Neither an Authentic Product nor a Counterfeit: The Growing Popularity of Shanzhai Products in Global Markets

DOIhttp://doi.org/10.1002/cjas.1501
Published date01 September 2019
Date01 September 2019
Neither an Authentic Product nor a Counterfeit:
The Growing Popularity of Shanzhai Products in
Global Markets
Yao Qin
Macau University of Science and Technology
Linda Hui Shi*
University of Victoria
Barbara Stöttinger
Vienna University of Business and Economics
Erin Cavusgil
University of Michigan Flint
Abstract
Counterfeits have been a longstanding concern to global
brand manufactures. However, recently, a new product cate-
gory that partly imitates and partly innovates under the term
shanzhai has entered into market. Shanzhai products mimic
original leading brands through visual or functional similar-
ities and may also provideadditional features. Given this new
copycat phenomenon,our study for the f‌irst time conceptually
distinguishes shanzhai products from counterfeits, theoreti-
cally compares the values of consumers choosing shanzhai
products versus counterfeits, and empirically tests such
differences in one integrative model. Specif‌ically, shanzhai
buyers value product functional benef‌its more than counter-
feit buyers, while counterfeit buyers value status consump-
tion, yet experience less self-clarity than shanzhai buyers.
Our f‌indings offer important implications for imitative
innovation literature as well as for practitioners. Copyright
© 2018 ASAC. Published by J ohn Wiley & Sons, Ltd.
Keywords: shanzhai products, counterfeits, consumer
values, imitative innovation, emerging economy, demand
drivers
Résumé
De tout temps, la contrefaçon a toujours été une source de
préoccupation pour les fabricants de marques mondiales.
Cependant, récemment, une nouvelle catégorie de produits
basée partiellement sur limitation et partiellement sur
linnovation et baptisée shanzhai a fait son entrée sur le
marché. Les produits shanzhai imitent les marques phares
dorigine avec lesquels ils comportent des similitudes
visuelles ou fonctionnelles et peuvent exhiber des
caractéristiques supplémentaires. Les auteurs de la présente
étude sappuient sur cette nouvelle forme de copisme
pour dune part, distinguer, pour la première fois,
conceptuellement, les produits shanzhai des contrefaçons,
dautre part, comparer théoriquement les valeurs des
consommateurs qui choisissent les produits shanzhai par
rapport aux contrefaçons, et, enf‌in, tester empiriquement
ces différences dans un modèle dintégration. Leurs analyses
montrent que les acheteurs de shanzhai apprécient
davantage les avantages fonctionnels des produits que les
acheteurs de contrefaçons, tandis que les acheteurs de
contrefaçons apprécient la consommation de statut, tout en
étant moins sûrs deux-mêmes que les acheteurs de
shanzhai. Les résultats comportent dimportantes implica-
tions pour la littérature sur linnovation imitative et pour
les praticiens. Copyright © 2018 ASAC. Published by John
Wiley & Sons, Ltd.
Mots-clés: produits shanzhai, contrefaçons, valeurs du
consommateur, innovation imitative, économie émergente,
moteurs de la demande
Introduction
While original brand manufacturers have fought against
counterfeit products, counterfeits are still f‌lourishing, espe-
cially given that e-commerce makes them readily available
* Please address correspondence to: Linda Hui Shi, Associate Professor,
University of Victoria, PO Box 1700 STN CSC, Victoria, British Columbia,
Canada, V8W 2Y2. Email: lshi@uvic.ca; or Erin Cavusgil, Associate Pro-
fessor, University of Michigan Flint, 303 E. Kearsley Street, Flint MI
48502, Michigan, USA. Email: erinc@umf‌lint.edu.
Canadian Journal of Administrative Sciences
Revue canadienne des sciences de ladministration
36: 306321 (2019)
Published online 17 July 2018 in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/CJAS.1501
Can J Adm Sci
36(3), 306321 (2019)Copyright © 2018 ASAC. Published by John Wiley & Sons, Ltd. 306
all over the world (Berman, 2008; Frontier Economics Ltd.,
2011). Recently, a copycat phenomenon called shanzhai has
drawn consumers away from original brands, and developed
rapidly in emerging economies such as China, Vietnam, and
India (Chubb, 2015). Shanzhai originated from the Chinese
characters and refers to a bandit stronghold outside
government control(Tse, Ma, & Huang, 2009, p. 2).
Shanzhai products are merchandise that imitate the original,
prestige brands through obvious similarities (such as visual
or functional similarity) and may provide additional benef‌its.
