Why do Korean and Chinese Consumers Use Counterfeits?: Focus on Motivation, and Benefit and Cost Factors
Seung Yeob Yu, Nami Kim
Why do Korean and Chinese Consumers Use Counterfeits?: Focus on
Motivation, and Benefit and Cost Factors
Seung Yeob Yu, 2Nami Kim
Department of Advertising & Public Relations, Namseoul University,
[email protected]
*2,Corresponding Author
Department of Advertising, Peking University, [email protected]
1
1, First Author
Abstract
This study addresses the following three questions: what is the using motivation of the counterfeit by
Korean and Chinese consumers? What is the benefit that can come from using the counterfeit? What is
the using cost of the counterfeit? Also, we identified the difference of tendency which influences the
attitude toward the counterfeit with three different factors, including motivation, benefit, and cost
factors related to the attitude toward the counterfeit goods by consumers. It was found that 4
motivational factors lead consumers to the use of counterfeit goods: ostentation, economy, satisfaction
and quality. For Korean consumers, ostentation and quality had a significant influence on their
attitude toward fake goods, whereas all the four factors had a significant effect in the case of Chinese
consumers. It was also found that the two benefit factors are personal and economic ones. For Korean
consumers, personal factors had a significant influence on their attitude toward counterfeits,
Keywords: Counterfeit, Attitude Toward Counterfeit, Motivation Factor, Benefit Factor,
Cost Factor
1. Research background and purpose
Counterfeit goods can be found in any corner of the glove, even in advanced countries [1] [2].
However, there is no question that China tops the list in terms of consumption of luxury goods
as well as production of counterfeit goods. According to the report by Word Customs
Organization, as of 2011, counterfeit goods account for 7% of the total volume of international
trade, approximately $512 billion. It was also reported that 67% of them were made in China,
which clearly means that China is the Mecca for the fake products. Production and consumption
of these products has become a social issue in the Chinese market. Those who can not afford
genuine luxury goods run to buy counterfeits that look almost the same as genuine ones.
Chinese counterfeits that can be found anywhere in the world has been criticized and even
ridiculed. The weekly Times did publish a special issue titled ‘Top 10 Chinese Knockoffs’ in
2010. Number 1 in the list was Hi Phone, a fake of iPhone followed by I-ped, a counterfeit of
iPad. Interestingly, even an architecture copying the White House was in the list. Korea Trade
Promotion Agency(KOTRA) recently held an exhibition show that displays 250 kinds of
genuine products made in Korea and counterfeit goods made or purchased in China.
In England, the Daily Mirror called China ‘King of Counterfeit’ and concluded that it is
attributable to Chinese government’s connivance. It is not difficult to see a show selling fake
mobile phones much cheaper than genuine ones in a home shopping channel. The government’s
overlook or indifference is a very plausible reason, since department stores and hotels also sell
these products. Moreover, a Chinese official recently remarked, “Counterfeits also mean
innovation or development. It is not fair to claim that counterfeits are always wrong” [3].
Consumers generally think that a product, genuine or fake, is more or less worth to buy if
valuable. That is probably why counterfeits never disappear. However, the value of products
depends on how much consumers possess or purchase genuine or fake ones. For example, those
who consume genuine products only are very negative toward fake ones, while those who
possess many counterfeits are not[4].
One of the most important reasons for purchasing counterfeit products is to possess the
image of genuine products at much cheaper prices[5][6]. Those who have favorable attitude
toward counterfeit goods, as we can easily understand, are more likely to buy those products[7]
[8]. Alber-Miller finds that those whose neighbors purchase and use counterfeit goods are more
Advances in information Sciences and Service Sciences(AISS)
Volume5, Number15, October 2013
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Why do Korean and Chinese Consumers Use Counterfeits?: Focus on Motivation, and Benefit and Cost Factors
Seung Yeob Yu, Nami Kim
likely to purchase counterfeits[5]. Also, if you are not really sensitive to regulations, you are
more likely to purchase counterfeits[9]. Chinese consumers believe that their favorable attitude
toward counterfeits might support small companies competing with large firms. They even
report that they will purchase counterfeits, though they are financially good enough to buy
genuine goods [10].
This research is proposed to solve a question: why Korean and Chinese consumers use
counterfeit in a circumstance in which Korean and Chinese consumers frequently use
counterfeit? Of course, the research is based on Chinese consumers because Chinese is well
known country for its production and consumption of counterfeit. In South Korea, which is
contiguous to China, there is also an increase in using the counterfeit by Korean consumers.
