ethical beliefs of chinese consumers in hong kong

ABSTRACT. In recent years, there has been increasedawareness of unethical consumer practices in Asiancountries. Asian consumers have gained a bad repu-tation for buying counterfeit products, such ascomputer software, fashion clothing and watches. In1993, the estimated losses to US software companiesdue to Chinese counterfeiting stood at US $322million (Kohut, 1994). The present study uses aconsumer ethics scale developed by Muncy and Vitell(1992) to investigate consumers’ ethical judgmentsfrom a Chinese perspective. The result shows thatconsumers in different cultures utilize similar rules toassess the ethicality of a given situation. However,findings also show certain cultural elements that areunique in influencing Chinese consumers’ ethicaljudgments. The results also indicate the need forthe continued development of and investment inconsumer education in Asia.

Introduction

Recent sky-rocketing rates of software pirating,the excessive losses caused by shoplifting and therampant supply of counterfeit products have allbecome issues of concern to today’s marketersin Asia. Governments and most of the businesscommunity believe that the desire for excessiveprofit is the major reason for these activities.Consumers, however, are the actual force behindthis trade. Consumers’ low ethical standardsmay be the key variable that breeds unethicalbehavior. It seems that consumers have ‘double-standards’ when making ethical judgments. Theytend to expect businesses to have higher standardsthan they themselves are willing to follow (Vitellet al., 1991). There have been quite a numberof studies conducted in this area (Antil, 1984;Kallis et al., 1986; Vitell and Muncy, 1992;Rallapallie et al., 1994; Rawwas et al., 1994).However, not much research has been done inAsia. Since Hong Kong has a reputation as a‘moral jungle’ where no ethical standards exist(McDonald and Zepp, 1988), the present studyhas selected consumers in Hong Kong as thesubject of analysis.

Literature review

The understanding of consumer ethics is crucialto today’s marketers and policy makers. But whatis consumer ethics? Muncy and Vitell (1992)define consumer ethics as “the moral principlesand standards that guide behavior of individualsor groups as they obtain, use, and dispose ofgoods and services.” Consumer behaviors withethical implications can be further subdivided

Ethical Beliefs of ChineseConsumers in Hong Kong

Journal of Business Ethics 17: 1163–1170, 1998.© 1998 Kluwer Academic Publishers. Printed in the Netherlands.

Andrew ChanSimon WongPaul Leung

Andrew Chan is Assistant Professor of Marketing at theHong Kong Polytechnic University. His research has previously appeared in refereed conference proceedings andjournals.

Simon Chak-keung Wong is a lecturer at the Hong KongPolytechnic University. He teaches courses in HumanResources Management, Employee Relations and Social& Cultural Studies. He has a variety of research inter-ests, including Employee Ethics, Organizational Com-mitment and Motivations & Barriers to different touristdestinations. His concurrent research projects includeHotel Employee Ethics, and Cultural Differences andPerceptions in Chinese and Western Management

Paul K. H. Leung is Assistant Professor in the Departmentof Hotel & Tourism Management at the Hong KongPolytechnic University. He teaches courses in MarketingManagement and Advertising Manage-ment. Hisresearch interests include marketing-related topics, studentethics and tourist destinations.

into ‘benefit at the expense of the seller’ and‘benefit at the expense of other consumers.’Because the aim of this study is to examineunethical consumer behavior that harms theseller, behavior that has no direct negative impacton the seller will be excluded from the presentstudy.

Since ethical judgments are ‘situation-specific’(Barnett and Karson, 1987), a good measurementscale should cover ethical behaviors in a widevariety of situations. Previous studies, however,have focused on moral standards in general(Forsyth, 1980) or on specific fraudulent behav-iors such as shoplifting and retail fraud (Cole,1989; Cox et al., 1990; Kallis et al., 1986).

Only a few studies have attempted to examinea broad variety of unethical behaviors in a mar-keting context. One of the earliest such studieswas conducted by Wilkes (1978). He examinedconsumer attitudes towards certain fraudulentbehaviors in retail outlets. Respondents wereasked to indicate how wrong they felt certainbehaviors were. General attitudes toward businesswere also assessed, in order to determine respon-dents’ business orientations. The study found thatcertain fraudulent behaviors were more toleratedthan others, and suggested that consumers’business orientations were irrelevant to theirethical judgments.

