Asia Pacific Journal of Marketing and Logistics

Understanding counterfeit consumption

Felix Tang Vane-Ing Tian Judy Zaichkowsky

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Felix Tang Vane-Ing Tian Judy Zaichkowsky , (2014),"Understanding counterfeit consumption", Asia Pacific
Journal of Marketing and Logistics, Vol. 26 Iss 1 pp. 4 - 20
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APJML
26,1

Understanding counterfeit
consumption
Felix Tang
Department of Marketing and Management,
Hang Seng Management College, Shatin, Hong Kong

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Received 22 November 2012

Revised 29 July 2013
Accepted 29 August 2013

Vane-Ing Tian
School of Business and Administration,
The Open University of Hong Kong, Kowloon, Hong Kong, and

Judy Zaichkowsky
Beedie School of Business, Simon Faser University, Vancouver, Canada
Abstract
Purpose The purpose of this paper is to create a framework for broadly understanding categories
and motivations behind purchasing different counterfeit products.
Design/methodology/approach Focus groups provided qualitative data from 509 counterfeit
purchases incidents by 95 informants.
Findings The most frequently mentioned motivation was the utility (35 percent) received from the
good over the genuine article. The second, but negative, motivation was the perceived risk involved in
the purchase (22 percent), whether it is physical or social risk. Social norms, confusion, and ethical
concerns each represented about 10 percent of the motivations toward the purchase of counterfeit
items. The least mentioned motivations to purchase, at less than 4 percent each, were culture, habit,
and desire to explore. These factors were evident across a variety of 15 product categories, headed by
electronics, such as DVDs and computer software.
Practical implications Through targeting negative motivations, such as perceived physical and
social risks, businesses can devise strategies from a demand side perspective to overcome the problem
of counterfeit consumption.
Originality/value Qualitative responses, over many product categories, provide a unique
overview to the perception of counterfeit consumption. The finding that consumer ethics may depend
on whether the activity benefits the society as a whole is worthy of additional discussion. The authors
learn that when consumers thought their counterfeit consumption caused little or no harm, they do not
see much ethical concern in their actions.
Keywords Cultural influences, Perceived risk, Behavioural psychology, Brand confusion,
Consumer ethics, Counterfeit
Paper type Research paper

Asia Pacific Journal of Marketing and

Logistics
Vol. 26 No. 1, 2014
pp. 4-20
q Emerald Group Publishing Limited
1355-5855
DOI 10.1108/APJML-11-2012-0121

Introduction
Past research on counterfeit consumption has mainly focused on luxury goods
(Wilcox et al., 2009; Phau and Teah, 2009; Commuri, 2009) and on pirated counterfeit
media and software (Shoham et al., 2008). These studies generally try and evaluate the
consumers ethical versus practical motivations to purchase counterfeit articles
through surveys (Davis et al., 2012; Chaudhry and Stumpf, 2011). There are few
qualitative studies which look in-depth to accepting or rejecting counterfeit articles,
such as Perez et al. (2010) and their study of fake handbag purchases in Mexico.

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What is missing from the literature is a broad understanding of consumers

motivations to purchase such goods, and more importantly were they aware the goods
were counterfeit or did they believe they were purchasing original goods (Fejes and
Wilson, 2012).
The consumption of fake luxury goods has been repeatedly found to be viewed as
fun and harmless by the consumer (Perez et al., 2010; Nia and Zaichkowsky, 2000).
An understanding of the other factors that drive the consumption of a broader range of
fraudulent products would be helpful to international marketers to prevent lost
revenues due to counterfeits by targeting the specific reason or value in the purchase of
fake goods.
This paper addresses gaps in the literature by investigating the following:
.
why people purchase and consume counterfeits over a broad range of goods;
.
what are the major and minor motivations in the purchase decision; and
.
how can these motivations be targeted to reduce counterfeit purchases.
The goal of this research is to help businesses devise strategies from a demand side
perspective to overcome the problem of counterfeit purchases by consumers.
Selected literature review
Most consumers do not differentiate among counterfeiting, piracy, and imitation, and
use the term counterfeits loosely to label intellectual property infringing products in
general (Hoe et al., 2003). The present research adopts this consumer perspective and
the term counterfeit is used in a broad sense that encompasses copyright, patent, or
trademark infringing products. Furthermore, since the purpose is to examine
motivational issues relating to counterfeit consumption, the research focuses on
non-deceptive counterfeit consumption, where consumers are collaborators of the
counterfeiters and purchase counterfeit goods knowingly (Prendergast et al., 2002).
A deeper look at counterfeit consumption
The literature on counterfeit consumption suggests that while consumers buy
counterfeits for different reasons, the overwhelming factor that influences purchase is
distinct price advantage over their genuine counterparts (Moores and Dhaliwal, 2004;
Wang, 2005). Even those who preferred to buy legitimate products found the low prices
of counterfeit goods attractive (Tom et al., 1998). However, consumers might also look
beyond the immediate economic benefits of lower price when deciding to purchase
counterfeits. These factors include ability (e.g. tech-savyness in pirating music;
Shanahan and Hyman, 2010); cultural values (e.g. materialism; Cheung and
Prendergast, 2006); brand personality (e.g. competence, excitement; Bian and
Moutinho, 2011); attitudes towards the brand/corporation (Penz and Stottinger, 2008;
Wang, 2005); attitude towards the act of counterfeiting/piracy (Taylor et al., 2009;
Wee et al., 1995); and social norms (Chiou et al., 2005).
While it is interesting to identify what makes consumer choose to engage in
counterfeit consumption, it is even more important to take a deeper look at
understanding the factors that reduce/lower counterfeit consumption since a major
objective of research in this area is to solve the problem of intellectual property
infringement from a demand perspective. Perceived risk and perceived ethicality are

