Chinese consumers are no longer keen on goods such as fake designer shoes and clothes

While foreign companies and the U.S. government have pressured China to solve the problem of fake goods, consumers such as Liu Wenzhong have made people realize that the country’s demand for genuine goods is becoming more and more intense.

Recently, Liu Wenzhong purchased a pair of snow boots and fleece hoodies at a North Face sports equipment store in Beijing's most popular business district. His purchase of each item costs about 700 yuan, or about $110, which is about five times the price of the imitation sold on the street.

Liu Wenzhong said that the difference between buying real goods and counterfeit goods lies in the feeling after purchase. Liu Wenzhong, 36, operates a fiber optic technology sales company and has a stable income of 15,000 yuan per month. He said he was very proud to wear a genuine brand name.

Although the Shanzhai version of the branded product is still available in most parts of China, it can be seen from Liu Wenzhong's words that the mentality of the Chinese consumers who are keen to purchase goods from illegal channels is changing.

Since Chinese consumers are now more inclined to purchase authentic products, Nike is also willing to invite big-name sports stars like James.

A survey conducted by the China Market Research Group last year found that 95% of Chinese women between the ages of 28 and 35 felt embarrassed that they were holding fake designer bags. People’s demand for fake brand names has also dropped. According to the consulting firm McKinsey & Co., only 15% of consumers were willing to buy counterfeit clothing or leather goods in 2010, which is lower than the 31% in 2008.

This change has helped foreign companies expand in China. Retail brands such as Nike Inc., Columbia Sportswear Co., cosmetics brand Shiseido Co., and North Face's parent company, VF Corp., have opened stores in relatively remote cities in China. Many retailers are attracting shoppers into the stores through activities such as in-store ex-gratia. Some brands have also taken measures such as special packaging to differentiate genuine and fake products.

Aidan O'Meara, Asia Pacific region of the Wealth Group, said that Chinese consumers are more discriminating than Western consumers. They do not want to be caught when they use counterfeit goods.

In the late 1990s and the first years after 2000, the North Face replica was rampant. Now, the brand has about 500 stores in China and continues to expand. Weifu Group plans to add 450 North Face stores in China in the next three years.

However, fakes are still a big problem that China needs to face. According to the data from the General Administration of Quality Supervision, Inspection and Quarantine of China, the total value of fake goods confiscated by the Chinese government last year reached 5.33 billion yuan*** (US$ 847 million). According to US government data, China is still the largest source of counterfeit and pirated products seized in the United States. Of the counterfeit goods valued at $124.7 million last year, about 62% were from China.

In the past few years, Tod's SpA, an Italian high-end shoe manufacturer, has established a network of more than 30 stores in China. However, the company spokesperson said that it still found inferior quality counterfeit shoes in the underground market and the company is currently developing a counterfeiting strategy.

In addition, as golf is becoming more popular in China, the US Golf Manufacturers Anti-Counterfeiting Working Group has been increasing its counterfeiting efforts in China. In the two anti-counterfeiting operations last year, a total of more than 7,000 counterfeit clubs and counterfeit clothing were seized. The organization’s spokesman, Jason Rocker, said that as long as someone is willing to buy counterfeit goods, someone will produce it. The organization's members include golf equipment manufacturers such as Callaway Golf Co.

When U.S. President Barack Obama stated in his State of the Union address last month, the U.S. government will step up efforts to prevent counterfeit goods from entering the United States, in which he specifically mentioned China.

China has been working hard to increase its crackdown. In 2010, China launched a large-scale operation to combat intellectual property infringements, mainly targeting software, auto parts, mobile phones and food in the coastal provinces of Southeast China. Columbia said that the Chinese authorities had seized 2,000 counterfeit goods counterfeiting the company's products at the end of the year, for a total price of about 2.7 million US dollars.

A number of apparel companies stated that the change in consumer attitudes is one reason for their increased investment in China. Nike said last month that the company plans to build a campus in Shanghai to expand its business and increase sales to $4 billion by 2015. Nike achieved revenue of more than 2 billion U.S. dollars in the Greater China region including China, Taiwan, and Hong Kong last year.

Nike spokeswoman Jeanne Huang said that consumers want to buy genuine products and they also want to get a real experience when they shop at a specialty store. The Nike China store hosts racing events and video discussions with world-renowned athletes such as Chris Paul. Paul plays for the Los Angeles Clippers of the NBA. Consumers can also design shoes and clothing for themselves in the store.

Twenty years ago, Columbia began producing clothing in China. This means counterfeit raincoats and down jackets are available in many places. With consumers changing their attitude towards counterfeit goods, coupled with repeated counterfeiting activities, China is now one of the company’s largest markets. In 2004, the company began to sell products in China, and now its products are sold in more than 600 stores and specialty stores in China.

William Tung, Columbia’s vice president for Latin America and Asia Pacific, said the company is determined to maintain its status as one of the largest outdoor sports brands in China. He said that people have realized that there is a difference in quality between genuine and counterfeit goods. They are disappointed with down jackets that often have feathers falling out.

For some companies, with the online retail industry starting to take off in China, the Internet has become a new source of concern for counterfeit goods.

William Tung said that the company’s products on the Internet every day about 100,000 counterfeit goods for sale. Columbia employs software companies to help them detect such product listings so that the company can issue a lawyer's letter.

Japan's Shiseido began selling a cosmetics line through the Internet last year in China. The product packaging is special so that the company can easily distinguish between genuine and fake products and products that are not authorized for sale.