This reality is reflected in the research. The present research aims to answer the question: Why
do Korean and Chinese consumers use counterfeit goods? China is a country well known for its
production and consumption of counterfeits. Koreans have also increasingly used counterfeits.
The reality is well reflected in this research.
Based on a result of in-depth interview with Korean and Chinese consumers, the research
tries to figure out what is the using motivation factor of Korean and Chinese consumers
according to the social cultural change ,and reveal which factor among purchase motivation
factors affect the attitude toward the counterfeit and a difference between factors. Researchers
of counterfeit have been ignored a perspective of benefit and cost which come from use of
counterfeit. From this perspective, the research tries to identify the benefit factor and cost factor
which come from the use of counterfeit, and a difference of Korean and Chinese consumers’
awareness. In addition, the research tries to identify whether benefit and cost factor of using
counterfeit influence the attitude toward the counterfeit and difference of Korean and Chinese
consumers’ awareness.
2. Theoretical Background
A counterfeit has been frequently used as a synonym to an imitation or a copied product. The
terms like gray market and copy on demand are also used with a similar meaning. An imitation,
unlike a counterfeit, refers to one whose material, brand name, look and color are similar to a
genuine product[11]. An imitation is designed and manufactured to ‘look like’ a genuine one
and to remind consumers of a genuine brand. A counterfeit, on the other hand, is designed to ‘be
like’ a genuine[12]. The present research does not discuss imitations but focuses on counterfeits
only. A counterfeit can be simply defined as an illegal copy. It is recently called ‘JJaktoong’ in
Korean, which is defined by Korean National Language Institute as ‘a slang for a counterfeit’
[13].
The rocketing popularity of luxury brands has led young people, who can not afford to buy
them, to purchase counterfeits. In other words, the youth might think that even the counterfeits
help upgrade their values, as they try to satisfy their inclination to show off and propensity to
consumers.
Tom et al. also found that consumers were satisfied with the durability, quality, and
particularly with the prices of the counterfeits[14]. S. Lee and C. Shin also found that
counterfeit buyers had propensity for conspicuous consumption and that the design led them to
purchase them. They were more likely to find pleasure and form networks with other people
from shopping[15]. J. Park, in turn, found that appearance similar to genuine products and high
quality of the counterfeits led to more positive attitude toward counterfeits[16].
Wee at al. claimed that the three characteristics people consider when purchasing counterfeits
are durability, quality and outward look. Singapore customers were found to have a higher
intention of to purchase when they feel the counterfeits look similar to genuine ones[17].
Phau, Sequeira and Dix argued that integrity is an influencing factor for customers’ attitude
toward counterfeits[18]. One’s behavior is influenced by his or her personal sense of
justification [19]. Such values as integrity are likely to have an impact on their judgments of
unethical behavior. Thus, people with less integrity are more likely to show a favorable attitude
toward counterfeits[9]. Phau, Teah and Lee, in turn, found that social influence and inference of
price/quality significantly influence attitudes toward counterfeits[19]. First, consumers’
consumption pattern reflects their social status, which, thus, influences their purchasing
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Why do Korean and Chinese Consumers Use Counterfeits?: Focus on Motivation, and Benefit and Cost Factors
Seung Yeob Yu, Nami Kim
behavior. As far as price inference is concerned, counterfeit users can be classified into two
types. Some might feel that the offered price is outstanding despite the counterfeits are
comparable to genuine products in every aspect. Or the others might feel that the counterfeits
have a price benefit even though their quality may fall short of genuine ones.
Hoe, Hogg and Hart performed small group interviews to investigate how consumers get
related with counterfeits and what implications the counterfeits have in the formation of their
identity. These researchers found a fundamental contradiction in the customers’ attitude toward
counterfeits. The subjects were found to have intentions to purchase and use counterfeits and
also to be reproachful of those who use counterfeits. It might be assumed that the counterfeit
market would disappear if consumers do not want or use counterfeits, and that counterfeit
sellers have made use of the psychology of consumers’ aspiration for luxury brands. Thus,
people could justify their purchasing behavior and at the same time criticize those who fall a
prey to the exploitation of the psychology[20].
Penz and Stottinger’s study of similarity and difference between genuine and counterfeit
products found that the subjects’ mental maps of the two concepts do not really overlap, which
might mean that they have a clear concept of luxury purchasing and another of counterfeit
purchasing. Often, similar characteristics (quality and price) are used in evaluation of luxury
goods and counterfeit brands[21].
3. Research Problem
Research Problem 1: What is the use motivation of the counterfeit by Korean and Chinese
consumers?