Understanding
counterfeit
consumption
5

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two factors consistently found to be influential in lowering consumer intention to

engage in counterfeit consumption.
Perceived risks. There are two types of perceived risk involved in purchasing
counterfeit items. One is the belief that the product as it is made or is consumed has
potentially negative physical consequences. An example of physical risk may be the
danger of leaking batteries from electrical equipment. The other is social risk, where
the consumption or purchase of the counterfeit will cause the individual to lose social
capital from peers or society. When risk is activated consumers are more motivated to
avoid negative consequences, whether social or physical, than to maximize utility
(Mandel, 2003).
Some consumers purchase counterfeit luxury brands for their social-adjustive
function (e.g. to express themselves and/or to fit in) (Wilcox et al., 2009). Thus, if the
social group the consumer aspires to disapprove of such consumption, the perceived
social risk involved in the purchase of counterfeit product lowers consumer intention to
purchase counterfeits (Miyazaki et al., 2009). However, Sinha and Mandel (2008) found
that increasing social risks and/or consequences of such consumption may not work
for consumers who have high tolerance for risk (i.e. high optimal stimulation level).
Perceived ethicality. Ethicality is an important concept in society and most
individuals are taught to behave ethically, as ethical individuals are praised and
unethical individuals are publicly condemned and chastised. Vitell and his colleagues
(Vitell and Muncy, 2005; Vitell, 2003) suggested several criteria that consumers use to
evaluate whether a consumption behavior is ethical or not:
.
actively/passively benefiting from illegal activities;
.
benefiting from deceptive (or questionable, but legal) practices; and
.
perceived harm caused.
Empirical evidence finds consumers who purchase counterfeits do not feel guilty and
legally accountable for buying or possessing knockoffs or counterfeits for domestic
consumption (Ang et al., 2001; Phau and Teah, 2009).
Consumers may even hold a double standard in that they think selling counterfeits
and knockoffs is unacceptable (thus it is the seller who is at fault), but buying them is
perfectly social and morally legal (Zaichkowsky, 2006). Consumers may reduce their
feeling of guilt and deflect the locus of fault to the counterfeiters for the sales or to the
genuine business for the high price charged for originals (Cordell et al., 1996), or
inconvenience of shopping locations (Wee et al., 1995). Ang et al. (2001) found that
consumers rationalize their purchase of pirated CDs because the entertainers still earn
high incomes. Nunes et al. (2004) found that the cost structure of the product (such as
those with high fixed cost but low variable cost) influence consumers purchase
intention of pirated software.
Despite a seemingly large pool of research on counterfeit consumption, many
researchers note that the most important work needing to be done is to gain an in-depth
understanding of the consumer behavior behind the consumption and purchase of
counterfeit products (Penz et al., 2009; Chaudhry and Stumpf, 2011). Such
understanding may not be achieved by surveys alone. Qualitative methods are an
important consideration. The extant literature on counterfeit consumption is currently
dominated by survey-based quantitative studies with some exceptions (Hoe et al., 2003;
Eisend and Schuchert-Guler, 2006; Bian and Moutinho, 2011). Furthermore, previous

studies examined only a few antecedents of counterfeit consumption in specific

contexts:, e.g. Hoe et al. (2003) on fashion counterfeits; Cheung and Prendergast (2006)
on materialism and conformity; and Bian and Moutinho (2011) focused brand influence.
Instead of focusing on specific contexts, this paper aims to provide qualitative support
of current antecedents and to generate new insights of counterfeit consumption within
a common framework to provide a comprehensive understanding of the phenomena.