Vitell et al. (1991) explored the relationshipbetween Machiavellianism and the ethical beliefsof elderly consumers in the United States.A consumer ethics scale was developed thatlisted various questionable consumer practices.Respondents were asked to say whether they per-ceived a given behavior as being wrong or notwrong, on a 5-point scale. The findings revealedthat consumers used three major rules to maketheir ethical judgments: the locus of the fault, thelegality of the behavior, and the degree of harmcaused. For example, actions that did not causeany harm to the sellers were considered as ethical,and actions that were illegal or initiated by theconsumer were considered as unethical.

Vitell and Muncy (1992) also examined theinfluence of personal attitudes on ethical decisionmaking. They found that if a customer had agenerally positive attitude towards business, he/she was more likely to behave in an ethical

manner. Likewise, if the customer equatedunethical behavior with illegal behavior, he/shewas more likely to apply stricter ethical standardsto unethical behaviors. Subsequent studies alsofound that consumers’ ethical decision-makingwas affected by demographic characteristics andpersonality (Muncy and Vitell, 1992; Rallapalliet al., 1994).

The present study explores the ethical beliefsof Chinese consumers in Hong Kong, andcompares the results with those obtained inWestern studies. We also aim to determinewhether attitudinal differences affect consumers’ethical judgments, and attempt to rationalize thefindings by reference to traditional Chinesecultural and moral beliefs. The results will, wehope, serve as a gateway to a better under-standing of Chinese customers, and will providea basis for future consumer education andresearch.

Methodology

Sample

Self-administered questionnaires were completedby 242 part-time and full-time students studyinghotel and tourism management courses at theHong Kong Polytechnic University. The use ofhospitality students as a sample might limit theapplicability of the findings to other consumergroups in Hong Kong. Specifically, these studentsmight have unique perspectives on this issue, andmight behave differently from those studying inother academic disciplines, or from consumersin general. However, we attempted to minimizethis potential bias by including a wide rangeof demographic segments in the sample. (seeTable I)

Measures

Ethical beliefs were measured using the consumerethics scale developed by Muncy and Vitell(1992). This scale has displayed acceptable levelsof reliability in several studies (Rallapalli et al.,1994; Rawwas et al., 1994; Muncy and Vitell,

1164 Andrew Chan et al.

1992). Respondents were asked to choose from‘strongly believe that a statement is wrong’ to‘strongly believe that a statement is not wrong’using a 5-point scale. Because the original scale,for the most part, was based on the culture andlifestyle of the United States (Lascu, 1993), fivequestions that had little bearing on local marketconditions were eliminated. Replacement ques-tions dealing with certain frequently-encounteredquestionable behaviors in Hong Kong wereobtained through discussions. Specifically, ‘finda lost stored value ticket and use up the balance’1

and ‘buying counterfeit compact disks instead ofthe real thing’ were added to the scale.

In addition, respondents’ general attitudestowards business, people in general and illegalactivities were measured by six Likert scale state-ments. These statements were adopted directlyfrom Vitell and Muncy study (1992) withoutmodification. In order to assess the relevance ofthe items, the scale was first tested in a pilot study(N = 30). The results generally indicated accep-tance of the instrument. The final questionnairelisted 20 questionable consumer practices and 6attitudinal questions. Demographic informationabout the respondents was also collected.

Results and analysis

Ethical judgments

Principal component factor analysis with varimaxrotation was performed to identity the under-lying decision rules used by the respondents. Ityielded a four-factor solution with eigenvaluesgreater than 1.0. The pattern of loadings andfactor structures are shown in Table II. Thefactors account for approximately 50.2 percent ofthe total variance, lower than that of Muncy andVitell (1992). Since the responses to these itemswere reflections of the underlying decision rules,and not the rules themselves, a principal axiscommon factor analysis was applied to verifythe extraction method (Hair, 1995). The resultsobtained were similar to those obtained from theprincipal component method, so the principalcomponent method was retained.

The appropriateness of factor analysis wasdetermined by Barlett’s test of sphericity. The test(Barlett’s = 1194.8, p < 0.001) indicated thatfactor analysis was appropriate for analyzing thedata. The internal consistency of each of the fourfactors was established through Reliability tests.All the Cronbach’s alpha coefficients were above0.5, giving additional support to the scale mea-suring consumers’ ethical judgments.

