BEIJING — The push for more piracy protection for fashion brands just may play out in Beijing’s Silk Alley, which has received increasing attention in recent months. Just yards from the U.S. Embassy in downtown Beijing, the market bursts with varying qualities of fakes from a wide range of brands such as Timberland boots, Banana Republic sweaters, Calvin Klein underwear, Abercrombie & Fitch cargo pants and Von Dutch hats. (The products displayed are just the start: Bulk sales, complete with international shipping, are available from warehouses nearby.) An industry investigation earlier this year, funded by a joint partnership of Louis Vuitton, Prada, Burberry and Chanel, determined that 90 percent of all products in the market were counterfeit (and 20 to 30 percent of the goods were copies of those brands alone).
While the bustling market may face imminent destruction due to fire hazards, a sleeker shopping mall is being built right next door to replace it. At an auction for spots in the new market, due to open by the end of the year, booths went for as high as about $477,000 for a five-year lease — an exorbitant amount of money in a city where the average annual income is about $1,700, and a true indication of just how much revenue is being generated there. (According to the government-owned China Daily newspaper, sales at the Silk Alley top $12 million a year, though that’s considered by many to be a conservative assessment.) The plans for the new Silk Alley — at nearly triple the size of the existing space — have become a major cause for concern, prompting the U.S. Embassy in Beijing to recently urge the city’s municipal government to make major changes before the new opening. “[Silk Alley] has become a symbol of the IPR problem in China,” said a U.S. Embassy spokesperson. “Taking this opportunity to change the way it does business would be a very positive sign of China’s commitment of IPR enforcement.” The municipal government has not yet responded to the protest.
Despite the market’s prominence, it has gone largely ignored by counterfeit-chasing companies that would rather focus their attention and money on the goods’ manufacturers — until now. Since late July, a poster from the Beijing Administration of Industry and Commerce has been tacked to the side entrance of the market warning vendors in Chinese that selling items bearing the labels of Louis Vuitton, Prada, Burberry, Chanel and their affiliated brands is forbidden and that violators could face imprisonment or expulsion from the market. (The banned brand list has recently been increased to more than 20 well-known labels, including Givenchy and Fendi.) Nearly 800 posters also have been placed in more than 160 other markets around town, according to the AIC. The warnings are part of a new strategy by the enforcement agency to force the shops’ landlords (in fact, companies owned by district governments in Beijing) to take responsibility for the illegal goods sold inside, a move prompted by lawyers for the brands.
“In just about any country, if you as a landlord know something illegal is going on in your property, then you can be held liable,” said Joseph Simone, the lawyer who’s handling the case for the brands. “We want to bring this issue of landlord liability to China, and Beijing is the best place to start.”
There are signs that the warnings may be having an effect, at least for the officially banned brands, as other labels not on the list are still being sold openly. In Hong Qiao, another knockoff-heavy market where a similar enforcement tactic began earlier this spring, more than 30 vendors have had their leases suspended or terminated when they didn’t adhere to the warnings. In Silk Alley, a recent follow-up survey showed that no merchants were openly selling the brands, according to Simone. However, if you know who to ask in either market, you can be taken to a nearby location where those brands are still stocked.
Though the Chinese government is touting the crackdown as a major sign of their commitment to the piracy issue, Simone isn’t quite ready to call it a victory. “Whether or not the [market] management’s cooperation will be short-lived remains to be seen,” he says, “but the progress we have observed recently is unprecedented, and clearly encouraging.”