Understanding
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consumption

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7
Method
The research investigation resembles a triangulation approach in an exploratory
study, in that two sets of independent coders were used to verify classifications of
responses from a large group of individuals. Thirteen focus groups, with six to eight
students per session, were conducted in a large university in Hong Kong. Hong Kong is
a valid context to examine counterfeit consumption because Hong Kong is an
international city where counterfeit consumption is pervasive (Special 301 Report by
the Office of the United States Trade Representative, 2010). It is a free-port where most
genuine products are widely available; meanwhile, it is not difficult to find counterfeit
products. Furthermore, Hong Kongs emerging economics status combines with the
influence of both western (due to its colonial past) and oriental (particular Chinese)
values makes it a unique location to study the phenomenon.
Ninety-five informants (62 percent female) ranging in age from 18 to 24 received a
course credit for their participation. Thirty of the informants were not born in Hong
Kong; they were exchange students from Mainland China studying in Hong Kong for
less than one year. Therefore, the groups provided an opportunity to compare
responses from Hong Kong locals and those from Mainland China (Zhejiang et al.).
While the sample is not representative of the population, they do represent active
consumers of aspirational fashion goods, electronics and fashion accessories, which are
frequently counterfeited. In each session (approximately one-two hours), informants
were motivated and probed by experienced moderators to share their experience of
everyday consumption and counterfeit consumption, if any. The focus groups were
videotaped and then transcribed, so as to be accurate in the documentation.
We followed the principles in grounded theory and use weft QDA, a tool that
organized text into thematic groups with character-level coding (i.e. categories
organized in a tree structure) to support our coding and analysis. Specifically, two
coders[1] were independently instructed to identify incidents of counterfeit
consumption (i.e. purchase or use of a counterfeit). The resulting incidents of
counterfeit consumption were classified into the following 15 product categories:
computer software (25.2 percent); audio/visual media (21.4 percent); bags/handbags
(20.4 percent); clothing/shoes (14.5 percent); books (5.5 percent); daily commodities
(3.1 percent); accessories (2.8 percent); toys (2.8 percent); food (2.0 percent); watches
(1.4 percent); electronic equipment (1.2 percent); cosmetics; eyewear; medicine; and
musical instruments (all , 1 percent). In total, 509 counterfeit consumption incidents
across 15 general product categories were identified (Table I).
Then, the two coders discussed and grouped the incidents into motivational factors
based on the criterion of similarity within factors and dissimilarity between factors.
We adopted Strauss and Corbins (1990) process and allowed the data to direct us.
Specifically, the authors interpreted the data in each group and labeled each group
independently to reflect the theories and empirical generalizations that may explain the

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Table I.
Product category of
counterfeit consumption
varies across groups

Product category

Hong Kong
informants
(n 65)
No.
%

Mainland
informants
(n 30)
No.
%

All informants
(n 95)
No.
%

Computer software
A/V media
Bags/handbags
Clothing/shoes
Books
Daily commodities
Accessories
Food
Toys
Watches
Electronic equipment
Cosmetics
Eyewear
Medicine
Musical instruments
Total

92
93
68
36
20
4
9
4
7
6
3
1
1
0
0
344

36
16
36
38
8
12
5
6
2
1
3
0
0
1
1
165

128
109
104
74
28
16
14
10
9
7
6
1
1
1
1
509

26.7
26.9
19.7
10.4
5.8
1.2
2.7
1.2
2.1
1.8
0.9
0.3
0.3
0.0
0.0
100

21.8
9.7
21.8
23.0
4.8
7.3
3.0
3.6
1.2
0.6
1.8
0.0
0.0
0.6
0.6
100

25.1
21.4
20.4
14.5
5.5
3.1
2.8
2.0
1.8
1.4
1.2
0.2
0.2
0.2
0.2
100

phenomena. We also identified some potential relationship between groups (i.e. axial
coding) and reviewed the full transcripts to propose an integrated framework
explaining counterfeit consumption (i.e. selective coding). The process is iterative until
no further insight can be gained. The output was a list of nine motivational factors
associated with purchasing intellectual property rights infringing products.
Afterward, two new coders (recruited and trained as before), independently recoded
the incidents into the nine factor categories. The Cohens Kappa inter-coder reliability
was .91 and inconsistencies in classification were resolved via discussion. Utility
(35.2 percent), risk perception (22.0 percent), social influence (12.3 percent), confusion
(10.9 percent), and ethical perception (8.6 percent) were the most frequently mentioned
factors that influence the consumption of counterfeits. Habit (1.6 percent), desire for
exploration (1.9 percent), local interest (5.3 percent), and cultural influence (4.3 percent)
were mentioned less frequently (Table II). These nine factors provide a multiperspective and overarching framework to understand the consumer motivations
related to the consumption of counterfeits.
Findings
Utility (35 percent)
The number one reason for knowingly purchasing counterfeit items, especially with
prestige and luxury items, was one of utility: The consumer evaluated the benefits
associated with the consumption and made the purchase when such consumption was
beneficial to oneself. The counterfeit was a carefully evaluated transaction and the
consumer balanced the perceived benefits against a reference point (i.e. the authentic
product). This also fits the marketing concepts of acquisition utility and transaction
utility (Thaler, 1999).