Because the factor structures produced wereconsistent with previous studies (Rallapalli et al.,1994; Rawwas et al., 1994; Muncy and Vitell,1992; Vitell and Muncy, 1992), the originalfactor labels were retained. The first factor,labeled ‘actively benefiting from an illegalactivity’, comprised three questions with a groupmean of 1.49. This was the lowest of all thefactors in this study. Respondents seemed tobelieve that these activities were illegal and there-fore unethical. Most of them indicated strong andclear judgments against these behaviors. Thesecond factor, labeled ‘passively benefiting atthe expense of others’, had a group mean of2.45. Two items previously classified as ‘activelybenefiting from an illegal activity’ were groupedinto this factor: ‘reporting a lost item as “stolen”to an insurance company in order to collect themoney’ and ‘returning damaged merchandisewhen the damage is your own fault.’ A possible

Ethical Beliefs of Chinese Consumers in Hong Kong 1165

TABLE IDemographic characteristics of respondents

Percentage

SexMale 38%Female 62%

Age21 to 25 47%26 to 30 33%31 to 35 15%36 or above 05%

EducationHigh school 34%College 51%Graduate school 15%

Annual Family Income (HK $)Under $120,000 25%$120,001 to $240,000 41%$240,001 to $360,000 20%over $360,000 14%

explanation is that the loss or damage are, in fact,outside of one’s control and thus subsequentactions to seek a refund on the items are con-sidered as passive. The third factor, labeled‘actively benefiting from a questionable action’,had a group mean of 3.71. All but one of the acts

described in this factor represent cases of copy-right violation. It is interesting to note thateven though these behaviors are illegal in HongKong, respondents tended to view them as ‘notwrong’. This may explain why so many con-sumers in Hong Kong ignore intellectual


TABLE IIFactor analysis of consumer ethics scale

Dimension name and items Mean

* Factor Cronbach’sloading alpha

1. Actively benefiting from an illegal activity 0.75Drinking a can of soda in a supermarket. 1.33 0.78Changing price-tags on merchandise in a retail store. 1.46 0.79Give misleading price information to a clerk for an unpriced item. 1.67 0.74

2. Passively benefiting at the expense of others 0.79Reporting a lost item as !stolen to an insurance company in order

to collect the money. 1.96 0.51Returning damaged merchandise when the damage is your own

fault. 2.20 0.69Lying about a child’s age in order to get a lower price. 2.34 0.63Getting too much change and not saying anything. 2.48 0.76Not saying anything when the waitress miscalculates the bill in

your favor. 2.68 0.75Moving into a new residence, finding the cable TV is still hooked

up, and using it rather than signing up and paying for it. 3.02 0.58

3. Actively benefiting from a questionable action 0.51Buying a counterfeit CD instead of the real thing. 3.09 0.62Finding a lost stored value ticket and using up the balance. 3.59 0.56Taping a movie off the television. 4.05 0.62Recording a CD instead of buying it. 4.13 0.69

4. No harm/No foul 0.63Returning an item after finding out that the same item is now

on sale. 2.84 0.63Returning merchandise after trying it and not liking it. 3.31 0.65Spending over an hour trying on different dresses and not

purchasing any. 3.43 0.66Using computer software or games that you did not buy. 3.81 0.69

Questions with an insignificant factor loading (less than 0.5):Taking an ashtray or other !souvenir from a hotel or restaurant. 2.62Breaking a bottle of salad dressing in a supermarket and doing

nothing about it. 2.47Stretching the truth on an income tax return. 2.69

* A 5-point scale was used, where 1 indicated the action was wrong and 5 indicated the action was notwrong.

property rights and buy counterfeit products(Chung, 1994). The fourth factor was labeled ‘noharm/no foul’. Four questions with a groupmean of 3.35 fell into this factor. Even thoughall the acts described in this factor are legal anddo not cause great harm to the seller, respondentswere somewhat neutral with regard to thesebehaviors.

