The Xiangyang Market

Abstract

Xiangyang Market, located at the center of the shopping district in the trendy former French concession in Shanghai, is one of the city's prime shopping venues and a must-see tourist destination. Considered a shoppers' paradise by many foreign visitors, this open-air bazaar is known for the incredible deals on quality knockoffs of designer products. This case first describes the history that led to its development. It then gives an account of the shopping experience of a couple of American tourists, giving details of their discoveries and bargaining sessions in the market. It concludes with a description of the future of the market, highlighting the concerns about protection of intellectual property rights as well as competition from traditional retailers in Shanghai. The case can be used to teach the economics of markets under asymmetric information, bargaining and negotiation, and intellectual property rights. It can also be used in finance to teach market efficiency or in consumer marketing.

Excerpt

UVA-BP-0487

The Xiangyang Market

Will Gordon and his wife, Jennifer, had spent the month of July sightseeing all over China, fully enjoying their first visit to the country. Now they were in Shanghai with only a few days left before they were scheduled to return home to the United States. Although they had picked up souvenirs here and there throughout their travels, they still wanted to find a few more items to give as gifts to friends and family at home. According to their guidebooks, one of the prime shopping venues in Shanghai was the Xiangyang Market (Exhibit 1), an outdoor flea market where more than 800 shops and stalls offered a wide array of merchandise at deep discounts. The Gordons read that the market was a shopper's paradise and that it was especially famous for offering deals on quality knockoffs of designer goods. The Xiangyang Market seemed to be both a must-see tourist destination and an ideal place to buy last-minute gifts, so with little time to spare, they planned a trip there the next day.

A Brief History

When the Chinese government under the leadership of Deng Xiaoping loosened a long-standing policy of forbidding private entrepreneurship in the late 1970s, family-owned and -operated stalls, stands, and kiosks popped up in the streets of Chinese cities. To facilitate tax collection and oversight, local governments across China soon relocated the small shops to designated streets, often converting the streets into open-air pedestrian bazaars. In Shanghai, a vibrant fashion market took residence along Huating Lu (or Huating Road) in the early 1980s.

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Keywords: Bazaars Markets Information Efficiency Bargaining Intellectual property rights