Research Problem 2: Is there a difference in relationship of use motivation influencing
attitude toward the counterfeit good between Korean and Chinese consumers?
Research Problem 3: What benefit do Korean and Chinese consumers earn by using the
counterfeit?
Research Problem 4: Is there a difference in relationship of using benefit factor affecting the
attitude toward the counterfeit good between Korean and Chinese consumers?
Research Problem 5: What is cost resulted from using the counterfeit by Korean and Chinese
consumers?
Research Problem 6: Is there a difference in relationship of using cost factor affecting the
attitude toward the counterfeit good between Korean and Chinese consumers?
4. Method
4.1. Participant
To compare Korean and Chinese consumers’ use behavior of the counterfeit, 300 college
students of 4 colleges located in Seoul and Cheonan are surveyed for the case of Korean
consumers. For the case of Chinese consumers, 307 college students of 4 colleges located in
Peking and Kirin are surveyed.
4.2. Measure scales
4.2.1. A counterfeit purchase motivation scale
A counterfeit refers to a product labeled with the same trademark as a genuine one.
Participants think of experience of purchasing the counterfeit, and their motivation and reason
for purchasing the counterfeit good are measured on Likert five point scale. The survey is
consisted 19 questions. As a result of reliability analysis, a coefficient of Cronbach α is .899.
The questions were translated by an expert of advertising in China and were given to a group of
Chinese people as a preliminary test. Some awkward or culturally inappropriate expressions
were revised for a finalized version of survey questions.
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Why do Korean and Chinese Consumers Use Counterfeits?: Focus on Motivation, and Benefit and Cost Factors
Seung Yeob Yu, Nami Kim
4.2.2. A counterfeit benefit of use scale
Participants think of experience of purchasing the counterfeit, and their using benefit and
profit are measure on Likert five point scale. The survey is consisted of 12 questions. As a
result of reliability analysis, a coefficient of Cronbach α is .901. The questions for benefits for
Chinese customers were arranged in the same way as those for motivation.
4.2.3. A counterfeit cost of use scale
Participants think of experience of purchasing the counterfeit product, and the subject of their
cost of use and dissatisfaction is measured on Likert five point scale. This survey is consisted of
16 questions. As a result of reliability analysis, a coefficient of 5 Cronbach α is 0.900
4.2.4. A counterfeit attitude toward product scale
The criterion of attitude toward the counterfeit is consisted of 13 questions and measured on
Liker five point scale. As a result of reliability analysis, a coefficient of Cronbach α is .671. A
person with ph.D degree in advertisement from university in China translates the entire criterion
for the Chinese consumers. A preliminary research is proceeded to revise culturally improper
expression in a translated criterion. A final revised version is used for the final survey. The
questions for cost factors for Chinese customers were arranged in the same way as those for
motivation.
4.3. Analysis of data
For an analysis of data, SPSS/PC+(Windows 18.0 Version) is used. To know the composition
of using motivation of the counterfeit good, using benefit, and using cost, an analysis of factor
which utilize a principle component analysis method is conducted. Also, to identify whether
using motivation factor, using benefit factor, and using cost factor of the counterfeit influence
the attitude toward the counterfeit good, multiple regression analysis is conducted. To know the
reliability of each criterion, question Cronbach's α is used.
5. Result
5.1. Influence of using motivation of the counterfeit to the attitude toward the
counterfeit
5.1.1. Motives for counterfeit use
First, a factor analysis was conducted in order to identify consumers’ motives for counterfeit
use. We used a principal component analysis and performed VARIMAX rotation and KMO &
Bartlett tests. We used the criterion of Eigen value 1.0. After eliminating Item 4, which fell
short of the communality value .40, we performed the analysis and found the following four
motives in order of importance: ostentation, economy, satisfaction and quality.
5.1.2. Influence of using motivation of the counterfeit to the attitude toward the
counterfeit: Korean consumers
Intended for Korean consumers, to know whether these four using motivation of counterfeit
influence the attitude toward the counterfeit, multiple regression analysis is conducted.
Among using motivations of counterfeit, motivation for tendency of showing off(t=3.20,
p<.01) and motivation for quality(t=4.84, p<.001) influence the attitude toward the counterfeit.
On the other hand, motivation for economy and motivation for satisfaction do not influence the
attitude toward the counterfeit.
