Counterfeiting in China Essay

China has been undergoing rapid economic growth since the adoption of its open door policy in 1979 . It keeps showing the world its enormous potentials in market economy. However in the recent decades, there has been increased awareness of unethical business practices in China. The production and purchase of counterfeiting goods has been one of the major issues. The International Chamber of Commerce (2004) estimates that 7 per cent of world trade is in counterfeit goods, and China has built a reputation as the source for such products . The conduct of counterfeiting can causes seriously social, economic and political problems.

For example, studies have shown that counterfeit goods lowers consumers’ confidence in legitimate brands and company reputation, impacts upon consumers’ perception of genuine articles, and poses potential threat to consumer health and safety. Every year Microsoft loses nearly $10 billion due to software piracy. Hundreds of medical accidents due to the mistaken of counterfeiting drugs happens in China every month . Given the widespread effects of counterfeiting products, many researches have been done to investigate the reasons that why there are so much counterfeits in China.

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Most of these studies are related to supply side, suggesting that the desire for excessive profit and lack of the independent innovation are the major reasons for these activities. Also insufficient protection for Intellectual Property from the government worsens the situation by given an easy pass for counterfeiting industries . However, consumers are the actual force behind this trade. Even if the government and enterprise control counterfeit sales through the various measures in short time, because of the existence of counterfeit market demanding, consumers will also look for counterfeit products though all kinds of channel.

So to understand the counterfeiting problem from the angle of consumers’ intention to purchasing counterfeit goods is crucial to solve it. The culture related characteristics of being less sensitive to unethical issues, more inclined to relativism and terminal materialism and higher vanity are the key reasons breed unethical behaviors of Chinese consumer in recent decades. Consumer ethical belief To understand the ethical standard of consumer, the ECS ( Consumer Ethics Scale) developed by Muncy and Vitell is the common method through questionnaire to measure consumers ethic . This measurement includes four dimensions.

The participants are asked to choose from ‘strongly believe that the statement is wrong’ to ‘strongly believe that the statement is not wrong’ using 5 points Likert scale under each dimension. The first dimension is called ‘Actively Benefiting from Illegal Activity’. The actions identified in this dimension are generally regarded as illegal and initiated by the consumer, such as drinking a can of soda in a supermarket. The second dimension of ‘Passively Benefiting at the Expense of Others’ describes a consumer’s behavior when the consumer takes advantage of the seller’s mistake, such as getting too much change and not saying anything.

The third dimension of ‘Actively Benefiting from a Questionable Action’ means that the consumer is actively involved in an action that may not be necessarily perceived as illegal. Most of studies include the purchasing of counterfeiting products in this category. The fourth dimension of ‘No Harm/No Foul’ means that the consumer perceives that the consequences of his or her actions produce little or no harm and, in this way, they are considered permissible. Through this method, Neo eta. , Shen eta. and Wendy eta. have shown in their papers that Chinese consumers have high scale in ‘Actively Benefiting from a Questionable Action’.

This dimension is specific associated with purchasing of pirated goods and the results are showing that mort Chinese consumer do not think that buying counterfeit products is an unethical thing to do. This could be because that the lack of education and knowledge makes people less precognitive when doing unethical things. This is also the main argument for many researchers that people with high education are less likely to purchase counterfeiting products. Also Asian culture, especially Chinese culture have traditionally emphasized that the individual creators are obliged to share their achievement with the society.

People Chinese may feel less guilty when they conduct behaviors associated the lifting of other’s intellectual properties. Another reason for people to be less sensitive to this ethical issue could be due to lack of advertising and regulation in prohibition of counterfeiting products in China. Idealism Vs. Relativism In the research paper of ‘an empirical Investigation of the Ethical beliefs of consumers in China’, the writer mentions that individuals make ethical judgments through two dimensions: Idealism and relativism. People have high deals consider the welfare of others the most important and try to minimize harms to others when they are making decisions. People high on relativism are more flexible in their decision-making and view every situation as a special case without a standard moral code. Studies have shown that people with high ideals are more critical of ethically questionable behaviors including purchasing of counterfeiting products (mentioned in the first part) . With referent to previous studies of cross-cultural ethical belief, Chinese people are perceived to be more idealistic than Westerners due to its culture of face saving and collective tradition .