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Factor

Hong Kong
informants
(n 65)
No.
%

Mainland
informants
(n 30)
No.
%

All informants
(n 95)
No.
%

Utility
Risk
Social influence
Confusion
Ethicality
Local
Habit
Desire of exploration
Cultural difference
Total

112
76
42
38
37
12
6
6
15
344

67
36
22
11
7
15
3
1
3
165

179
112
64
49
44
27
9
7
18
509

32.6
22.1
12.3
10.9
10.8
3.5
1.6
1.9
4.3
100

40.6
21.8
13.3
6.7
4.2
9.1
1.8
0.6
1.8
100

35.2
22.0
12.6
9.6
8.6
5.3
1.8
1.4
3.5
100

Acquisition utility is a measure of the value of the good obtained relative to its price:
I dont buy counterfeits all the time [. . .] After all, a counterfeit is just another product to
choose from [. . .] I buy it because of its superior value relative to price (Male, 24).

Transaction utility is shown when a consumer acquires a product at purchase price

less than his or her reference price:
A genuine Arsenal soccer jerseys cost several hundred (Hong Kong) dollars. Its imitations,
which are very similar, are ten times cheaper. I only wear it to play soccer. Why should I buy
an expensive one? Its better for me to buy the imitation (Male, 18).

While price was a leading factor contributing to acquisition and transaction utility, the
extant literature seems to overestimate its influence and overlook another determinant
of utility. It is also not uncommon to find evidence which suggests that money is not
the issue, the authentic ones [referring to some difficult to get collectable Monchhichi
dolls] were simply not available (Female, 23). Another informant said that:
[. . .] pirated movie often arrived much earlier than the movie in theaters. We have to wait for
a long time if we want the authentic ones. As it is faster, people choose the pirated ones
(Female, 19).

From a transaction utility perspective, having a counterfeit is better than having

nothing.
Besides price and availability, convenience and personalization were two additional
aspects which emerged from the data to create utility, and drive consumers to purchase
counterfeits. An informant in our focus group commented on the distribution of pirated
software that, it is so convenient. There are around 20 or more such shops in one
street. So it is very easy to buy these products (Female, 18).
Some counterfeiters are willing to customize products for their customers, and such
personalization increases the acquisition utility of the counterfeits over the originals.
One informant described her experience with tailors who are willing to copy designer
clothing, you get to choose the style, the color, and the fabrics [. . .] It has the look of a
designer piece and matches your personal taste perfectly (Female, 26). Another
informant said:

Understanding
counterfeit
consumption
9

Table II.
Reasons behind
counterfeit consumption
varies across groups

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10

[. . .] sometimes, the imitation is even better than the genuine product. I have an imitation bag
that comes with a lot of accessories that allow you to personalize the bags [. . .] The design
was also good, its just too bad that it added the agnes b logo and makes it a counterfeit
(Female, 21).

In summary, the data suggests that many counterfeiters offer extra transactional and
acquisition utility to their customers beyond the price advantage.
Risk perceptions (22 percent)
The consumer evaluated the risks associated with the consumption and made the
purchase when the perceived risk was personally acceptable. In general, risk can arise
during the purchase of the product and also arise during the consumption of the
product. For purchasing risks, legal enforcement is the most directly related factor. For
example, Albers-Miller (1999) found perceived criminal risk reduced the purchase of
illicit goods because fear of a criminal penalty deters aberrant behavior. An informant
in our focus groups described his experience of purchasing a pirated game DVD in a
shop as following:
When I got inside, I feared of being caught. I dont know what would happen if the inspectors
from the Customs and Excise Department suddenly came in. I dont know if I will be on the
news if I get caught (Male, 18).

For consumption risks, the most directly related factor in this category is product
quality. One informant in our focus group told us:
My friend bought an MP3 player that imitated IPOD. However, it got electric leakage when he
tried to charge it. Thats really too dangerous, I would never buy an imitation electrical device
(Female, 21).

For some product categories, such as pharmaceutical products, product quality is very
important and the risk of consuming a substandard knockoff drug can be life
threatening. I would never use a counterfeit cosmetic knowingly. Have you watched
the news report? Some (samples of counterfeit cosmetic) have mercury content several
thousand times over the safety standard (Female, 22). However, for other product
categories, such as clothing, consumption risk is much lower because the product
quality of the imitator is either not important or perceived to be similar to the genuine
product. I only wear it [a counterfeit soccer jersey] once a while; I should be fine
(Male, 24).
Social risk is another kind of consumption risk associated with reference groups. If
the reference group does not approve of the consumption of imitation products, the
users run the risk of being ostracized. An informant in our focus group said that:
For clothes and bags, you use the brand for your own pride. If you bought an imitation,
people will think that you had no money but want the pride. They will then laugh at you
(Female, 21).

