Two American customers examine products at Beijing's Xiushui Market, or "Silk Street". Earlier this year, 29 stalls involved in selling fake products were forced to close by the market operator. Asianewsphoto

The six-floor Xiushui Market, popularly known as "Silk Street", is neither very big nor high-end, but it is so famous among visitors that it has been branded a tourism destination just like the Great Wall and the Forbidden City in Beijing guidebooks.

This must-see shopping spot for foreigners, with a business area of 25,000 sq m, is where the wife of International Olympic Committee President Jacques Rogge shopped six times during the Beijing Olympics. She bought jade, made dough models for her grandchild, and ordered 17 dresses.

Expatriate Tom Iggulden, from the Australia Broadcasting Cooperation, says he buys clothes at the market every couple of weeks. "It is very cheap, and fun to shop there (bargaining with vendors)," he said.

However, the market, with more foreigners than Chinese, has been a hot topic of discussion for decades for its fake brand-name products, and is a key zone between China and the United States on the issue of intellectual property rights (IPR) protection.

In 2005, Channel and four other international brands sued vendors in Xiushui Market for selling replicas of their products. The court ruled that the vendors and the market must pay 20,000 yuan in compensation to each of the five brands. Fighting counterfeiting has been the top agenda for management after that.

In early 2005 when the open-air market moved to new facilities, Wang Zili, its general manager, decided Xiushui needed to change. "Xiushui can never live on fake goods," Wang said.

Tong Keke, vice director of Chaoyang District where Xiushui is located, said "if the prosperity of Xiushui could not live without the counterfeits, then we would rather abandon such prosperity."

Since then, the administration and the market management have adopted a series of measures to crack down on fake products. The policies include persuading vendors selling fake goods to leave the market, rewarding the sellers strictly abiding by IPR rules, introducing home-grown brands, as well as selling shirts, tea leaves, ties, chinaware and other articles under the legal trademark.

Xiushui Market also invited IntellecPro, a global law firm offering IPR services to domestic and foreign clients, to serve as IPR consultants.

Though some people worried business at Xiushui would shrink without counterfeit goods, its performance during the Beijing Olympics, when supervision was strengthened, eased such doubts.

From Aug 1-23, Xiushui posted sales revenue of 383 million yuan, compared with 47.23 million yuan a year earlier last year. Visitors between Aug 8-23 reached 736,293, of which 589,034 were foreigners.

The counterfeit products never totally disappeared, however. Last month, 29 stalls involved in selling fake products were forced to close by the market operator.

Why has the counterfeit problem persisted despite the efforts of management and local authorities?

Located at the west end of Beijing's booming Central Business District, Xiushui Market is stuffed with foreigners wandering between bustling aisles flanked by stalls, bargaining with merchants in English, French, Russian, German or fluent Chinese, calculators in hand.

Near one clothes booth, an Australian girl and her family are some of the market's many customers on a recent day. Her family members drag two black bags filled with shirts. "The counterfeit quality is good," said the girl, pointing at the jeans she wears, "I bought this 'Diesel' pair seven years ago for $15, and it's $200 in my country for a genuine one."

"Many foreigners came to my shop and buy world-class counterfeit bags for their friends or family members as gifts," said a seller surnamed Zhang, who believes she is just meeting customer demand. In her shop, a replica Agnes b is sold for about 150 yuan, compared with about 1,000 yuan in franchised stores.

Xiushui has a three-decade history in accordance with China's opening up and policy change toward a more free market economy, according to general manager Wang.

In the beginning, Xiushui had no fake brands. It sold products originally produced for exports with some flaws at a far lower price, recalled Li Shulan, a veteran seller who started business in Xiushui in 1988.

In the 1980s, Xiushui was an open market with booths along a narrow street and mainly engaged in traditional Chinese silk-products retailing. Due to high-quality products and reasonable prices, it became a hot destination for foreigners in Beijing, and since the 1990s the number of sellers surged from dozens to hundreds.

In early 2005, the old market, which was in fact stalls in makeshift buildings, was torn down and reconstructed with improved facilities.

Although Xiushui has made great efforts to restore its reputation, foreigners still regard it as a desirable place for counterfeits. They come here for affordable prices and high-quality goods.

"According to the rule, Xiushui is forbidden to sell fake brands, but, till now, many foreigners intend to buy the fake ones, and large demand makes the sellers sell them in private," said Wang, who estimates that 80 percent of the market's customers are foreigners.

"Where there are demands, there are markets," said Yu Guodong of Sam & Partners, an IPR-specialized law office, adding that in addition to educating and supervising vendors, education for consumers is crucial to anti-counterfeiting efforts.

Leslie Wang, trademark specialist from the global law firm Jones Days, said buying quality products for reasonable prices is common sense for consumers, but when concerning IPR issues, both businesses and consumers should keep in line with laws and increase their self-discipline.

Editor's note: The IPR Special is sponsored by the State Intellectual Property Office and published by China Business Weekly. To contact the Intellectual Property Office, the IPR Special hotlines are 8610-64995422 or 8610-64995826, and the e-mail address is ipr@chinadaily.com.cn.

(China Daily 03/23/2009 page11)