By  on July 28, 2014

SHANGHAI — China’s expertise in the manufacturing of counterfeit accessories is well-known but a new, subtler form of imitation products is emerging from the country’s factories.

Known as “tong kuan” or “look-alike” products, they bear a striking resemblance to specific products from well-known designer brands — especially shoes and handbags — in terms of shape and silhouette. But unlike outright fakes, the products don’t feature phony logos and nameplates of the brands they emulate. They might bear labels resembling European brands — like a triangle reminiscent of Prada’s logo — imprinted with the name of a local Chinese company or a Western (often vaguely Italian) sounding name, to denote quality.

It is technically possible under Chinese law for a brand to patent a garment or accessory design, but it’s incredibly difficult and not exactly practical for a fashion company with a vast portfolio of products. Plus, enforcing that protection through China’s obtuse and dilatory legal system takes considerable time and money.

“With the close copies, there’s nothing you can do unless you have a ‘protected design’ according the law,” said Alex Misseri, Razorfish’s head of retail for the Asia-Pacific region.

Experts say it’s nearly impossible to assess the size of this look-alike market. It’s even harder than measuring sales of counterfeit goods, which are generally extrapolated from seizures in China and around the world. The World Trade Organization puts the total value of all counterfeits at $500 billion globally, but that includes all categories, from clothing, accessories and sporting goods to medicines, food products, and more.

A search on China’s leading e-commerce platform Taobao for a term like “LV Alma” will generate a mixture of results, advertised as both authentic and look-alike versions. The look-alike bags are generally priced between 150 and 600 yuan, or about $25 to $100 at current exchange, with examples from the mid to high end of that price range featuring reasonable quality leather.

In order to evade detection, look-alike sellers often won’t put the brand’s full name in the description but will use abbreviations, such as LV for Louis Vuitton or MK for Michael Kors. Taobao’s relatively sophisticated search function, however, will bring up results featuring these commonly used abbreviations, as well as those using the Chinese name of the brand, even if consumers are searching for the full brand name in English.

David Ho, legal counsel at Alibaba Group, which owns Taobao, said that even if copies don’t carry fake brand names or logos, Taobao.com’s company policy is to work with brands to issue takedown notices for look-alike products — even if they aren’t strictly illegal under Chinese law.

“In the absence of brand [trademark] infringement, rights holders may submit takedown notices to Taobao Marketplace based on copyright to facilitate takedowns,” he said.

The time it would take the company to investigate and issue takedown notices for look-alikes, however, will vary from case to case, and those that are taken down often reappear under a different shop name soon after.

Dong Dong, a Shanghai-based schoolteacher, said she often does searches on Taobao.com using the names of a Chinese celebrity, along with the term “tong kuan,” to find products that copy the look of the star’s designer wardrobe, without the designer price tag.

“If I see a picture of Fan Bing Bing online or in a magazine, and I like what she’s wearing, I will look for products that look the same on Taobao,” she said. “People who search for and buy tong kuan products are more interested in how something looks than the brand.”

For Jason Spencer, Millward Brown Shanghai’s managing director, the evolution of look-alike products is directly tied to the growing sophistication of Chinese consumers — particularly younger shoppers located in first-tier cities.

“The post-Nineties generation is very sophisticated in China and they do tend to behave in a way that is more similar to an international middle class, and with that comes better discernment about choosing something because it appeals to them. They want to stand out from the crowd, but not too much, so I think the appeal would generate traction among them first,” Spencer explained.

The same increasingly urbane consumers who have turned their backs on conspicuous designer labels in recent years still care about looking fashionable — particularly to their peers — but don’t necessarily need to be decked out in designer labels from head-to-toe to achieve that goal.

“I don’t think the fundamental need to show off luxury in China — except in government circles, of course — has gone away. The desire to flaunt wealth and privilege is still there, they’ve just become a bit more sophisticated about it. It needs to be subtle, but not so subtle that other people don’t know what it means — dialing down the volume rather changing the station,” Spencer said.

Experts, including Michael Zakkour, a principal at Tomkins International Consulting and author of an upcoming book, “China’s Super Consumers: What 1 Billion Customers Want and How to Sell It to Them,” believe the rise of look-alikes is simply an evolutionary step in China’s copycat culture.

As government agencies and major marketplaces, including Alibaba’s Taobao and Tmall, work increasingly effectively to eradicate counterfeit designer products in the marketplace, counterfeiters have had to find different ways to evade authorities, Zakkour contended.

“The idea that we are at the end of copycat China is ridiculous — it’s just not true,” he said. “Innovation is there in pockets, but the respect for ownership of ideas just hasn’t happened yet.

“I think this is becoming something of a phenomenon because these companies have been working with, have been buying and have been exposed to design, creativity, marketing, branding — all these things that come along with foreign premium luxury products. They know how to do all that now and think they know how to do it on their own, but aren’t quite confident enough to come up with their own designs,” Zakkour added.

While Millward Brown’s Spencer agrees that look-alikes are a mutation of the traditional counterfeit products that have proliferated on the Chinese market, he also sees look-alike products as an overwhelmingly positive step toward true innovation in China.

“These copycats are more legitimate, it’s more about leveraging public domain and it’s more about taking something and modifying it for the needs of a local consumer,” Spencer explained.

“I really think this happens in the West all the time and I think it’s an improvement on counterfeiting products,” he said. “It’s a more legitimate way [of doing business]. Once they have a bit of money to play with, we’ll see more Chinese companies investing in research and development, as we see in the West, they will eventually come to see true innovation as an important part of their business.”

As Spencer pointed out, look-alike products in China can be viewed through a similar lens as fast-fashion and high-street brands internationally, which are known for borrowing heavily from designer products.

However, look-alikes could present a silver lining for brands, which can take heart from the fact that Chinese consumers are responding to their designs, and as these younger buyers gain affluence, they will also gain the ability to invest in legitimate luxury items.

“I would encourage brands to turn it around and use it to their advantage,” Zakkour said. “If these products are following your lead, this is something that appeals and let this be the basis for something else, if you are Prada, Ralph Lauren, Tory Burch — it’s your name, history, story and the integrity of your brand you need to focus on.”

Several Western brands contacted did not immediately return calls for comment.

Misseri agreed, citing advice Razorfish gave Ugg when helping the company launch its e-commerce business in China. A pair of genuine Uggs retails for around 1,500 yuan, or approximately $240, but look-alikes go for 100 yuan to 200 yuan, or about $16 to $32.

“Don’t try to get everybody in the market who was interested in your design — that’s difficult, or even impossible,” he said. “If you focus on those true potential consumers by convincing them of your unique selling points, you will gain them. Eventually, those types of consumers will be there.”

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