Q: Your paper Counterfeiting in Singapore – Understanding Consumer Attitudes and Purchase Intentions examines the attitudes of Singaporean consumers towards counterfeits of luxury brands, what do you personally feel is the driving force behind the popularity of fake luxury brands specifically in Singapore? Is Singapore’s long term love affair with luxury brands and renown as a shopper’s paradise what is fuelling it?

Several interesting theories have radiated from our focus group interviews and surveys. For one, Singapore has enjoyed many good years of astronomical growth. The large pay packages have certainly driven the blind pursuit of luxury brands. The love affair can be attributed to a number of motivations including that of social comparison and peer group influence, symbol of success which signals affordability and even as an indication of having achieved a self-prescribed social status. Singapore being a magnet for luxury brand houses to set up their flagship stores also helped in building awareness for these international brands. In the process of socialization with the “elite”, it certainly encouraged a strong sense of brand consciousness within the society.

For the less wealthy (although not exclusively), the need to conform and belong certainly drives them towards counterfeits of luxury brands. However, there are basically two parallel markets – consumers who only patronize genuine luxury brands and those who actively look for counterfeits. In between, there is also a segment of consumers which has the affordability to purchase the real thing, yet choose to purchase “good quality” counterfeits to add to their mix of luxury brands. To be brutally honest, we have to understand and admit that only the rich can get away with publicly consuming counterfeits. There is the remote chance that they will be caught or suspected of owning a counterfeit. If caught, they can always scream hysterically or shrug it off lamenting that they have been duped into purchasing one. We also have to admit that the flawless copies of the originals together with dust bags, warranty cards and all the peripherals do drive the pursuit of good counterfeits. It is perceived to be value for money.

Q: The study you carried out was restricted to local postgraduate students. Do you feel that these are the consumers who most affect the counterfeit market in Singapore? How about the tourists and expats, what role do they play?

The postgraduate students were all holding full time jobs. More than 80% were within the age of 20-39 and more than 50% had an income of below 40K pa. While this may not be representative of the overall market for luxury brands, it does provide a snapshot of the segment. They are deemed to have a high awareness of luxury brands and counterfeits. It can also be argued that they are probably the most susceptible to counterfeits of luxury brands. They have either knowingly purchased them individually or have shared these indulges with their peers.

Tourists and expats do contribute to the counterfeit sales. It is suggested that situational ethics of consumers who are on travels or holidays form a “double standard” mentality, resulting in counterfeit purchases overseas. However, it must be highlighted that tourists and expats harbor different motivations while purchasing counterfeits. Some focus group interviews have shown that tourists may knowingly purchase counterfeits for the “fun” of it. They purchase these items as gifts for their friends back home and probably share a laugh at their purchases of $40 Cartier watches. Others also claimed that they buy counterfeit replicas of Tiffany rings which they already owned, only to be used for travelling or while on holidays.

But in the local context, Singapore is not exactly the place to shop for counterfeits. Interestingly, Singaporeans form a large segment of the “tourists” segment shopping for counterfeits outside Singapore. These oversea locations include China, Thailand and most notably good quality counterfeits from South Korea. And there is always the ever reliable source of counterfeits from EBay.

Q: It is interesting that one of the conclusions you draw is that brand conscious individuals are more likely to have a negative attitude towards counterfeits of luxury brands. Do you feel this information has a potential role to play in anti-counterfeiting campaigns?

Brand conscious individuals certainly have a role to play. Singapore consumers have gone beyond the “show off” stage of ownership of luxury brands. It is very much about the “me” mentality and what the products say about their personalities. The more sophisticated consumers would not want to be associated with brands that are termed mass luxury brands such as Gucci, Louis Vuitton and Prada which are well known for counterfeits. As the market evolves and becomes more developed, consumers will go for authenticity. Consumers also pursue exclusivity and look for quiet luxuries and these urges can be explained by the rarity principle. However, I still like to emphasize that there is the existence of two distinct markets. Only that the counterfeit market is likely to shrink with consumers either buying the genuine brands or shifting to home grown brands or more subtle middle range luxury brands which have not attracted the counterfeiting producers. On a personal note, I hope that this is the trend that Singapore consumers are aspiring to as we move to a more sophisticated and better developed society.