Table III compares the rankings and groupmeans of the present study with those obtainedby Rallapalli et al. (1994), Rawwas et al. (1994)and Muncy and Vitell (1992). The overall agree-ment of these rankings was determined by mea-suring the Kendall Coefficient of ConcordanceW. The computed W was 0.825 (p < 0.05), indi-cating that the overall rankings of the groupmeans did not differ significantly from thoseobtained in previous studies. However, in thepresent study, the behaviors listed under thefactor ‘benefiting from questionable actions’ wereconsidered as ‘more ethical’ than any otherbehaviors. One possible reason could be that theChinese have a strong cultural motivation towardsgroup conformity and “face saving” (Hofstede,1980). In order to save face, they have a hightendency to behave according to group norms,and therefore observe stricter ethical standardsin public. However, in private, they may relaxthese ethical standards because the risk of losingface is much lower. All the acts described in‘questionable action’ such as recording a CD(mean score = 4.13), are committed in private,and were considered as ‘more ethical’ by the

respondents. Subsequent discussions with someof the respondents confirmed this suggestion.

Attitudinal characteristics

To determine whether ethical judgments differedaccording to attitudinal differences, respondentswere asked to indicate their attitudes towards sixstatements concerning business, people in generaland illegal activities. The mean scores of thesestatements are shown in Table IV, together withthe percentage figures.

In general, respondents were satisfied withbusiness practices in Hong Kong. A large numberof respondents felt that businesses truly care aboutconsumers (50 percent) and deal with them fairly(39 percent). Also, over half of the respondents(52 percent) believed that free enterprise is thebest economic system. Such a pattern is to beexpected, since Hong Kong has a long historyof laissez-faire government. Regarding the natureof humankind and illegal activities, respondents’attitudes were somewhat divided. Twenty-fivepercent believed that man is good, and 30percent believed otherwise. Likewise, 28 percentof respondents believed that people deal honestlywith each other, and 43 percent believed other-wise. Finally, 41 percent believed that illegalactivities were wrong, and 31 percent felt other-wise. It appears that respondents were less willingto make clear-cut judgments about whether manis good and whether illegal acts are wrong. It is


TABLE IIIComparison of ranking between studies

Dimensions This Study Rawwas Rallapallie MuncyN = 242 N = 650 N = 295 N = 569

Rank Mean Rank Mean Rank Mean Rank Mean

Actively benefiting from an illegal activity 1 1.49 1 1.54 1 1.76 1 1.45Passively benefiting at the expense of others 2 2.45 2 1.84 2 2.66 2 1.99Actively benefiting from a questionable action 4 3.71 3 2.08 3 2.61 3 2.14No harm/no foul 3 3.35 4 3.05 4 4.01 4 3.38

Kendall Coefficient of Concordance (W) W = 0.8250 p < 0.05

* A 5-point scale was used, where 1 indicated the action was wrong and 5 indicated the action was notwrong.

interesting to note that these concepts are equallycontroversial in Confucius’ doctrine, which is stilla basic pillar of Chinese life today. According toMencius, human nature is good and all men havean innate predisposition to goodness. Xunzi,however argued that human nature is evil, andmaintained that morality must be built on rulesand education. Because of these long-standingcontroversies, respondents may have hesitated tomake judgments on these issues.

Univariate correlation analysis was used toexamine the correlation between respondents’attitudinal characteristics and ethical judgments.Table V indicates that only 3 of the 12 correla-tion coefficients were significant at 0.05 level. Itseems that there was no general overall relation-ship between ethical judgments and attitudinal

characteristics, except in three separate circum-stances. Firstly, respondents’ attitude towardsbusiness had a positive correlation with ‘passivelybenefiting at the expense of others’ which sug-gesting that respondents who had a more positiveattitude toward business tended to be less tolerantof ‘passively benefiting’ behaviors. Secondly, asignificant relationship was found betweenattitude toward mankind and ‘actively benefitingfrom questionable action’. Respondents who feltthat man is good applied stricter ethical standardstowards the questionable actions. Finally, respon-dents’ attitude towards illegal acts was related to‘actively benefiting from an illegal activity’.Respondents who felt that illegal activities werewrong were less tolerant of illegal activities.


TABLE IVGeneral attitudinal statements

Attitudinal statements Mean* Agree Disagree

1. Attitude toward businessMost businesses in Hong Kong truly care about individual consumers. 2.36 50% 26%Most businesses generally try to deal with me in a fair way, thus,

I try to deal in a fair way with them. 2.78 39% 22%Free enterprise is the best form of an economic system. 2.45 52% 14%

2. Attitude toward mankindMan is basically good. 3.01 25% 30%If you deal with a person honestly, he or she will deal with you honestly. 3.25 28% 43%

3. Attitude toward illegal actsIf something is illegal, then it must be ethically wrong to do it. 2.76 41% 31%

* A 5-point scale was used, where 1 indicated strongly agree and 5 indicated strongly disagree.

