Effects of Country-of-Origin on Buying Behavior: A Study of the Attitudes of United States Consumers to Chinese-Brand Automobiles

Article excerpt

In spite of its three decades of sustained high economic growth rates with $3.42 trillion GDP in 2007, China has an image and reputation of a low cost producer in the global marketplace. Yet, China faces a marketing challenge to sell Chinese brand products due to its country and product images. This article evaluates, empirically, the attitude of US consumers toward Chinese-brand automobiles made in nine different countries. The sample of this study comprised 345 consumers from Sacramento, California and that the data were collected by means of a specially-developed questionnaire. We employed logistic regression to analyze the effects of a set of hypothesized independent variables on customers attitudes to Chinese brand automobiles. The findings of this research indicate that US consumers are rational buyers who focus on the perceived product quality rather than emotional factors such as ethnocentrism and ethnicity. Thus, they are more receptive to products made in the most advanced countries, such as Japan, Germany, and the US, than those from advanced countries, such as South Korea and China, and that they are the least receptive to those from developing countries. Statistical results also show that Chinese automakers gain the most benefit from quality image improvements by producing automobiles in advanced countries, such as South Korea and China, than in the most advanced countries.

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Introduction

Beginning in late 1978, China decided to move the economy away from a centrally planned system to a more market driven approach. The result has been close to three decades of sustained high economic growth rates. In spite of its $3.42 trillion GDP in 2007, China has an image and reputation of a low cost producer in the global marketplace. China, however, "understands that it needs to move beyond a low cost production model into higher value-added products" (Loo and Davies, 2006:201) in order to achieve sustainable economic growth. After investing resources into R&D to improve the quality of its products and once Chinese brand names are established, China has to convince the world that they have "brands that deserve a price premium" (Loo and Davies, 2006: 201).

Yet, China is loaded with two images that do not go hand-in-hand; an developing industrial power but one based more on communism than on capitalism; an enormous market but one where most consumers are still relatively poor; a source of goods made for established Western or Japanese brands rather than a source of goods valued because they are 'Made in China' (Loo and Davies, 2006). In spring 2003 China was associated with the SARS epidemic while in 2008 it was violent protests in Tibet. Furthermore, recent recalls of toothpaste, toys, drugs, tires and other products have created a marketing challenge for any company trying to sell Chinese brand products in the US . International marketers, marketing scholars, economists, and politicians understand that image of a country where a product is made is important because the country of origin of a product influences product evaluations and purchase decisions; consumers tend to infer the quality of a country's products from its national image (Papadopoulos and Heslop, 1993; Jaffe and Nebenzahl, 2006).

This article evaluates, empirically, the attitude of US consumers toward Chinese-brand automobiles made in nine countries: China, Japan, Mexico, Canada, South Korea, Germany, Russia, India, and the US. Specifically, this study has examined US consumers' perceptions on their product evaluations in terms of product quality: reliability, workmanship, quality, design, safety, fuel efficiency, comfort, and performance. This study has also attempted to identify the association between independent variables, such as US consumers' perceived product quality, country image, ethnocentrism, and ethnicity, and one dependent variable, US consumers' buying intentions towards Chinese automobiles made in various countries. …