Another informants precaution behavior is even more extreme:

I dont want my friends to know the handbag is a fake [. . .] I use it only when we go out
at night. You know, it is more difficult to spot out it is a fake [. . .] My strategy works
(Female, 21).

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In summary, consumers consider the risks associated with the purchase and
consumption of counterfeit products. If perceived risk related to the imitation product
is high, consumers are likely to forgo buying the product and discontinue using it.
These risks include health and safety, social embarrassment, criminal association, and
the risk of product loss.

Understanding
counterfeit
consumption

Social influence (13 percent)

The consumer was influenced by the opinion of peers, family, and perceived accepted
behavior on the consumption. When deciding whether to consume counterfeits or not,
many consumers look beyond the immediate benefit and consider the social ideals and
standards imposed by others (Bearden et al., 1989). I dont photocopy textbooks [. . .]
What would the professor think if he found out that I am using pirated textbook?
(Male, 20).
Consumers are more likely to act in accordance with the social norm when in public
than when alone (Chan et al., 1998). Evidence of relaxation of ethical standards when
alone was expressed by several informants:

11

I think it is okay to use pirated software because we just use them at home. Its not like using
imitation bags. You will be judged by many people on the street about whether you are using
a genuine one or an imitation bag. For pirated software, you dont need to worry about being
judged (Female, 20).

However, research on compliance, obedience, and conformity suggests that social

influence can lead people to break rules as well as follow them (Conger, 1980):
I bought the genuine Microsoft Office software for around HK$400 [. . .] Many classmates said
that I am stupid. They said I could have just bought a pirated version instead. They think
that it is acceptable to buy pirated computer software and only stupid people will buy the
genuine ones [. . .] I used pirated software since then (Female, 19).

Confusion (10 percent)

The consumer was confused or unsure about the true identity of the product during
purchase and had difficulty in distinguishing the genuine product from the
counterfeit. I was confused by the counterfeit at the time of the purchase; it was very
similar to the authentic one (Female, 23) represents a common response from the
informants across the groups to the question of why they purchased counterfeits.
Several informants echoed that brand confusion occurred When the genuine one is
not available for direct comparison, it is sometimes difficult to spot the counterfeits
(Male, 23).
Even knowledgeable consumers may be confused with the origin of products. Many
informants complained that it is difficult to tell the authenticity of a product:
Some visual/audio shops claimed that they are selling genuine products. Some shelves inside
the shops seemed to be selling genuine products. However, some other seemed to be selling
pirated ones [. . .] As most products are genuine but some are pirated, they look similar and
priced the same, you cant tell [which one is counterfeit] most of the time (Female, 19).

Another informant told the group that some so-called international editions are really
counterfeits; the contents are the same but of lower quality. I didnt think those were
unauthorized copies when I bought them (Female 20).

APJML
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12

The underlying reason of why product similarity leads to brand confusion was
hinted at by the experience of two informants. The shops looked normal, price was
average, the design seemed okay, so I thought it must be a real one (Male, 21). Another
added:
I know the brand very well, but I dont look at the brand name and check it letter by letter
(referring to the misspelled but confusingly similar brand name) [. . .] it would be so
embarrassing [if I check the brand name letter by letter] (Male, 22).

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This observation suggested that consumers rely on a few heuristics and situational
cues to judge the authenticity of a product: for example, if the product itself and the
surroundings were similar or looked right, consumers did not question the origin of
the product.
Ethical perceptions (9 percent)
The consumer made an ethical judgment and made the purchase when such
consumption was perceived as not unethical. Purchasers of counterfeits and knockoffs
blamed the original manufacturers for making the originals unavailable (due to limited
distribution channel) or unaffordable (due to premium pricing strategy). You [the
original manufacturer] dont make it [the genuine product] available [. . .] I dont think it
is unethical to buy the counterfeit (Male, 23). One informant accused Microsoft to
justify the purchase of pirated software, First, you dont have the money. Second,
Microsoft had monopolized the market then charging high price for its products; this is
bad for the world (Male, 19).
Consistent with Cordell et al. (1996), some blame the counterfeit manufacturers for
producing the items and giving them the choice. It is those who manufactured them
[the counterfeits] who are unethical; I am just buying what is available in the market
(Female, 22). Second, many informants hold a double standard in that they think
selling counterfeits and knockoffs are illegal, but buying them is legal:
If we take away something from the supermarket, we know that we are stealing. However,
when we are buying imitation or pirated products, we paid for it. Therefore, I dont feel like I
am stealing something (Male, 19).

