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It seems the local police do nothing more than scare them off as they move to the next block & lay their products out again. It's illegal because they are stealing the brand name of someone else. Companies try to make their brands stand for something (style, quality, durability). Knockoff items not only affect a company's sales, they can undermine the brand. Not every woman out there can afford to spend $1,500 and upwards for a tote bag or any bag.
You read all the time about travelers being "put off" by people thrusting things at them and harrassing them to buy, yet the only reason they do it is it works. Mr. Liu’s family has been making leather handbags for nearly 20 years. Not many sellers on RL source from his family so he’s not famous. Mr.Liu has business ethics, doesn’t need to be famous, just needs customers to understand the product, domestic customers only want to buy from his family.
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I sell preloved designer handbags (insured/taxed/VAT registered etc) and some Mulberry that retail for £1295 now sell for £500. For £200 you could get a mulberry, Kate Spade, Hill & Friends, Vivienne Westwood etc. Fake bags are immediately identifiable to those who have the real thing and it's far worse than just carrying unbranded.