Shops selling fake branded goods in the Karama area of Dubai have been told to clean up their act by August 15 or face prosecution. The area has a reputation for selling counterfeit clothes, handbags and watches at a fraction of the cost of the genuine products, and is popular with tourists and residents alike who have dubbed it "Calvin Karama" after the fake Calvin Klein jeans and shirts which are openly on sale.

The crackdown by the Economic Department has been welcomed by companies which own the franchises for the genuine brands as well as intellectual property rights enforcers who constantly battle the illegal trade.

Jo Bourjelli, manager of the Ralph Lauren boutique in the BurJuman Centre, highlighted the scale of the problem by saying that he recently found fake versions of the brand's Polo garments in 26 Karama shops.

Eli Malkoun, fashion and accessories manager for Fitra International, which owns the local Lacoste and Ralph Lauren franchises, said, "We have worked with the authorities several times in the past to confiscate counterfeit items from the market.

"However, the traders bring them promptly back into the market after a few weeks. This decision is extremely welcome and a step in the right direction as the tightening of regulations is necessary to protect legitimate trade."

Edward Hardcastle, general manager of the Dubai office of Rouse and Co International, a specialist intellectual property rights consultancy, said Dubai's reputation was being affected by the open sale of fake products.

"We have an environment here where the government of Dubai is trying to invite business and tourism, and I'm sure they wouldn't want to be known as a city where you can buy counterfeit goods cheaply." He said the Economic Department's decision to give the shops a deadline was the best solution to the problem.

"They are balancing firmness with fairness by giving these traders an amount of time to sort their act out, and I am sure they will follow it up to protect the rights of consumers and legitimate traders who deal honestly."

Karama shop owners, who are currently discounting their stock in an attempt to sell it before the deadline, say the decision will disappoint shoppers and drastically affect their livelihoods.

Yahsin Ahmed, a 25-year-old shop manager, said: "Nearly 65 per cent of our stock comprises fake branded items.

"Karama is known as the duplicate market and customers come here looking for brand names, this is especially true of European tourists. We ask them how they know about the market and they have told us that other tourists tell them about it.

"Now these people are not going to shop here, which means sales are going to fall dramatically." Another manager, who has run a shop in Karama for the past 10 years, said it will take time to fill the huge stock gap with unbranded items. "We have been trying to sell our stock as soon as possible since receiving the notice and have to clear it all by August 15, otherwise we will face legal action.

"We are selling at half our cost price, because of which we are already incurring huge losses. I will suffer a loss of Dh200,000. The other option is selling it back to the agent at an even lower price." He said the low rents in Karama will enable shops to continue trading, but predicted that the area will lose its appeal to many of the people who shop there.

"The rent of shops is around Dh4,000 for a year so I don't expect any to close down. They will be able to continue, but sales will be very low as our main customers will stop coming in." The fake brands available in the market include Timberland, Boss, Polo by Ralph Lauren, Camel, Versace, DKNY, Diesel, Calvin Klein, Gucci, Lee, Oakley, Lacoste and Armani. Most are sourced from Thailand, China, Korea and India.

Yacoub Mohammed, 29, who has been running his shop in Karama for the past seven years, said: "When people walk into the stores here, they do so expecting cheaply priced items. Otherwise they would go to the shops selling the genuine stuff. "They don't want to pay huge prices but would like a good image and finish. These fake branded items give them that without the high pricetag.

"Also the market adds to the charm of the city, it's part of the tourist experience, so taking away these branded items is going to have a drastic effect on all."