Third, some believe that imitation products do not cause harm to the original
trademark holders because the value of their transaction is insignificant. When you
are buying Microsoft Windows, you would think that he [Bill Gates] is already one of
the richest people in the world. One or two pirated software wont hurt his income at
all (Female, 19), the others nodded. Others argue that they are not going to purchase
the originals anyway. I wont buy a Louis Vuitton because it is way too expensive, so
the company really lost nothing [when I bought the counterfeit] (Female, 22).
Informants suggest a fourth factor, as some saw counterfeiting beneficial to society
by allowing those who cannot afford the authentic products an alternative choice:
I bought a HK$20 pirated CD. However, I wont buy the HK$160 genuine CD anyway.
Therefore, there is little, if any, loss to the genuine CD makers. I just benefit myself and hurt
no one at all. The society gains as a whole (Male, 21).

This notion is consistent with the Chinese philosophy of sharing. Furthermore, one
informant even sees how an original manufacturer might benefit from the
counterfeiters:

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There are Hello Kitty clocks, candle-sticks, ovens, even toilet papers [. . .] Sanrio (the licensor
of the Hello Kitty character) can get some creative ideas and know what works and what
doesnt from these counterfeits (Female, 19).

Cultural influence (4 percent)

The consumer was influenced by the traditional Chinese cultural value that copying
and imitation is reasonable and acceptable. Western philosophy values creativity and
students are taught to respect the works of others and avoid copying and plagiarism.
Meanwhile, Asian philosophy values the importance of sharing, where ones expertise
should be shared to maximize the benefit to the society as a whole (Ang et al., 2001).
As exemplified in the Chinese proverb he that shares is to be rewarded; he that does
not, condemned (Swinyard et al., 1990, p. 656). We all learn to copy the good things;
good things get copied, thats nature (Male, 20).
When growing up, Asian children are expected to learn, imitate, and copy the
good behaviors of siblings and the knowledge of their teachers. In Asian calligraphy,
copying a masterpiece is historically considered an art form in its own right. We are
brought up in an environment where copying is acceptable and encouraged (Female,
18); and this comment provides the best support to the above view.
Although the data supports the notion that the Asian value of sharing may
encourage counterfeit consumption, a confounding factor, the lack of understanding
proper intellectual property rights, becomes apparent:
What parents did will pass to the next generation. We had often copied books in the past, but
now the intellectual property rule said that we cant. Copying wasnt a problem before. Why
should we care about intellectual property now? (Male, 20).

Another informant commented that the concept of intellectual property was not
educated seriously either at school or at home. Therefore, we feel like there is nothing
wrong about using imitations (Female, 18).
The comment of an informant may be insightful to educators of intellectual
property rights. Those movie makers and singers are not losing money, they are still
making a profit. They talk about intellectual property rights only because they want to
make more money (Male, 20). In short, consumers with a poor grasp of intellectual
property rights often do not see a problem in buying counterfeits. Their immersion in
the cultural value of sharing further impedes their understanding on how intellectual
property rights benefits society.
Local interests (5 percent)
The consumer evaluated the influence associated with the consumption on the local
economy and made the purchase when it would benefit/not hurt the local economy.
When the manufacturing and distribution of counterfeits are integrated into the local
community, some locals view them as legitimate businesses representing the local
interest. Many hawkers [of counterfeits] just want to make a living [. . .] Give them
some room to survive (Female, 22). Another added, You are right. Counterfeiting
actually feed many unskilled labors [. . .] Selling counterfeits are better than robbery
(Female, 21). Another joined the conversation, at least they dont rob us (Male, 22).
Some believe that when the scale of the counterfeit activity is so large, curbing it
may create more problems. The whole shopping mall sells intellectual property rights

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infringing products; what can they sell if they dont sell those products? (Male, 20).
Chow (2000) provided a thorough description of the China small commodities city in
Yiwu city, a local distribution center of counterfeits. With over 30,000 wholesale stalls
and 3,500 full sized wholesale stores, China small commodities city has 200,000 visitors
and 2,000 tons of goods purchased everyday. At least 90 percent of the daily-use
consumer products found there are counterfeits. Thus, the distribution of counterfeits
benefits the logistic, hospitality and retail industry in the local area and counterfeiting
is viewed as a legitimate source of employment and economic development.
Most famous genuine branded goods are imported and generally perceived to be of
foreign interest:
The US government forced the Chinese government to get rid of the problem of pirated
Windows software because they wanted to protect the Americans interest. If the Chinese
government is really going to prosecute those who sell pirated software, then the Americans
and Bill Gate would benefit (Male, 21).

Habit (2 percent)
The consumer did not think much about the consumption prior to the purchase and
the consumption was spontaneous. Many informants admitted that they are used to
the idea of buying counterfeits and have been buying counterfeits habitually for a long
time. Recent conceptualizations of habit, from an information-processing perspective,
suggest that the repetition of a behavior, which is initially based on conscious and
deliberate process, automates the whole cognitive processing. When I want software,
there is no need to think, I will just go there [the counterfeiters] to buy it (Male 21).
Some consumers had an initial negative attitude towards buying imitations, but
changed their attitude and became more willing to buy imitations instead of original
products after they accidentally bought an imitation:
I dont know that it was a counterfeit, I wouldnt be buying it if I knew [. . .] but now I dont
mind [. . .] next time I will buy again, it is cheap and of good quality (Female, 23).

