A Critical Study on the Factors Influencing Consumers’ Intention to Purchase Counterfeit Products in Penang, Malaysia

Abstract

Counterfeit products (“CP”) are illegal selling of those imitations derived from the original versions. Typically, counterfeiting is a fraudulent practice by affixing counterfeit trademarks (Budiman 2012). Counterfeits are also labelled as imitation, fake, copycat and copy (Beth 2019). CP span across multiple industries and common products include apparels, footwear, watches or jewelry, handbags, consumer electronics, pharmaceuticals, optical media, computers and others (Dunham 2019).

E-commerce is rapidly growing and expected to surpass USD$4 trillion by 2020 (National Association of Manufacturers 2020) and is rapidly facilitating the sales of CPs. The Organisation for Economic Cooperation and Development (OECD 2019) reported that sales of CP reached a staggering USD$509 billion or 3.3% of global trade in 2016. According to Richter (2019), China and Hong Kong were the top global hubs for counterfeits from 2014 to 2016 period.

CP is also a challenging issue in Malaysia. CP’s revenue is estimated at approximately RM300 billion per year or 21 percent of the Malaysia gross domestic product (GDP) (Malaysian Reserve 2020). In Malaysia, the Domestic Trade and Consumer Affairs Ministry’s enforcement division collaborates with registered trademark owners to protect intellectual property rights including seizures of CPs. For example, in July 2020, the enforcement team seized counterfeit branded clothes worth approximately RM1.6 million at two premises in Selangor (Malay Mail 2020). The enforcement team also seized counterfeit perfumes worth RM1.7 million in Kuala Lumpur in December 2020 (Mohamad, 2019; Hani 2020). These counterfeiting activities adversely affected the business of producers of genuine items (The Star 2020).