An Exploration of the Micro-Level Impacts of Shanzhai (Copycat) Products on the Originals in China

Abstract

Shanzhai (copycat), a product imitation strategy that is ubiquitous in many emerging economies, affects firms offering the original products. This phenomenon raises an important strategic question that we address using lab and field studies: How do Shanzhai products in China affect the performance of the original products which they imitate, and why? Contrary to the belief that Shanzhai products always hurt the original, we find that the effects of Shanzhai depend on Shanzhai quality: a joint retail display with a low-quality Shanzhai product actually benefits the original, while a joint retail display with a moderate-quality one hurts the original. Further analyses suggest expectancy disconfirmation effects underlie these performance outcomes. This research deepens our understanding of imitation strategies to help firms cope with Shanzhai.