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Why do Korean and Chinese Consumers Use Counterfeits?: Focus on Motivation, and Benefit and Cost Factors
Seung Yeob Yu, Nami Kim
Table 1. Effect of use motives on attitude toward counterfeits: Korean consumers
standardized
Non-standardized coefficient
coefficient
t
motives
B
standard error
beta
ostentation
economy
satisfaction
quality
.086
.021
.013
.125
.027
.031
.027
.026
.201
.043
.033
.289
3.201**
.691
.490
4.836 ***
F=16.725, p<.001, R2=.181 *p<.05, ** p<.01, ***p<.001
5.1.3. Influence of using motivation of counterfeit to the attitude toward the counterfeit:
Chinese consumer
To know whether four using motivations influence the attitude toward the counterfeit,
multiple regression analysis is conducted.
Among using motivations of counterfeit, motivation for quality (t=4.880, p<.001), motivation
for quality (t=4.078, p<.001), and motivation for tendency of showing off (t=2.590, p<.01) have
a static effect on the attitude toward the counterfeit. On the other hand, motivation for economy
(t=-2.403, p<.001) has a negative effect on the attitude toward the counterfeit.
Table 2. Effect of use motives on attitude toward counterfeits: Chinese consumers
standardized
Non-standardized coefficient
coefficient
t
motives
B
standard error
beta
Ostentation
economy
satisfaction
quality
.094
-.078
.133
.145
.036
.032
.033
.030
.166
-.148
.278
.297
2.590**
-2.403 *
4.078 ***
4.880 ***
F=25.703, p<.001, R2=.286 *p<.05, ** p<.01, ***p<.001
5.2. Influence of using benefit of the counterfeit to attitude toward the counterfeit
5.2.1. Benefit factors of counterfeit use
A factor analysis was conducted in order to identify what benefits consumers obtain from
using counterfeits. We used a principal component analysis and performed VARIMAX rotation
and KMO & Bartlett tests. It was found that the first factor is personal benefits followed by
economic benefits.
5.2.2. Influence of using benefit of the counterfeit to attitude toward the counterfeit :
Korean consumer
To know the using benefit factor of the counterfeit, the factor analysis is conducted. As a
result of the analysis, there are two factors, including personal benefit and economic benefit
factor. Therefore, to know whether two using benefit factors influence the attitude toward the
counterfeit, multiple regression analysis is conducted.
Among the using benefit factors, the personal benefit factor (t=5.166, p<.001) influences the
attitude toward the counterfeit. On the other hand, economic benefit factor does not influence
the attitude toward the counterfeit.
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Why do Korean and Chinese Consumers Use Counterfeits?: Focus on Motivation, and Benefit and Cost Factors
Seung Yeob Yu, Nami Kim
Table 3. Effect of benefit factors on attitude toward counterfeits: Korean consumers
standardized
Non-standardized coefficient
coefficient
t
benefits
B
standard error
beta
personal
economic
.133
.047
.026
.029
.298
.093
5.166 ***
1.621
F=13.330, p<.001, R2=.109 *p<.05, ** p<.01, ***p<.001
5.2.3 Influence of using benefit of the counterfeit to attitude toward the counterfeit:
Chinese consumer
To know whether two using benefit factors, personal benefit and economic factor, influence
the attitude toward the counterfeit, multiple regression analysis is conducted.
Among the using benefit factors, the personal benefit factor (t=7.098, p<.001) influences the
attitude toward the counterfeit. On the other hand, economic benefit factor does not influence
the attitude toward the counterfeit. This result has a same trend with the result of research based
on Korean consumers.
Table 4. Effect of benefit factors on attitude toward counterfeits: Chinese consumers
standardized
Non-standardized coefficient
coefficient
t
benefits
B
standard error
beta
personal
economic
.229
.006
.032
.030
.400
.012
7.098 ***
.207
F=25.606, p<.001, R2=.161 * p<.05, **p<.01, *** p<.001
As illustrated in Table 4, personal benefits were found to have a significant impact on their
attitudes toward counterfeits(t=7.098, p<.001).
5.3. Influence of using cost factor of the counterfeit to the attitude toward the
counterfeit.
To know whether four using cost factors influence the attitude toward the counterfeit for
Korean and Chinese consumers, multiple regression analysis is conducted. As a result, no factor
influences the attitude toward the counterfeit. In conclusion, using cost factor of counterfeit is
not important to a formation of attitude toward the counterfeit.
5.3.1. Cost factors of counterfeit use
A factor analysis was conducted in order to identify what cost factors, dissatisfaction or loss,
consumers feel from using counterfeit products. We used a principal component analysis and
performed VARIMAX rotation and KMO & Bartlett tests. The four factors were found: the first
factor is personal cost followed by social, physical and quality factors.