They are different from counterfeits with respect to the
degree of similarity to the original brand and the possible
additional benef‌its they provide. Perhaps the earliest
shanzhai products are the various shanzhai versions of
Apples iPhone. Chinese shanzhai manufacturers produce
and improve the mobile phones in line with local consumer
desires, such as multiple slots for more SIM cards,
waterproof features, and projector functions, and so on (see
Figure 1). These shanzhai mobile phones were extremely
popular in the local and adjacent market, and it is estimated
that shanzhai mobile phones gained a 30% market share in
the Chinese mobile phone market (Chubb, 2015).
Owing to shanzhai mobile phonespopularity, other
product categories such as fast moving consumer products,
fast-food operations, fashion accessories, and cultural events
increasingly appear as varieties of shanzhai products. The
volume of shanzhai product sales worldwide is substantial,
with sales growing as quickly as counterfeit products (Jiang
& Shan, 2016). Tied to global online and off‌line distribution
networks, shanzhai products reach consumers worldwide.
For example, several shanzhai handbags were produced by
top Italian luxury manufacturers. They kept high visual
similarity and the superior product quality of leading brands
yet changed the leading brandsnames and logos. These
shanzhai products were sold at an attractive price through
e-business channels, which satisf‌ied consumers who
valued superior quality yet cared less about brand names
(Zhu, 2014).
While both shanzhai products and counterfeits imitate
original leading brands at a much lower cost, they represent
two different product categories with respect to the degree of
visual and functional similarities to the original brands.
According to our f‌ieldwork, a shanzhai manufacturer from
Fujian province, China commented, when interviewed:
What we make (i.e. our own shanzhai brand or a counterfeit
of global brand) depends on the order.In other words, if
international distributors want shanzhai products, they will
provide their own shanzhai brands. Thus, shanzhai product
consumption may not be identical to counterfeit product
consumption.
The extant literature has shown that consumer demand
is the key driver of counterfeit product consumption. For ex-
ample, product attributes such as low price and acceptable
quality motivate consumers to choose counterfeits (Bian &
Moutinho, 2009; Yoo & Lee, 2009), and non-product attri-
butes, such as social status and materialism, drive counterfeit
purchase (Jiang & Cova, 2012; Yoo & Lee, 2009). Given the
differences between counterfeit and shanzhai products, it is
crucial to answer questions such as how shanzhai products
differ from counterfeits (conceptually and empirically); what
drives consumersshanzhai purchases; and do these reasons
differ from the motivations that drive counterfeit purchase.
A careful analysis of prior shanzhai literature has revealed
that scholars have investigated the characteristics of innova-
tive shanzhai manufacturers (Dong, 2014), the dynamic
capabilities needed for shanzhai manufacturers (Ren, Yu,
& Zhu, 2016), shanzhai manufacturersentrepreneurial
capability and institutional environment (Lee & Hung,
2014), shanzhai as a branding strategy in a f‌irms start-up
stage (Leng & Zhang, 2011), and the social and psycholog-
ical implications of the shanzhai phenomenon (Chubb,
2015). In other words, most of the prior shanzhai literature
has focused on either shanzhai manufacturers as an
organizational-level unit of analysis, or the external environ-
mental impact of the shanzhai social phenomenona macro
social perspectivebut there is a general lack of attention on
how consumers perceive shanzhai products differently from
counterfeits, and the implications of that perception on cor-
porate strategy. The limited shanzhai literature often con-
fuses shanzhai products with counterfeits by considering
shanzhai as one type of counterfeits (for instance, Jiang &
Shan, 2016; Liu, Yannopoulou, Bian, & Elliott, 2015). Such
blending of shanzhai products with counterfeits might lead
to an implicit assumption that the motivations for con-
sumerscounterfeit purchases will also apply to shanzhai
products. However, such an assumption might not be accu-
rate. Against this background, the aim of this study is to
explicitly distinguish shanzhai products from counterfeits
and investigate what factors motivate consumersshanzhai
product purchase over counterfeits.
Figure 1. Shanzhai iPhone. [Colour figure can be
viewed at wileyonlinelibrary.com]
CONSUMERSMOTIVES OF BUYING SHANZHAI VS. COUNTERFEIT PRODUCTS QIN ET AL.
Can J Adm Sci
36(3), 306321 (2019)Copyright © 2018 ASAC. Published by John Wiley & Sons, Ltd. 307

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