Luxury goods in China.
Chinese malconsumption.

Because China invests so much, many economists argue that it invests badly. China-watchers compete to find the most egregious examples of “malinvestment”. This week’s Free Exchange column turns away from white elephants and ghost cities to look instead at some examples of “malconsumption”.

One is the purchase of counterfeit goods, specifically designer fashions. Fake Gucci, Prada and Louis Vuitton do seem unusually popular in China, where designer brands are widely admired, but only patchily protected. It is, however, hard to find good numbers to back up this impression. Of the pirated and counterfeit goods seized by American customs last fiscal year, 62% originated from China. But that says more about China’s production of counterfeits than its consumption of them. I liked the simplicity of a study by Ian Phau and Min Teah of Curtin University of Technology in Perth. They stopped every fifth person who crossed a designated spot outside a Shanghai mall and quizzed them. Of the roughly 2,000 people approached, 202 filled out their survey properly—and 151 of those admitted buying counterfeit luxury items. So there you have it: counterfeit luxuries—three out of four Shanghai mall-goers prefer them.

If a customer falls for a fake, they obviously lose out. That is a clear example of malconsumption. But many buyers are not duped by their purchase; they want their purchase to fool everyone else. No doubt they often succeed, passing off a counterfeit good as the real thing. But in China, fakes are so widespread, the opposite danger also looms: genuine articles may be mistaken for fakes. Yue Li of Nottingham University (Word doc) cites one Chinese shopper who wrote the following on an online discussion board: 

 Even if I bought a real one, it’s really embarrassed [sic] if other people think it’s fake, should I explain to everyone that it’s real?

Luxury goods in China.
Chinese malconsumption.

Because China invests so much, many economists argue that it invests badly. China-watchers compete to find the most egregious examples of “malinvestment”. This week’s Free Exchange column turns away from white elephants and ghost cities to look instead at some examples of “malconsumption”.

One is the purchase of counterfeit goods, specifically designer fashions. Fake Gucci, Prada and Louis Vuitton do seem unusually popular in China, where designer brands are widely admired, but only patchily protected. It is, however, hard to find good numbers to back up this impression. Of the pirated and counterfeit goods seized by American customs last fiscal year, 62% originated from China. But that says more about China’s production of counterfeits than its consumption of them. I liked the simplicity of a study by Ian Phau and Min Teah of Curtin University of Technology in Perth. They stopped every fifth person who crossed a designated spot outside a Shanghai mall and quizzed them. Of the roughly 2,000 people approached, 202 filled out their survey properly—and 151 of those admitted buying counterfeit luxury items. So there you have it: counterfeit luxuries—three out of four Shanghai mall-goers prefer them.

If a customer falls for a fake, they obviously lose out. That is a clear example of malconsumption. But many buyers are not duped by their purchase; they want their purchase to fool everyone else. No doubt they often succeed, passing off a counterfeit good as the real thing. But in China, fakes are so widespread, the opposite danger also looms: genuine articles may be mistaken for fakes. Yue Li of Nottingham University (Word doc) cites one Chinese shopper who wrote the following on an online discussion board:

Even if I bought a real one, it’s really embarrassed [sic] if other people think it’s fake, should I explain to everyone that it’s real?

(Source: economist.com)

@2 years ago
#The Economist #The Economist Free Exchange