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The Silk Market - the New Xiushui Market is fun and yes, everything is fake. It takes a lot of patience, time and back and forth with the calculator, but the people are wonderful.
Start at the top floors for quality items, and remember: whatever designer bags you buy that are not real will be dealt with by customs. So, stick to the things that do not violate the international trade laws. If it is your first time, and you are a U.S citizen, then you will be warned as you enter the states. However, if you've been warned and you have fake bags - they will be confiscated.
Also, make sure you ship your "flying UFOs." You can get them for $5.00 USD, make sure they have the English instructions and set them up for you. You cannot board the flight with the UFOs, in carry-on or checked luggage, because the magnets are very powerful. It is an amazing toy.
Read tips about Silk Market at