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Trendy U.S. Goods Big Sell In Berlin

CBSNews.com's Christine Lagorio is filing weekly dispatches from Berlin while writing for the Financial Times Deutschland as part of the Arthur F. Burns Fellowship Program.

Alte Schönhauser Strasse, a narrow drag through a trendy sector of Berlin's Mitte neighborhood, is brimming with boutiques, quirky shoe stores and tiny lavish restaurants, where tables full of ocean-hued cocktails and tiny tapas spill out onto the street. In other words, it oozes with so Berlin's high-end hipster culture.

Smack dab in the middle of Schönhauser is a different sort of hipster beacon: an American Apparel store. The company American Apparel, founded 10 years ago with a socially conscious image and "made in America" labels, has boomed abruptly in the United States over the past five years - and at the same time was reaching its arms across the Atlantic.

In this über-global economy, that's not a shock, even for a brand that's made its mark by boasting being "made in America." But American Apparel is part of a new wave of U.S. products -- from Starbucks coffee to Apple computers -- that is appealing to young Europeans as American-chic, and at prices that give then an air of exclusivity.

The weak dollar would seem to give Europeans more buying power, but in American Apparel, along with a few other exporters, the conversion rate seems to have been ignored. A $28 halter leotard is €28. A "Unisex flex fleece zip hoody" is $40, or €40. Those Euro prices convert to roughly $38 and $54 respectively.

Apple products are sold in mostly the same fashion, in which the Euro mark is simply substituted for the dollar sign, equaling at the current exchange a more than 30 percent increase from the original dollar price. That adds up to when buying, say, a 13-inch black MacBook, priced at €1,499 (it is the same in dollars), €400 (or $544) more than one would spend in the states.

Europe is now Apple's second most important geographic region in sales behind the Americas.

Twenty-eight year old Berlin-based student Andrea Rungg has her eye on an Apple laptop, but hasn't bought one due to the price, which is in Europe considerably higher than that of PCs.

"I am going to the U.S. this year and I was thinking I should buy an Apple there to save money," Rungg said. She's reconsidering: "I'd be a little worried getting it through customs, and maybe it isn't so practical because our keyboards are different."

Of course there are trade tariffs, shipping costs and market factors to consider in this equation. Most of Starbucks' prices, in Germany at least, are relatively comparable to those in the United States -- give or take about 30 percent on various products.

"Starbucks determines its prices in individual markets based on a number of different factors," Carol Pucik, a company spokeswoman, said in an e-mail. "Our objective is to price our products competitively for each market."

But the realm of retail is a bit more exclusive. For an American in Berlin, there is a bit of sticker shock - especially when U.S. prices of popular European brands, such as H & M, are actually cheaper in the states (for example: a €49,90 mid-length coat costs $59.90, but it would have a price tag of $67.00 under the current conversion rate).

A shopping trip to New York might not seem like a fruitful endeavor to a frugal American, but a German could find many steals - especially those in the market for electronics, which are typically more expensive in Europe.

A spokeswoman for the U.S. International Trade Administration explained that U.S. companies set prices abroad based on various factors, but that when importing, the government keeps an eye for prices set by foreign companies only if they get far too low.

"The only thing that would concern us is if a company was selling an item below cost, which would constitute dumping … of if they were subsidizing the sale -- that's another problem," she said.

American brands have been in vogue overseas for decades, and at eight of the 10 most popular global brands of 2007 were American, according to Millward Brown Optimor, a global brand consultant. Google tops the list, followed by General Electric, Microsoft and Coca-Cola.

"Selling the American dream has paid off handsomely," Harvard business professor John A. Quelch said in a 2003 interview. "These brands used to extract a price premium over local products. Many consumers were willing to pay this premium to associate themselves with the aspirational American lifestyle."

Quelch also predicted that America's unpopularity abroad due to foreign policy could hurt profit margins.

But for now, weak dollar be damned, Starbucks is still expanding throughout Europe, American Apparel items are sought after by the young and hip and it seems that the appeal of Apple computers and iPods here seems to transcend any transatlantic rift.

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