Xinhua Insight: Beijing's Silk Street Market seeks redemption in originality

Beijing's landmark Silk Street Market, where traditional souvenirs and knock-offs sit side-by-side, is looking to reinvent itself into a breeding ground for local, quality brands.

In a bid to redeem its reputation, since last year the market has began removing vendors who sell counterfeits and instead is inviting Chinese brands and designers to set up shop there instead.

It hopes to shake off its former infamy and instead be known as a hub of originality.

The market's management said this transition is a recipe for success and said this week that it will expand to other cities in China.

Hu Wenli, the general manager, told Xinhua that the market has taken several vendors to the western Chinese city of Xi'an and inland economic powerhouse Chengdu, two cities the management has identified potential locations for new stores.

The market, located in the capital's central business district, opened in the late 1970s to cater to expats working in nearby embassies looking for cheap apparel and accessories.

While the Silk Street Market has secured itself a reputation worthy of being included alongside the Forbidden City and the Great Wall in "must-do" guides to the city, it has received negative coverage for tolerating merchants who sell shoddy knock-offs. Several luxury brands have sued vendors and the market itself was asked to compensate for failing to effectively prevent such violations.

Over the past three decades, vendor numbers have been reduced from more than 2,000 to around 500, and the average retail space for each merchant has risen to 20 square meters.

"It is important that brands have the space and the environment to express their themes and values," said Jason Ding, partner at Bain & Company, "it's all about perception and lumping all your products on a crowded stall is a surefire way to comprise a brand's value."

China's large shopping malls and department stores are suffering as a result of the slowing economy and the rise of e-commerce, forcing many retailers to close their brick-and-mortar stores.

Smaller markets, where tenants sell cheap clothing to price-sensitive consumers, are also falling out of favor as more people become brand-conscious and shop for quality.

"Chinese garment makers have mastered the manufacturing process after years of making clothes for foreign brands but what they need to work on the most in the future is to build brands and design," Ding said.

Meanwhile, more such markets in Beijing are being closed as the city wants to rid non-essential institutions and low-end retail and wholesale markets.

Local regulators are also stepping up efforts to fight counterfeits. Silk Street Market has also been expanding its business scope to traditional Chinese handcrafts, antiques and paintings over the years after vendors who sell fake products were evicted.

According to Hu, merchants who apply to rent a booth in the market now need to undergo a rigorous examination of their business vision, product quality and production capabilities.

Hu said raising the bar for merchants will help with the market's competitiveness.

"The market is in a prime location," said Zhang Yongping, president of Silk Street Market Group, "only quality merchants deserve to be here."

However, regardless of how determined he is to root out low-end merchants, removing those who have been in the market for decades is an emotionally difficult choice for Zhang.

"I told these old tenants that the door is still open for them, as long as they can come back with quality products and original brands."

Outside the market, oversized posters outline the requirements for prospective merchants, emphasizing the market's thirst for quality and originality.

It will take time for the market to really rebrand itself.

At a handcraft store inside the market, the store owner told Xinhua that not many people appreciate the artistic value of his work.

"This hand-made jewelry represents hundreds of years of craftsmanship inherited from the imperial court." he said, "but many who visit my store bargain aggressively, oftentimes offering to buy them at prices that cannot even meet the cost of making them."

Price still matters in China, said Ding, and that means the retail landscape needs to be diverse, so it meets the needs of the country's highly stratified consuming class. Endi