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Politics

Counterfeit products driving Chinese shoppers overseas

TOKYO -- Two weeks before the Chinese New Year, Japan's tourism and retail industries are excited about another round of bakugai (explosive buying) by Chinese visitors.

     But for policymakers in Beijing, Chinese consumers' insatiable appetite for overseas goods is a headache. All that buying represents an outflow of money. This is a serious problem for the government, which hopes domestic consumers will prop up the faltering economy. It has launched a campaign to encourage people to spend more money back home, but it is an uphill battle.

What's in a name?

A report by China's state-run Xinhua news agency quoted Feng Fei, vice minister of industry and information technology, as saying the biggest difference between foreign and domestic products lies in the popularity and influence of brands. He mentioned a survey that showed there was little difference in the quality of rice cooked in a Japanese electric rice steamer and one made in China.

Beijing has launched a campaign to persuade consumers to spend their money at home.

     While he offered no details, Feng may have been referring to a program aired last year by China Central Television, the state-run TV broadcaster. In the program, 10 people took a blind taste test of rice prepared in two similarly priced rice cookers -- one made in Japan, the other in China. Five people said the rice prepared in the Chinese cooker tasted better, while two said there was no difference in quality.

    Of course, one cannot draw conclusions about product quality based on the opinions of 10 people.  Internet postings about the program were skeptical about the reliability of the survey. One typical response said that if the two rice cookers were priced about the same, the Japanese rice cooker must have been a low-end product, while the Chinese one was a high-end model.

     But Feng's remark highlights the fact that officials in China are aware of the inferior brand image of Chinese products. He also offered other reasons why Chinese tourists do so much buying overseas. "There are fewer counterfeit products in industrial countries, and consumers feel safe about buying," Xinhua quoted him as saying. It was a candid admission of the rampant counterfeiting that goes on in the country. 

Genuine imitations

A report on online shopping in China was presented in November to a meeting of the Standing Committee of the National People's Congress, China's parliament. According to the report, only 58.7% of products sold online in 2014 were authentic and had no quality problems. It also said there has been a sharp increase in the number of complaints filed by consumers about their Internet purchases.

     These problems are encouraging Chinese to buy more overseas, and the proliferation of fakes could hamper the efforts of Chinese companies to establish their own brands. Feng said this was vital to promoting domestic consumption.

     Some Chinese manufacturers are cottoning on. The website of Xiaomi, a fast-growing Chinese smartphone maker, has a page urging consumers to report any fake Xiaomi products they run across. Domestic brands are struggling to deal with the problem of rampant piracy.

Spur of competition

Feng stressed the importance of "purifying the domestic environment for consumption" to persuade Chinese consumers to spend their money at home rather than at stores overseas. This will require an enormous amount of time and energy, but the government is trying to tackle the problem.

    At a meeting last April, Premier Li Keqiang ordered tariff cuts on a trial basis on foreign products for daily use that are popular among Chinese consumers, and called for measures to improve the brand power of domestically manufactured goods. Both steps were aimed at boosting domestic consumption, but it is difficult to say how effective they have been.

     The government has been surprisingly candid in acknowledging social and economic problems. Only politics remains taboo. Beijing has taken the initiative in spotlighting problems such as heavy debts incurred by local governments, excess capacity at manufacturers, the deteriorating environment and food contamination. It is, in fact, leading media campaigns aimed at confronting these problems.

     But there are no quick fixes and these problems are gumming up China's efforts to shift the economy to a path of stable, albeit slower, growth.

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