5.3.2. Effect of cost factors on attitude toward counterfeits: Korean consumers
A multiple regression analysis was conducted of the effect of cost factors on Korean
consumers’ attitude toward counterfeits and the result was as illustrated below in Table 5.
The table shows that no cost factors have a significant effect on their attitude toward
counterfeits.
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Why do Korean and Chinese Consumers Use Counterfeits?: Focus on Motivation, and Benefit and Cost Factors
Seung Yeob Yu, Nami Kim
5.3.3. Effect of cost factors on attitude toward counterfeits: Chinese consumers
The same multiple regression analysis was conducted with Chinese consumers. Table 6
exhibits the result.
Again, as shown in Table 6, no cost factors had a significant influence on Chinese
consumers’ attitude toward counterfeits. To summarize, both Korean and Chinese consumers
are not influenced by any cost factors in their attitudes toward counterfeits.
Table 5. Effect of cost factors on attitude toward counterfeits: Korean consumers
standardized
Non-standardized coefficient
coefficient
t
Cost factors
B
standard error
beta
personal
economic
physical
quality
.012
.016
-.006
-.019
.031
.032
.030
.028
.032
.038
-.013
-.046
.046NS
.501NS
-.192NS
-.683NS
F=.217, p>.05, R2=.003, NS=No significance
Table 6. Effect of cost factors on attitude toward counterfeits: Chinese consumers
Standardized
Non-standardized coefficient
coefficient
t
Cost factors
B
standard error
beta
personal
social
physical
quality
.029
.062
.006
-.023
.047
.054
.039
.033
.058
.115
.011
-.051
.615NS
1.160NS
.157NS
-.702NS
F=1.467, p>.05, R2=.022, NS=No significance
6. Conclusion and Discussion
This research starts from a question: Why do consumers use a counterfeit in a reality filled
with the frequent use of counterfeit, in other words, an imitated product? To answer that
question, a scale was created, through literature review, of consumers’ motives for counterfeit
use. We also designed two other scales: one for benefit factors and the other for cost factors
they get from using counterfeits. Then, a factor analysis of both of the benefit and cost factors
was conducted to identify what factors influence Korean and Chinese consumers’ attitude
toward counterfeits.
As a result of the research, first, the four motivation factors for use of counterfeit are
tendency of showing off, economic feasibility, satisfiability, and quality. As shown in the result
of research based on Korean consumers, motivation for tendency of showing off and motivation
for quality have a significant effect on the attitude toward the counterfeit. On the other hand, as
shown in a result of research based on Chinese consumers, all four purchase motivations have a
significant effect on the attitude toward the counterfeit. As a result of the research, there is a
difference of tendency which influence the attitude toward the counterfeit with different using
motivations of counterfeit between Korean and Chinese consumers.
Secondly, two benefit factors for using counterfeit are personal benefit and economic benefit.
The result of research based on Korean consumers shows that only personal benefit have a
significant effect on attitude toward the fake product. Therefore, to consumers, personal benefit
factor should be considered as important factor in the formation of the attitude toward the
counterfeit. On the other hand, as shown in the result of research based on Chinese consumers,
only personal benefit factor has a significant effect on the attitude toward the counterfeit. This
result shows a same tendency with the result of research based on Korean consumer. This result
has a difference with the result of research based on Korean consumers.
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Why do Korean and Chinese Consumers Use Counterfeits?: Focus on Motivation, and Benefit and Cost Factors
Seung Yeob Yu, Nami Kim
Thirdly, there are 4 cost motivation factors of counterfeit. Four factors are cost of individual,
cost of society, cost of material, and cost of quality. As shown in the result of research based on
Korean and Chinese consumers, among four factors, using cost factor does not have a
significant effect on the attitude toward the counterfeit. Through a deep understanding of using
behavior of counterfeit by Korean consumers, this result will be expected to provide the data.
The data can be used in a campaign designed to reduce the use of counterfeit.
This research is designed to compare the factors which influence the attitude toward the
counterfeit with Korean and Chinese consumers as the subjects of the research. However, it was
hard to collect the data from people of all ages, and research fails to have people of all ages as
the subjects. The limit of research is that the research is only based on college age group. For
generalization, the expansion of research subjects is needed. Also, the questionnaire, which was
used in a preliminary research to advertising professional, verified, and translated, is used as
questionnaire to Chinese consumer. However, this research has a limit because it does not
conduct a preliminary test to Chinese consumers. The effort to attain validity of criterion
through an in-depth interview of using motivation of counterfeit, benefit factor, and cost factor
with Chinese consumers is additionally needed.
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