TABLE VCorrelation of general attitude and consumer ethics dimensions

Dimensions Attitude towardBusiness Mankind Illegal acts

Actively benefiting from an illegal activity –0.085** –0.074* –0.167**Passively benefiting at the expense of others –0.183** –0.060* –0.020**Actively benefiting from a questionable action –0.109** –0.148* –0.005**No harm/no foul –0.097** –0.010* –0.021**

* Significant at 0.05 level.** Significant at 0.01 level.

Conclusion and limitation

Notwithstanding the cultural differences, theresults of this study seem to support those ofVitell and Muncy (1992) and Rallapalli et al.(1994), which suggested that consumer ethicaljudgments are affected by three major factors:‘whether or not the buyer or the seller is at fault,whether or not the activity is perceived as illegaland whether or not there is a direct harm tothe seller’ (Vitell and Muncy, 1992). However,as mentioned earlier, the ethical judgments ofChinese consumers are heavily influenced by thegroup norm. Chinese people, in fact, maintainseparate standards for their public and privatelives. For example, they may maintain highethical standards in relation to obvious illegalbehaviors, such as ‘drinking a can of soda in asupermarket’ (mean score = 1.33), but in theirprivate life they may relax their standards byjudging a less-observable illegal behaviors as a‘questionable action’ only. If this is indeed thecase, legislation would have a very limited impacton those less-observable behaviors such as buyingand using counterfeit products. Consumer edu-cation aimed at developing correct ethical normsand peer pressure may be therefore a long-termbut effective measure.

Another interesting finding is that the ethicaljudgments of the Chinese consumers seemed tobe less affected by their personal attitudes. InVitell and Muncy’s study (1992), personal atti-tudes played a significant role in consumers’ethical decision-making. For example, if aconsumer was pro-business, he/she would behavemore ethically in every situation. Yet Chineseconsumers in Hong Kong seem to be somewhatneutral or impersonal when making ethical judg-ments. In other words, they may be influencedby the group norms rather than their ownpersonal inclinations in assessing the ethicality ofa given situation. We do not have sufficientevidence to make a definitive conclusion here,but it is certainly an area for further exploration.

Some limitations of this study should be con-sidered together with the conclusions drawnabove. In our study, hotel and tourism manage-ment students were selected to represent Chineseconsumers in Hong Kong. Despite all the com-

monalties in social and cultural traditions, thesestudents may behave differently from generalconsumers with regards to their ethical judg-ments. While we sought to limit this bias byusing a wide range of demographic segments, wemay not have eliminated it completely.

The use of simple statements to describepotentially unethical behaviors might have intro-duced additional variances to the results. Chinesepeople in particular tend to be situation-orientedand pragmatic (Yau, 1988). When asked to makejudgment on event, they tend to put moreemphasis on the context than on the action itself.For example, a decision about whether it isright or wrong to buy a counterfeit productmight depend on the availability and price of thegenuine article. If a genuine product is not avail-able in the local market, or if it is priced toohigh, consumers may feel that it is acceptable tobuy counterfeit product. On the other hand, ifa genuine product is available in the local marketat a reasonable price, they may feel that is itwrong to commit such an offense. This maypartly explain why the factors extracted in thisstudy accounted for only half of the variance inthe data set. Further research should thereforeinclude ethical scenarios that provide a muchricher context to the incidents described.

Although the present study was only explora-tory in nature, the findings should benefit mar-keters and policy makers in understanding thedecision rules of Chinese consumers. In addition,it should contribute to the development of amore rigorous methodology for researchingconsumer ethics in Asia.

Note

1 A stored value ticket is a magnetic card used onthe public transit system in Hong Kong. Fares arededucted from the ticket each time the holder usesthe public transit system. There is no user name oridentity marked on the card, so anyone can pick upa lost card and use up the balance.


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Department of Hotel & Tourism Management,The Hong Kong Polytechnic University.


ethical beliefs of chinese consumers in hong kong

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