Q: One commonly voiced opinion is that luxury brand owners only have themselves to blame for loss due to counterfeiting by setting such high price tags for their products and imbuing them with so much prestige (using celebrities to advertise them for example, tapping into the youth market). What is your view on this and do you feel that brand owners themselves could be more proactive in preventing counterfeiting of their products?

To answer the second part of the question, brand owners could and should be more proactive in preventing the counterfeiting of their brands. However, it does require huge resources to support constant surveillance of counterfeiters. Luxury brand owners would also need to be more conscious of the quality, design and innovation of the products that they introduce into the market so that they are not easily counterfeited. One strategy perhaps is to have new ranges every season so that it is not that profitable for counterfeiters to keep up with the new offerings. However, there must still be a balance so as to not allow consumers of genuine products to feel that there is no value in their luxury brands beyond one season. Luxury brand owners could also take it in their stride that only well known or luxury brands worthy of counterfeiting are counterfeited. Instead of working against counterfeiters, luxury brand owners can consider working with the counterfeiters to legalize and capitalize on their output and technology to produce products for them.

However, having said the above, I am not really sure if the loss to luxury brand owner is as massive as it has been reported. There is some evidence that there is a direct correlation between the sales and the proliferation of some luxury brands. It can also be argued that counterfeiting has directly or indirectly catapulted the sales of the genuine products. In a way, awareness of these brands has been enhanced. Obviously, only the top brands are counterfeited and the price tags of these heavily counterfeited luxury brands have increased astronomically in recent years as their popularity grew. I think this is a good strategy as the price differential only accentuates the drive for serious consumers to only consider purchasing the genuine product.

Q: Is the luxury counterfeiting picture in Singapore different from other places you have carried out studies in, such as Hong Kong, China and Taiwan?

Singapore is very stringent towards its IPR protection, thereby making counterfeiting and sales of counterfeit goods much harder to sustain. To the best of my knowledge, there are not many distinct or well publicized districts where you can purchase counterfeits, unlike Shenzhen and Shanghai in China and other designated parts in Hong Kong, Thailand and Taiwan. However, we cannot account for Singapore consumers purchasing counterfeits in these other markets. The focus group studies seem to point to Seoul as the source of “good quality” and “expensive” counterfeits. Hong Kong has a very well developed second hand luxury brand market where you can essentially “rent” a Gucci or Chanel handbag for a special occasion or an extended period of time. Singapore is probably also catching up on this trend. But there is the rampant use of counterfeits even for the elite in these other countries. For some consumers you need a well trained eye to spot if they are carrying a counterfeit.

Dr Ian Phau is currently Associate Professor and Chair of Research and Development at Curtin Business School in Western Australia, where his specializations are Consumer Behaviour, Brand Management, Marketing Theory and Market Research. His business experience includes management consulting and market research in the luxury fashion industry in Europe and Asia. He has also been involved in several research and consulting projects. Recent portfolios include Hugo Boss Australia, Action Supermarkets, Araluen Botanic Park and the Department of Information and Resources WA.

Dr Phau has received several accolades during his teaching career such as the Teacher of the Year 2001, Excellence in Teaching Award from 2004 to 2007, Supervisor of the Year Award in 2005, 2007 and 2008, the Researcher of the Year Award 2004 and the Curtin Excellence and Innovation in Teaching Award in 2008. He is Editor-in-Chief for the Asia Pacific Journal of Marketing and Logistics (Emerald). He has also subsequently won the Emerald Literati Network Awards for Excellence – Leading Editor Awards for outstanding editorship for Asia Pacific Journal of Marketing & Logistics in 2007, Outstanding Reviewer of the Year for Young Consumers for two consecutive years (2008 and 2009), and Outstanding Paper in Journal of Fashion Marketing and Management in 2009. Associate Professor Phau has initiated learning outside the classroom by setting up the Curtin Marketing Association.

Contact details of Dr Phau are:

Associate Professor Ian Phau
School of Marketing
Chair for Research and Development
GPO Box U1987
Perth Western Australia 6845
Tel: +61-8-92664014
Fax: +61-8-92663937

Click here to see some selected articles Dr Phau has written.