Unless the consumption experience and consequences are disastrous, the behavior of
buying imitations is likely to be repeated. Once these habits are formed, they are often
difficult to break. The intention to discontinue a habit requires sufficient strength to
override the well-practiced behavior:
I go there [where counterfeits are sold] when I have nothing else to do, to see if there are any
new movies or new computer games [. . .] It is difficult to resist the temptation to take a look
[. . .] [and] when I see something I want, I will buy it (Male, 21).

Desire for exploration (1 percent)

The consumer believed that the consumption process is fun, can satisfy ones desire
for knowledge, or an urge of curiosity.The consumption of counterfeits may lead to
pleasure from the process. Some purchasers found the purchasing process
adventurous:
The process was exciting [. . .] You write down the code of the product they want, give it to
seller, and pay. Then, the seller will tell you when and where to collect the [counterfeit]
products. Then, you show up at the location at the right time, you will find the products
(Male, 21).

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Although this process may remind some people that it is illegal and discourage
potential customers, other consumers enjoyed the thrill and found the process exciting.
Along the same line of reasoning, consumers also derive pleasure by satisfying their
urge of curiosity:

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Some British students from the exchange program asked us to bring them to Ladies market
to find some imitation Louis Vuitton bags. It is because those imitation bags are rare in their
country, so they want to buy them for fun and for the adventure (Female, 19).

15

Cultural differences
When we categorized the responses based on the informants city of birth (born in
Hong Kong informants vs born in Mainland China), several inter-cultural differences
emerged from our data. In terms of product category, the Hong Kong informants
experience of counterfeit mainly falls in two areas: digital content and fashionable
luxury products; the top four categories accounted for nearly 84 percent of the content
they shared. The Mainland Chinese experienced a wider spectrum of counterfeit
products as more consumption experience with apparel items and daily products were
recalled. As a Mainland informant calmly explained, we see all kinds of counterfeits
all the times in the Mainland (Male, 22).
We note that the lower incident of mentioning of audio/video media in the Mainland
group may be attributed to confusion, or their lack of knowledge in intellectual
property rights. One Mainland believed that there is no such thing as counterfeit
[pirated] music in China; all CDs manufactured in China are legit (Male, 18). A Hong
Kong informant replied, there is no legit music in China; all are counterfeits. Then a
heated debate on what counts as a counterfeit and what does not began.
The reasons behind consumption may also differ. Although value for money (i.e. the
utility factor) is the most importance motivator behind their counterfeit consumption, it
accounts for around 33 percent of total incidents by the Hong Kong informants
comparing the over 40 percent by the Mainland informants. More Hong Kong
informants (10.8 percent) voiced concerns about the ethicality of their decisions than
their Mainland counterparts (4.2 percent). Meanwhile, more Mainland informants
(9.1 percent) justified their counterfeit purchases through the local interest argument
than Hong Kong informants (3.5 percent). There seems to be no difference in the other
factors (e.g. risk perception) across the two groups. We speculate that differences in
family income may explain variance found in the utility dimension, while difference in
respect for intellectual property rights may be a plausible explanation for the variance
in the ethicality dimension. The difference in local interest may be explained by the fact
that most counterfeits are produced in (thus closely integrated with) Mainland China
instead of Hong Kong.
Discussion and implications
While the importance of price in purchasing counterfeits was revealed in the data, the
prominent effect of utility was also due to other aspects such as convenience in
obtaining counterfeits, or transaction utility, and personalization service provided by
the counterfeiters. Utility appeared most with respect to clothing, accessories, software
and designer luxury goods and might be the most difficult to change.

