November 14, 2005

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The real Shenzhen

Whenever we have female visitors, they are typically taken by Mrs M for a journey across the border into the wilds of China. By border I mean Lowu train station and by across I mean the 50 yards from that station to the entrance of Lowu Commercial Centre. I don't know of any other shopping centre in the world to have books dedicated solely to navigating its depths. By depths I mean 6 floors of near endless tiny shops, all seemingly hawking the same thing: fakes. The major categories are all fast moving consumer goods: DVDs, wallets, handbags, glasses, golf clubs, clothes, shoes. There is the "jewellery" section, an electronics lane, several eateries of varying quality and assorted odd shops. There are tailors who will copy any design or picture you provide, and a marketplace of materials for those clothes.

Two main questions arise from a visit to Shenzhen. The first is whether there is more to the place than the shopping centre? The short answer is no. Readers from Shenzhen, feel free to correct me. However aside from "Wonders of the World", Shenzhen is not a tourist town. The second is when it comes to protecting intellectual property rights and these so-called drives against piracy, China is nowhere. I stood and watched how efficiently the entire place packed away the copied goods as soon as a cockatoo* gave word the cops were around. Once the cops left, it all came out. Obviously the triads are behind much of what goes on, but it occurs in such staggering scale that local authorities must surely be involved or at least bribed to turn a blind eye.

One shopkeeper told me the rent of a small stall in the Lowu Commercial Centre costs RMB25,000 a month in a high traffic area and RMB9,000 a month in more out of the way corners. When I say small, these stalls we maybe 5 square metres. Larger stores no doubt cost significantly more. That's an awful lot of fake handbags, DVDs and whatever else each store needs to sell. Hazarding a guess, many of the stores are likely owned by the same person/group, stocking exactly the same goods. Yes China is a big country and its police cannot be everywhere, nor can reps from the fashion companies. But if China wanted to get serious about protecting IPR, it could. That's not to say I agree with governments doing brands' dirty work for them - far from it. But if China really is committed to getting rid of piracy, it needs to visibly raise the cost of doing that business. Mass arrests, confiscations, public trials, visible patrols. And not just the retailers, but the gangs, corrupt government officials and manufacturers driving it all.

It's possible, but not probable. The costs are slight and the profits large. As a business it employs many and provides many with goods they could or would not otherwise buy. There is a slight sacrifice in quality, but compared to the savings it is deemed worthwhile by the huge numbers of customers. If the brands and movie companies want something done, they need to do it themselves. In other words, they need to quantify the cost of piracy to their business and invest those amounts in protecting their brands. The taxpayer doesn't benefit from police enforcing anti-piracy laws, but the brands and their bottom line does. Let them pay for it, for real.

* A lookout

posted by Simon on 11.14.05 at 08:48 PM in the China category.


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fashion brands don't care that much about it. The people who buy fakes wouldn't ever buy an original.
CDs and movies are different, though. But if you can't buy a dvd copy, you can just download it nowadays. It's a lost battle.

posted by: Yago on 11.14.05 at 09:03 PM [permalink]

"The costs are slight and the profits large. "

this is probably the biggest reason why counterfeit goods is hard to control in developing countries (plus inefficeint policing). not just china, we have these in thailand, malaysia as well.
you got more in china because it is the 'world factory'

posted by: sun bin on 11.15.05 at 02:24 AM [permalink]

One of those rare times when I not only disagree with you, I disagree strongly. With a population higher than HK and average per capita income higher than even Shanghai, it's extremely wrong to write off Shenzhen so quickly.

Granted it is a difficult place to navigate if you don't speak Chinese or have Chinese friends with you. When you get away from Luo Hu and the horrendous shopping mall (perhaps by taking the brand spanking new subway system), you will find that parts of the city are really beautiful, from the tree- and art-lined streets of Overseas Chinese town to some great public parks and the beach and bar area over by Shekou.

From the shopping perspective, aside from Wal*Mart and Sam's Club, get away from Luo Hu to where the local Chinese actually shop and there are many alternatives to knock-offs.

And the food ... authentic Sichuan and Hunan cuisine that simply can't be found in HK; seafood at half the price of here; great little streetside barbecue shops.

And my favorite sauna palace where a two hour massage costs 80 RMB - another 25 to kick in a one hour foot massage. And this joint will give me a free ride to Huanggang if I'm there too late for the train, or just let me spend the night in one of the massage rooms (color TV that gets HK stations) for no extra charge.

Okay, maybe not a tourist town per se, but there is a reason so many HKers spend so much weekend time there.

posted by: Spike on 11.15.05 at 02:54 AM [permalink]

Point taken, Spike, but even as you concede, it's not a tourist town. I enjoyed spending time there, but I wouldn't rush back.

One other interesting thing: the one item not being copied is Olympic merchandise.

posted by: Simon on 11.15.05 at 09:30 AM [permalink]

Hi Simon, as my father-in-law has been working in Shenzhen for several years and I go quite often to visit (and sometimes to shop), I feel I should add to this conversation.

Until I had left the Lo Wu area, I tended to agree with you - it seemed just an endless assortment of cheap DVD shops, restaurants, clothing stores and tailors', hotels and massage parlors.

But having the use of a car really opened my eyes. There is a beautiful park, just to the east of the city, where one can walk, hike or jog and that includes a fossilized forest. There are also a number of nice neighborhoods in the city that gleam and sparkle and look nicer than most buildings in Hong Kong (although you never know how well they are built).

I take your point that it is not really great for tourism - I enjoyed visiting the Minsk aircraft carrier, but without a car getting around is a pain, and it is extraordinarily difficult to know where to go, especially for the tourist destinations outside of the city that have a much longer history than SZ itself.

But thanks to our local contacts, we were able to visit fabulous furniture shopping malls in Futian and other places where my wife and I, surprisingly, were able to buy or make-to-order some fabulous furniture at a fraction of the cost in Hong Kong. Many of the designs are copied from somewhere, but the shopping experience itself has improved, with attractive store layouts aimed at China's middle and upper class. (And I love my Bosch power tool I bought at the Shenzhen Wal-Mart!).

So let me say this - I agree with you about Shenzhen with regards to LuoHu. But if you know someone locally that can show you around the other city districts or further afield, Shenzhen can actually be quite interesting.

posted by: HK Dave on 11.15.05 at 09:44 AM [permalink]

Again point taken, although we made the effort to get out - went to Donren for example. Next time I'll suss out advice from you all and do a different trip.

posted by: Simon on 11.15.05 at 09:56 AM [permalink]

olympic merchandise.

don't conclude too early.

by 2008, when demand soars. i bet you will see a lot of them.

posted by: sun bin on 11.15.05 at 09:57 AM [permalink]

What Spike and HK Dave said. Despite working and living in HK five days a week, I still have an apartment in the Futian district - in the same bldg I lived in when I arrived there more than two years ago - and thoroughly enjoy the neighborhood. Trees, friendly outgoing people, a wide variety of cheap, mostly good food, close to the subway blahblah.
Lohu ain't Shenzhen any more than, say, the Ladies Market is Hong Kong. Or something like that.

posted by: Justin on 11.15.05 at 10:56 AM [permalink]

There is a crap load to do in Shenzhen. Check out the event calendar on my web site updated daily:

- Brent

posted by: Brent Deverman on 11.15.05 at 02:11 PM [permalink]

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