the last few years. There are now copycat stores of Subway which use a similar logo to the original franchise and even accept coupons from the real Subway sandwich store when customers confuse the two. In other cases stores such as Dairy & Queen and Dairy Fairy have been discovered where staff in copycat red and blue aprons serve up desserts similar to those signature dishes of the American ice-cream franchise Dairy Queen. The company has been involved in legal battles against knock-off stores resulting in the closure of two shops in 2011 which were found to be infringing upon the Dairy Queen trademark.
China is far from the only country to face major counterfeit problems but the fake goods trade is thriving there due to weak copyright laws and a demand for popular Western brands such as Apple. China has overtaken the US to become Apple's biggest market and the US tech giant had plans to open more than 20 stores in the country after its saw its revenues double to $13 million in the space of a year by the third quarter of 2015. However the unauthorized resale of Apple products, both genuine or counterfeit, can seriously damage the brand and make it more difficult for the company to manage their long-term devlopment plans. This must no doubt be of concern to the US smartphone manufacturer, particularly given that iPhone sales, once responsible for Apple’s rising profits in China, have this year witnessed a nearly 30% decline in revenue in the country.
While China remains the main source of counterfeit goods, the impact is felt by brands and consumers globally. In addition to fake shopping apps and new methods such as buying and selling counterfeits through Whatsapp, brands must also be aware of fake stores in faraway places which are taking advantage of their brand, logo, uniforms and product to confuse consumers and reap the profits.