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Introduction
The business and management literature is full of examples of the harm that counterfeit activities can do to established companies ([42] McDonald and Roberts, 1994; [14] Chow, 2003). Examples range from counterfeit watches and textiles to automotive and aircraft parts, at times with disastrous consequences not only for the reputation of the original manufacturers, but also to the health and safety of consumers ([50] Nia and Zaichkowsky, 2000; [70] Wee et al. , 1995; [71] Wilke and Zaichkowsky, 1999). The literature has spent considerable effort in classifying different types of counterfeiting activities and, as consequence, distinctions have been made between trademark-infringement, product counterfeiting and related activities. In doing this, the literature predominantly takes a legal perspective in its distinction between different types of counterfeiting activities ([4] Bale, 1998). This is not surprising given that most companies' main response to the counterfeiting problem is a legal one.
The production and sale of counterfeit products is big business in the international economy. The value of counterfeit products marketed annually in the world is estimated to be over US$1 Trillion. Nowhere is this more evident than in China ([31] Hung, 2003). The extent of product counterfeiting operations in China is astounding; estimates range from 10 to 20 per cent of all consumer goods manufactured in the country. The Quality Brands Protection Committee (QBPC), for example, an anti-piracy body under the auspices of the China Association of Enterprises with Foreign Investment, claims that government statistics show that counterfeit products outnumber genuine products in the Chinese market by 2:1. Furthermore, enforcement efforts are made even more futile by popular acceptance of piracy in China. Rising incomes have created an enthusiasm for foreign goods and brands, but Chinese consumers have become so accustomed to cheap, pirated goods that they are unwilling to pay full prices for the real thing. It almost seems like imitation in modern China is a way of life. Many argue that authentic manufacturers have contributed to the problem of counterfeiting due to their unyielding self-interest of pursuing lowest possible manufacturing cost ([42] McDonald and Roberts, 1994; [66] Tom et al. , 1998). Even in the face of increased counterfeiting these firms continue to seek production opportunities in developing countries. It may be that given the...