Long Island Professor: "Chinese Counterfeiters Cannot Replicate Services" Yes, They Can

Can people outside Long Island
really pour a sturdy Long Island Iced Tea?

Panos Mourdoukouras, professor of economics of Long Island University, gave some reasons for the existence of counterfeit and knock-off retail outlets in China with which I did not agree, see here.

Now he was interviewed by Canada TV (CTV) and I am afraid I again do not agree with him. Professor Mourdoukouras on branding:
"In the long term the only party that is harmed will be China. China will never learn to innovate. Branding involves two things. One, the right product and the right service. Second: the right word of mouth; the buzz. If you copy Apple, Nike, or replicate Starbucks, you also have to replicate the services. What makes Starbucks so successful is the services. Can China replicate the service? No. People sooner or later will found out it is the wrong Apple, Ikea, Starbucks. The stores will have to close down. Word of mouth will spread. Once they found out it is fake they walk away."

I do not concur. First of all knock-off retail outlets do not necessarily provide inferior service. And for example Ikea knock-off 11 Furniture can build up a brand presence by itself. The uncomfortable truth is that high quality counterfeit products do exist, and so does high quality service, which together can satisfy customers. It is naive to believe that consumers stop shopping at a retail outlet once they find out it is fake. I think that is especially not the case when a counterfeit retail outlet with good service sells genuine products, such as in some of the counterfeit Apple Shops. For products that have a negative price elasticity a lower price lures customers if the product "satisfices" (sufficiently satisfactory). The trademark proprietors will still have to do the heavy lifting of closing down these shops via the judicial, administrative or criminal routes of the Chinese legal system.

Watch the CTV interview here.