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The Fluidity of Markets

China is well known for producing fake branded goods and no location more so than the area around Xiangyang Market in Shanghai. The Chinese government has recently stepped up its campaign against vendors offering fakes and part of this is a visible police presense and details such as signs posted at the market entrance (photos, below). To some extent vendors of these goods are becoming more mobile - instead of carrying stock that is easily confiscated they show passer's by a catalogue of what's in stock, taking the punter to the gear once their interest is piqued. Where the product is carried - such as DVD's the bulk of the stock is held in a shop nearby - for the seller the practice is practical and reduces risk.

Over the course of an hour I managed to spend time observing the buyers, sellers and the uniformed police. As the police arrived the sellers scattered, and some of the more interesting aspects of that afternoon was in tagging along their escape routes - side alleys leading past the backs of restaurants into the maze of blocks of apartments. But within 20 - 30 seconds of the police moving on the goods we're back on the street being paraded and tourists were buying. Purely from the point of view of supply and demand efficiency the market works well. When there are buyers wishing to buy goods from sellers wishing to sell goods things will be bought and sold regardless of their legality. This scale can be changed by introducing higher risks and consequences targetting and publicizing them to both buyers and sellers. But could it be more efficient? Online Amazon's one-click shopping reduces the amount of friction in the transaction to a minimum. What is the absolute friction free shopping experience?

And perhaps more interesting, in a world of 'experience shopping' to what extent does obtaining goods and services through grey or black market channels enhance the user's experience of the good or service? In which situations does implying something is stolen enhance its value? Or credibility?

Don't sell fakes sign from a clothes market in the Shanghai suburbs.

Writing from Shanghai | May 4, 2006 | Permalink