1. RESEARCH METHOD
What influences consumers to buy counterfeit luxury goods in
China?
Kesminta Vascegaite
Roman Goryunov
Word count: 1812
Tutor: David Christopher
28/03/2014

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Abstract
The purpose of this research paper is to develop the knowledge about
consumption of counterfeit luxury goods and identify factors, which have an
effect on consumers buying behavior both in personal and social ways. The
report is based on a secondary qualitative data, which was obtained from
academic books, journals and previous researches.
1. Introduction
This report aims to find an explanation for what influences consumers to buy
counterfeit goods, taking an example of Louis Vuitton. The interest for this topic
comes from the fact, that in 21st
century counterfeit market has expanded and is
dynamically developing worldwide compared to previous decades. Statistics indicates
that from 2008 to 2010 approximately 70% of all global counterfeits production was
produced in China (Business Insider, 2013). One of the reasons is the growing power
of mass media marketing, which facilitates brand exposure and makes luxury brand
products more desirable between populations. Exclusivity and unreasonable high
prices for luxury brands mostly limit affordability of such goods among lower income
audience, therefore increasing demand for counterfeit markets.
The report starts from definition of what counterfeit is, followed by examining of
main factors that have an impact on consumer behavior. It discusses product
attributes, e.g. price, people’s individual factors and other variables as being main
determinants and influencers on human attitudes towards purchase of fake goods.
Further, methodology applied in this report is presented.
2. Literature review
2.1 Definition of counterfeit
As in various subjects, definition of counterfeit has been interpreted differently.
According to Bloch, Bush and Campbell (1993), counterfeit is an illegal way of brand
and licensed products copying. In the work of Kay (1990) it is said, that copied
products, which are packed as the genuine goods, including characteristics and
marking and look similar to the original items to the buyer, are considered to be

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counterfeits. Cordell, Wongtada, and Kieschnick (1996) defined counterfeit as the
production of products with unique characteristics, which are protected by intellectual
property rights, in unlawful way. For this particular research, definition given by
Eisend and Schuchert-Culer was used, as it clearly emphasizes the main factors of
luxury counterfeit: features of the genuine good are identical to fake one, involves the
use of original trademark, and sales at much lower price relatively to the price of the
original good take place.
From buyers’ perspective, two common forms of consumers’ counterfeit related
attitudes are recognized: deceptive and non-deceptive. Non-deceptive counterfeiting
refers to the condition when consumers obtain counterfeit product unconsciously,
meaning are not aware of counterfeit purchase taking place. However, this particular
study is concentrated on intentional purchasers, who buy fake goods consciously and
on purpose (Grossman and Shapiro, 1988). Nowadays counterfeit is mostly popular in
luxury brands markets, where there is a huge impact of brand marketing from the
mass media (Nia and Zaichkowsky, 2000). The majority of purchasers are able to
differentiate a fake product from the original one due to existence of significant
dissimilarities in product attributes and characteristics, such as price, poor quality and
unreliable distribution channels. Some researches related to non-deceptive
counterfeiting predict that in the future, if consumers are less attracted by brand
goods, the problem of existence of fake luxury goods may disappear (Bloch, et al.,
1993; Cordell et al., 1996). However, as technologies and labor skills are improving
through years, the quality, original design and even durability of the copied luxury
trademarks have become noticeably better, putting more pressure to brand industries.
2.2 Factors influencing consumers intensions in buying counterfeits
Several studies and researches have been taken to understand the nature of counterfeit
activities. The main reason and justification for counterfeiting phenomenon to exist is
the high demand for such goods created by buyers themselves. Therefore, the
understandings of what are consumers' incentives and logics standing behind such
behavior and attitude towards counterfeit goods have become one of the most
discussable questions requesting the answer. 5 major causes were determined and
classified into categories. These causes have significant influence on consumer
behavior and are:

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• Price. One of the main benefits that consumers get buying counterfeits is that
such goods are significantly cheaper than original products and allow
purchasers to get high status at nearly no cost.
• Customer profile. Demography and psychographic variables as well as
consumer standpoint regarding counterfeiting are other factors, which
influence consumer behavior. People from low social classes tend to buy
cheap fake products on a more frequent basis compared to people from higher
classes.
• Influence of culture. Customer’s home country and level of risk aversion are
also meaningful. For example, in CIS countries there are higher trends of
buying counterfeit goods between populations than in Europe.
• Special occasions. During holidays and journeys to foreign countries, the
probability of consumers buying copies of original luxury goods without
rational reasoning behind it greatly increases. Most of tourists engage in such
activities just for cultural experience.
• Ethical issues. The possibility of buying counterfeit products in societies with
strong law adherence and awareness is much lower compared to those, where
the legal system is weak and not regulated enough. Lack or even absence of
relevant laws in counterfeit industry makes this problem more challenging.
Characteristics such as product type, investment risk, constantly changing fashion and
product features also play an important role in influencing consumer behavior.
2.3 Relevance of luxury and counterfeit brands
Luxury items have become the world’s most counterfeiting products among numerous
other product categories. Since fake luxury brands represent the popular brand, there
is always a relation between the trademark and counterfeit (Cordell, et al., 1996). If
the brand is successful and well known globally, it has a greater chance to be
counterfeited. According to statistics, Louis Vuitton is one of the examples among the
top wanted luxury brands. High level of demand and desire for this brand’s products
led to their massive production and distribution on streets and suspicious markets as
well as unlicensed shops and on websites. However, the decision relating to the
purchase of fake products does not only depend on a brand choice, but on a product
type as well. There are more counterfeits between accessories, and mostly bags, as

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they are more visible and noticeable.
3. Methodology
3.1 Methodology
This part of the research is about finding the meanings of counterfeit goods in the
segment of luxury goods. In this work we have chosen qualitative research design.
We have interviewed 25 people that have been chosen on the basis of knowledge and
experience with counterfeit luxury goods. Our participants are residents of 4 different
cities in China, which are Beijing, Shanghai, Guangzhou and Wuhan. 15 of them are
women and 11 are men. 50% of contributors are more than 28 years old and the part
is younger. Younger part of participants was students and currently graduated and the
most of older respondents were employed people with children. Interviewed people
were interested in luxury and counterfeit companies. All interviewed people had
stable income, which was higher than the average level. In the table below there is a
data about respondents.

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For some people the topic is delicate and because of that first questions were simple
and general. We have asked questions about attitude, views and prospects.
3.2 Conformity
We use 2 measurements that appeared through our research. The first one is connected
with external aspects, which are conformity to a high social level (Jiang and Cova,
2012) . Another measurement based on internal feature, which is built on fashion and
brand experience (Jiang and Cova, 2012).
Conformity is very important aspect that influences the consciousness. Therefore,
people behave differently as consumers. Confucianism as a part of Chinese culture,
states that conformity is one of the most important aspects that influence social
contribution in China (Jiang and Cova, 2012). Chinese cultural features are developing
the idea of social influence surpassing individual one. As one of our respondents
(Yuan) said having fake luxury good might lead to mockeries. Our interviewees prefer
goods that are the most common in the society. This is closely connected to a desire of
being at the same social level with others. For some Chinese people social perception is
more important than personal aspects (Jiang and Cova, 2012).
3.3 Conspicuousness
According to Scheets conspicuous consumption is a demonstration of accessibility to
high price goods in order to draw attention from the side. This process is closely
connected to motivational process by which people try to increase their social level.
According to our study, the main reason for buying expensive goods is to demonstrate
their expensiveness. Some people cannot afford buying luxury brands and because of
that they buy fake goods. This illustrates that people can receive the same status as
people with original luxury brands until they know it is fake. As a result of developing
dissonance people start buying counterfeit luxury goods instead of original ones. It is
possible to lead an example with both counterfeit and original bags and according to
DMI organization goods with brand name on them are more likely consumed.

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3.4 Face saving
Face is favorable aspect in self-image and differentiation when people show their
selves differently. As Xian have said: “There are many who are willing to spend one-
month salary to buy something, not for quality, not for taste, but only for one thing:
face.” Many people try to build self-image by buying luxury brands and as we have
mentioned before there can be mockeries around people who wear fake goods. That is
why saving face in the society is important.
3.5 Fashion consciousness
According to Nam & al. fashion consciousness is about standing out from the crowd
by having fashion goods for being identified by people with similar fashion interests.
People like that usually interested in visual appearance rather than originality or
quality (Nam & al., 2007).
“I think it is okay, I know is a fake but it’s the same style.” By Liang
“The appearance is important when I selected a handbag.” By Zixi
“I bought it because I liked the style and the design and it was not because of the
brand.” By Hu
Fashion is changing quickly and because of that goods have short life cycle. Some
prefer buying fake goods every season rather than expensive brands once a few years.
Moreover, many customers think that cheaper copy is rational choice as they save
money, which can be invested into buying new things. However, some goods that
will be trendy for a long time are better to be originals according to Pheobe.

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