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The second factor, but negatively related to counterfeit consumption, was perceived
risk. Consumers saw significant physical risks in many counterfeit purchases
(e.g. electronics) but report of counterfeit consumables were almost non-existent: food
(2.0 percent); cosmetics (0.2 percent); and medicines (0.2 percent). Yet consumable
counterfeit products feature prominently on the black market (www.havoc.com/
products, 2012). It is clear consumers sought to avoid counterfeits, especially where
their health, safety, or criminal implication were involved. If consumers can be taught
to spontaneously recall the risk factor associated with counterfeit consumption, they
may be more likely to buy from the original manufacturers than from the
counterfeiters. The physical risk factors must be direct and prominent.
Social risks such as losing face for wearing knockoff apparel are dreadful, yet
plausible, consequences of consuming imitation products. When these kinds of risky
consequences flash by the minds of consumers during their product evaluation
process, they are more likely to reconsider their choices in favor of original brands. Our
interviews showed that consumers might avoid consuming counterfeit products if their
circle of influence disapproved and ridiculed the use and ownership of fakes.
When it comes to confusion, our data may partially explain why educational level
and product knowledge have little power on mitigating the effect of product confusion.
It is because consumers rely on a limited number of situational cues (e.g. price and
location) to judge the authenticity of a product, and these cues can be easily
manipulated by the counterfeiters. The perceived ethicality of counterfeit consumption
seems to be pragmatic and the results suggest when counterfeiting is perceived to
benefit the society as a whole, even though it may hurt a subset of individuals, many
informants judge it to be ethical.
Finally factors of culture, local interest, habit, and desire for exploration accounted
for very few of the motivations to purchase counterfeits. It is interesting to note the
influence of desire for exploration on counterfeit consumption only represented
1 percent of the data. This motivation is only relevant when the consumer consumes,
not for the sake of the product but, mainly for the emotional processes involved.
Cultural influence was one of the least frequently mentioned factors by the
respondents, likely because they are so immersed in the influence of their deeply rooted
cultural values, and thus are not consciously aware. Instead of seeing how culture may
influence their behaviors, many informants had difficulty in seeing how intellectual
property rights benefits them both short-term and in the long run.
Summary and insights
It is clear from the study that the consumer does want authentic goods, but many times
are not sure how to identify them. The main sources of identification are the
distribution channels, but these are not fool proof. Therefore, communication of how to
identify real brands needs to be a priority for business (e.g. presence of holograms).
The laws of a country may also have a profound effect on consumer perceptions and
motivations to purchase. For example, in France it is illegal to buy counterfeit goods
and those who have bought them may have them confiscated (Casalonga and Guerrini,
2009). While in the USA, customs allows one counterfeit product per person to enter the
country. By contrast the estimated value of counterfeit goods in the USA in 2011 was
225 billion versus 8.5 billion for France (www.havoc.com/products, 2012). So where
counterfeit goods are tolerated at the individual level, the ethical perceptions may

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follow the legal consumer laws. Businesses need to press governments to consider
counterfeit purchases by consumers as a serious crime.
Our finding that consumer ethics may depend on whether the activity benefits the
society as a whole is worthy of additional discussion. Much of the extant discussion
relating to consumer ethics focuses on the degree of harm consumer perceive
themselves inflicting on the brand owner, business, and/or the society. We learn that
when consumers thought their counterfeit consumption caused little or no harm, they
do not see much ethical concern in their actions (Ang et al., 2001; Nunes et al., 2004).
A sub-theme, within the ethicality dimension, is that some of those who purchase
counterfeits see the benefits of their purchases beyond the value for money. Some
consumers believe that they are helping others (hawkers who sell the counterfeits or
the manufacturers who products the product). The literature lacks research that
systematically studies the (perceived) benefits of counterfeit consumption on the
society and might be studied carefully in the future.
The findings on local interest send an important message to international
marketers, as our informants suggested that some people may hold positive attitudes
towards local counterfeiters. As Penz and Stottinger (2008) found, Ukrainians see the
counterfeiters as less professional but more human; Mexicans see the counterfeiters
as soft and lenient. The logic behind the locals consumption seems to be that buying
a local (counterfeit) product benefits the local community whereas buying a foreign
(genuine) product does not. This again emphasizes the need to crack down on the
purchase, as well as the creation of the counterfeit.

Note
1. The coders (senior students) were experienced with quantitative and content analyses. They
were trained by the authors using pretest focus group data.

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Koklic, M.K. (2011), Non-deceptive counterfeiting purchase behavior: antecedents of attitudes
and purchase intentions, Journal of Business Research, Vol. 27 No. 2, pp. 127-137.
About th authors
Dr Felix Tang is an Assistant Professor of marketing at Hang Seng Management College in
Hong Kong. His research interests include pricing modeling, customer satisfaction, counterfeit
consumption, and perceived fairness. He is currently teaching principles of marketing, consumer
behaviour and services marketing.

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Dr Vane-Ing Tian is a Lecturer at the Open University of Hong Kong. Her research focuses on
Chinese wisdom in marketing strategy and counterfeit consumption. She is currently teaching
marketing research.
Dr Judy Zaichkowsky is a Professor of marketing at Simon Fraser University in Canada. Her
knowledge and expertise on the role of involvement in consumer research has had a major
impact on the field of marketing. Dr Zaichkowsky was the Recipient of the 2013 C.W. Park award
for outstanding contribution to consumer psychology. She is the author of The Psychology
Behind Trademark Infringement and Counterfeiting (2005). She is currently teaching brand
management, consumer behaviour and Retailing Berlin, a course which focuses on aesthetics.
Judy Zaichkowsky is the corresponding author and can be contacted at: zaichkow@sfu.ca

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