However, in the paper of “Ethical beliefs of Chinese consumers in Hong Kong”, the writers realized that Chinese customers are more situation oriented in recent decades than before . For example, a decision of whether it is right or wrong to buy a pirated product might depend on the price of a genuine product. If the genuine product is so expensive that consumers cannot afford, they may feel that it is acceptable to buy a counterfeit product. On the other hand, if a genuine product is sold in a reasonable price, the may feel that it is wrong to commit such an offense.

This could also explain why there is a growing counterfeiting market in China. Vanity The third characteristic of Chinese consumers is the increased vanity trait, which also has been suggested by many researchers to be one of the major reasons for Chinese counterfeiting market. “Vanity trait is a feature of psychology which referred to the willing of having certain honor that in fact they don’t or cannot have, but showing particular that as if having some kind of honor personality through words or deeds. ” Studies have found that there is an existing relationship between the consumers and intention of purchase pirated products.

On one hand, consumers who buy the fake well-known commodities instead of buying the genuine ones still feel fulfilled and have self-expression of using quality good . This aspect can also be interpreted by Chinese traditional value of ‘face’. Chinese tends to care a lot about how other people perceive them. And also they gain the feeling of succeed through competition with others. So the using of branded commodities (even though they are fake) will bring them the feeling of having a higher social status and being more successful than others.

On the other hand, many people purchase counterfeits because of aesthetic appearance. There’s no doubt that the big brands are leading the fashion trend. Rich people could spend thousands of dollars on a bag and they do not have any pressure. But for those who are not that rich, they buy fakes for the design, not the brands. This will goes back to the reason that Chinese consumers are less sensitive and critical in these ethical issues. Materialism In recent year, many people claim that Chinese consumers become more materialistic than before.

To understand the consumer behavior form an ethical and materialistic stand point now become more crucial in study of the reasons for growing counterfeiting market and in helping to eliminating counterfeiting from the market. According to Muncy and Eastman, materialism may increase an economic wealth and material possessions; on the other hand it may lead to a negative overall effect on quality of life. A materialistic consumer feels a greater pressure to have possession to be happy with one’s life. This can lead a consumers conduct unethical behavior such as purchasing pirated products.

Research has shown that there is a high significant between respondents with high level of materialism and lower ethical standards . However, materialism should not be blamed all the time. Rochberg-Halton proposed two forms of materialism base on consumption purpose. The first one is instrumental materialism and is defines as a sense of directionality. One example is that people exchange possessions (gift giving) to establish relationship with others. This is a positive aspect from the possessions. The second level of materialism is terminal materialism.

There is no sense of reciprocal interaction in the relationship between the object and the goal such as owning a flashy car or branded bag to show off to friends and family. “Gift exchanging “ and is very significant in Chinese culture. People in China pay a lot attention on reciprocity and Guanxi (the relationship with others) . Sharing properties is also important for socialism society. However, this tradition has been distorted by the increase vanity trait. More people lean towards the terminal materialism and as a result purchasing of counterfeit become a common way to satisfy themselves with possession.

Conclusion To conclude, the main characteristics of Chinese consumers are less consciousness of unethical issues of purchasing counterfeits, more situation oriented, more materialistic trait (especially in terminal materialism) and having a increased vanity in recent decades. Some of these characteristics are based on the traditional values. However, Chinese culture should not be blamed for nourishing the market for counterfeiting products. Many traditional values such as value of ‘face’ and group norm actual restrict people from conducting unethical behaviors.

The problem of growing counterfeiting market could be solved in long term. The solution may down to the fundamental level, which is consumer education to make people more knowledgeable and critical in facing of questionable behaviors. The regulations and protection of intelligent property from government could also help to encourage people to purchase genuine products. Moreover, decrease of the economical inequality within the country will be important and effective to eliminate the consumption of counterfeits.

To achieve more, we have to consider and cooperate with the culture values behind every aspect to solve the problem such as advertising of genuine products might evoke the ‘face’ consciousness and shame those people purchase pirated products.


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