At the centre of this storm is Kunming-based 11 Furniture, a four-storey building that has more than a coincidental likeness to Swedish retail giant Ikea. From the blue and yellow color scheme, to mock-up rooms, and miniature pencils, 11 Furniture seems keen to offer its clients an Ikea experience.
“This is a new phenomenon,” Adam Xu, retail analyst with Booz &Co, told The Huffington Post. “Typically there are a lot of fake products [in China], and now we see more fakes in the service aspect in terms of [faking] retail formats”.
Also in Kunming, a series of fake Apple stores were uncovered by American blogger Bird Abroad, who is living in the region with her husband.
The fake Apple shops she discovered were very convincing to the untrained eye, with The Bird Abroad describing cases filled with authentic Apple products, the unmistakable Apple store design, and employees wearing blue Apple staff t-shirts. The blog even notes, “This was a total Apple store rip-off. A beautiful rip-off-a brilliant one- the best rip-off store we have ever seen (and we see them everyday).”
Yet, to Apple’s dismay, Bird Abroad also states that there are more of these counterfeit stores in Kunming, as “a 10-minute walk around the corner revealed not one, but TWO more rip-off Apple stores”.
The success of these fake stores has some interesting implications for leading Western firms. As Torsten Stocker, China Retail Analyst with Monitor Groups, told The Huffington Post, "What these fake stores indicate is that there is demand for the types of products and concepts that these brands sell."
Penetrating the Chinese Market
Several American fast-food companies, including Dunkin’ Donuts, McDonald’s, and KFC are proving to be very successful in China. This is due to the rather surprising news that these brands have a shared reputation for being “healthy” and trustworthy.
New research by the China Market Research Group indicates that many Chinese consumers see these fast-food outlets as a “healthy” alternative to local restaurants, as they can be relied upon to use a superior production process.
Shaun Rein, CMRG’s founder, told WARC, “They [the Chinese] fear tainted ingredients more that fat. These concerns continue to be top of mind because of regular allegations that food companies and restaurants are using poor quality ingredients."
It is clear that the way Chinese consumers observe brands is different to how they are perceived in the western world. Therefore, success for global firms depends on localizing their brand to appeal to the local audience.
Renault, for instance, decided to localize their products to appeal to the young professionals in China, who were seeking a “casual and luxurious” vehicle. This ensured that their sales increased from 894 units in 2008, to 14750 in 2010.
High-end fashion website thecorner.com.cn are also providing a tailored service exclusively for the Chinese market.
In an agreement with FedEx, their deliverymen will wait outside the doorstep of Chinese customers who ordered from their site. This is so they can inspect and try on their garments, before decide if they would like to keep them.
Milan based Yoox Group SpA, the holding company for thecorner.com.cn, are hoping that this localized strategy will enable them to penetrate the fastest growing luxury goods market in the world.
This new initiative is part of a larger trend of retailers offering special, localized services to Chinese consumers in order to access this lucrative market.