(JASON LEE /REUTERS)
11 Furniture, a knock-off Ikea store located in southwest China, has come to the attention of Ikea. 11 Furniture, like other “knock-off” companies, is just one of the examples of the type of stores that are emerging throughout China. Stores across China have emerged that mimic products/storefronts of brand named businesses such as Apple. However, the potential for these stores to damage the reputation of the brands if consumers believe that the stores are indeed affiliated with their corresponding brands may prove to be lethal to these businesses.
This emergence of these types of stores has been in response to the developing economy of developing countries like China. If you think about any other country that was at one point, experiencing a developing economy, you will notice that there have been the same types of stores appearing in those countries during that time. Why does this occur? In a madly developing “third world” country where everyone is trying to emerge from poverty and get rich, intellectual property and patents are foreign concepts that are luxuries of developed Western countries. Combine this attitude with a legal system that have a poor ability to enforce IP laws in not only the major cities in China, let alone the second tier and third tier cities away from the coast.
The pattern of copying successful business models and products from the West has been used by most of the successful Asian economies (Japan, Korea, Hong Kong, Taiwan, etc). That is the fastest way to learn from scratch and get to a level of capability that enables them to compete. Once they hit a level of economic maturity and these countries develop their own intellectual property, attitudes, laws, and enforcement will reach Western norms. This breach of intellectual property rights is unacceptable, but “understandable” given the current conditions of the Chinese economy and society. However, letting this piracy continue will seriously damage China’s international reputation and the “China brand”. Therefore, this will also be unacceptable for the new Chinese leaders who recently took office and I would expect that concrete measures will be taken … but due to the scale of the problem, it will not be a quick fix.