The Real Implications of Fake Products in Individualistic and Collectivist Cultures

April 16, 2024 • By The UCI Paul Merage School of Business

Have you ever purchased a knockoff version of a Gucci bag or worn a fake Rolex to impress your friends? What happens when someone notices your counterfeit status symbol? What does that moment of embarrassment do to influence your future buying decisions? More than that, how does the counterfeit market influence sales of the original product?

Professor Emerita L. Robin Keller of the UCI Paul Merage School of Business recently coauthored an article suggesting the counterfeit trade might not be so detrimental for legitimate businesses after all. The article, “Counterfeits Can Benefit Original Products When People Are Caught Using Counterfeits,” recently appeared in Psychology & Marketing. Keller wrote the piece in collaboration with Merage Ph.D. alumna Liangyan Wang of Shanghai Jiao Tong University, Qin Wang of Mississippi State University, and Eugene Y. Chan of Toronto Metropolitan University.


How Do Consumers in China and the United States React When Caught with Counterfeits?

Most marketers who study counterfeits tend to focus on what drives people to purchase them, but, as Keller explains, not much research has been done on what happens after someone buys a fake product. “In our study, we look at what happens when someone gets caught using the counterfeit,” she says.

Keller and her colleagues used various laboratory experiments and consumer surveys to see how individuals in the United States and China react to being caught with a counterfeit product. “We are mainly interested in people being caught with these fake products because there’s a large amount of counterfeiting, particularly in China, but it’s also true here in America,” says Keller. The researchers were curious about one question in particular: How do people behave when they get caught?

Keller’s prior research on Chinese markets saw differences between how Chinese people and North Americans respond in various situations. “Chinese cultures are more willing to put individuals at risk to save the group,” she says. “They are more collectivist as a rule than Americans, who are more individualistic.”

Initially, Keller admits she assumed the results of their current research would show contrasts between how Chinese and American consumers react to being caught using a counterfeit product. “That was the way I looked at some of my earlier research,” Keller says. “I would compare people from each country.” The truth is, however, generalizing based on culture and geography isn’t ironclad.


Key Factors: Who Buys Genuine Products When Caught with Fakes?

Keller and her colleagues discovered two key factors that influence the ways people react when they’re found to be using a counterfeit product. The first factor is whether the person is individualistic or collectivist. The second is whether the product is perceived as symbolic or utilitarian. “Symbolic means you can use the product to gain social credibility or showcase your individuality,” Keller says. “Utilitarian means the emphasis is on the practical performance of the product. Is it waterproof or shock-resistant? The comparison is between prestige versus functionality.”

“If you create an ad that suggests a watch has certain characteristics that are more symbolic, then people think about that product as a symbolic product.” Collectivist people tend to care more about what everyone else thinks about them. They buy expensive symbolic items because they want to stand out.

Such interdependent people are more likely to buy a genuine product if they are caught using its counterfeit when the product is considered symbolic. This can happen naturally or through manipulation, Keller says. “If we prime the person to think a certain way—in this case, interdependently—and then they get caught, that person is more likely to say, ‘I would like to buy the genuine product.’ But if they aren’t caught, they don’t have an increased desire to own the real version.”

One possible explanation is the person is attempting to save face with the people they care about. This is particularly true for people who are more collectivist or interdependent. “If you’re more collectivist or interdependent, you will pay more attention to what other people think about you and how other people react,” says Keller. “In that case, you’re more likely to try to buy that more expensive, real version of the product, but only after you get caught.”


The Main Point Is Personality, Not Geography

The deciding factor seems to be less about whether the consumer lives in China or America and more about whether the person is individualistic or collectivist. “Within any culture, people can be more individualist or more collectivist,” Keller says. The propensities of individuals can’t be ascertained merely because they live in a collectivist culture like China. Some inhabitants of a country that place particular importance on what’s good for the group can still be more individualistic.

“In our study, the more independent groups of people didn’t care if they got caught using counterfeits. Only the people who were more interdependent cared about getting caught. Then they were more likely to purchase the genuine article,” she says.

“It’s too simplistic to think the Chinese market is this, and the American market is that,” Keller says. “We need to be more specific and look at the individuals themselves.”


Embracing Counterfeit Culture

Based on the researchers’ findings, for some symbolic products, the counterfeit market may not hurt authentic companies and brands after all. Counterfeit products may actually help a company’s brand. Keller says people’s first inclination to go after the counterfeiters to sue them may not be worth the effort, “not only because it’s costly, but also because counterfeits are probably building demand for your product, especially if people are embarrassed to get caught using them. If they care about losing face, they might be even more likely to buy the original.”

Consequently, brands may want to consider how they position their products in the marketplace. If counterfeits of a product exist, it may be to the original company’s advantage to market the product as emblematic rather than as utilitarian merchandise.