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Asia Pacific Journal of Marketingand Logistics

Vol. 20 No. 4, 2008pp. 455-478

# Emerald Group Publishing Limited1355-5855

DOI 10.1108/13555850810909759

Received August 2007Revised January 2008Accepted April 2008

The impact of consumerethnocentrism and country

of origin sub-components forhigh involvement products on

young Chinese consumers’product assessments

Chui Yim WongSchool of Hospitality, Tourism and Marketing, Victoria University,

Melbourne, Australia

Michael J. PolonskySchool of Management and Marketing, Deakin University, Burwood,

Australia, and

Romana GarmaSchool of Hospitality, Tourism and Marketing, Victoria University,

Melbourne, Australia

Abstract

Purpose – The purpose of this paper is to examine the effect of country of origin (COO) sub-components (i.e. design, assembly and parts), as well as the extent to which consumer ethnocentrismtendencies interact with these COO sub-components for young Chinese consumers with regards toproduct quality assessments and purchase intentions.Design/methodology/approach – A 2� 2� 2 factorial experimental design was used to examinethe effects of the three sub-components of COO with two levels of sourcing location – Home (China)and Foreign (Germany), for two high involvement products (an automobile and a digital camera).Chinese students in China represented the sample of 272 respondents. MANOVA was used to examinethe direct effects and interactions of the three COO components, as well as ethnocentrism, measuredusing the CETSCALE.Findings – It was found that the three COO sub-components did not influence young Chineseconsumers’ evaluation of product quality or purchase intentions. In addition, consumers’ level ofethnocentrism also did not have a direct effect on perceived product quality or purchase intentions.There was only one statistically significant interaction effect between ethnocentrism and country ofparts for one of the two products. As such, COO dimensions and young Chinese consumers’ethnocentrism appears to have limited influence on their assessments of product quality or purchaseintentions. This may occur because young Chinese consumers perceive that hybrid products are thenorm for high involvement products in China as these products are all these consumers haveexperienced.Originality/value – The findings of this research dispute the commonly held belief andevidence that sub-components of COO have an impact on the perceptions of product quality andpurchase intentions. Young Chinese consumers may be different to consumers from westerncountries because they have been extensively exposed to hybrid products. Given the size and growthpotential of China, young Chinese are an important, under-researched segment within the Chinesemarket.

Keywords Country of origin, Design, Assembly, Parts, Ethnocentrism, China

Paper type Research paper

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IntroductionGlobal trade liberalization has increased the relative convergence of economic ideologythroughout the world (Shankarmahesh, 2006). With globalization consumers areincreasingly exposed to products from different countries and as such, the role ofcountry of origin (COO) cues, that is, how consumers perceive products from a country(Elliott and Cameron, 1994; Tse and Gorn, 1993) are more salient. Undoubtedly, COOcues potentially have a more complex meaning under globalization compared totraditional ‘‘export’’ focused international trade, given that fewer products aredesigned, manufactured, assembled, branded and owned by one country (Baker andBallington, 2002). This may mean that in some markets consumers only experiencehybrid products, i.e. those that have multiple COO components (Chao, 2001; Ettensonand Gaeth, 1991; Li et al., 2000). The research on COO has recognized the complexity oforigin by expanding the discussion from one overall COO concept, to consider aspectsof country of origin separately. These aspects include country of design (COD) (Ahmedand d’Astous, 2007), country of assembly (COA) (Brodowsky, 1998), country ofmanufacture (COM) (Okechuku and Onyemah, 1999) and country of brand (Pecotichand Rosenthal, 2001).

Despite the extant research on COO, the literature identifies two majorshortcomings. First, many past studies are wholly based on the ‘‘made-in’’ label, alsoreferred to as COM to investigate consumer behavior toward products from differentcountries. Only a minority of studies take into account global sourcing which involvesmultiple sourcing locations/countries and therefore transforms COO into amultifaceted construct (Ahmed and d’Astous, 2007; Chao, 1993; Insch and McBride,2004; Li et al., 2000; Pecotich and Ward, 2007; Samiee, 1994), although research intomore complex constructions of COO are emerging. Second, the majority of COO studieshave been conducted in developed countries although works in developing countries doexist (Ahmed and d’Astous, 2007; Kaynak and Hyder, 2000; Kaynak and Kara, 2002;Pecotich and Ward, 2007; Piron, 2000; Wang and Chen, 2004; Zhang, 1996). COOresearch in developing or non-western countries, especially Asian markets, remainsless explored. Consequently, our knowledge of COO effects on consumer behavior inother parts of the world is less developed.

While there is a substantial body of research on COO it has traditionally emergedout of the USA, however, there has been a call to explore COO from other perspectives(Balabanis and Diamantopoulos, 2004). This might help to partially explain thegrowing research investigating COO outside the USA in recent times (Kaynak et al.,2000; Pereira et al., 2002). Research investigating COO in Asian countries is growingwith studies exploring markets in Taiwan (Lin and Chen, 2006), Hong Kong (Yu andAlbaum, 1999) and China (He, 2003; LaTour and Henthorne, 1990; Wang and Chen,2004). Many of these studies that explored COO and Asian consumption have usedyoung people as their sample (Chan, 2006, Gong et al., 2004; Wang et al., 2004; Parkeret al., 2004). The increased general interest of young consumers in Asia is particularlyimportant (Gong et al., 2004) especially as Asia is growing more rapidly then the rest ofthe world and according to the World Bank, GDP in the Asia Pacific region represents6.8 per cent of world GDP (World Bank, 2007).

Without doubt, one of the critical Asian economies is China, which is presently one-sixth as large as the USA, and is projected to double by the year 2020 (World Bank,2007). It is also considered to be one of the most attractive consumer goods market inthe world (He, 2003; Kaynak and Kara, 2000; People’s Daily, 2003) with youngconsumers in particular being a critical target market (Chan, 2006; Gong et al., 2004).

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Chinese economic reform has brought a flood of foreign goods and investment into thecountry along with increased exposure to western ideas (Li, 1997; People’s Review,2003). This transformation has enabled Chinese people to interact with theinternational community. Therefore, international marketers seeking to tap into thismarket require an understanding of the relative effects of COO on product evaluationand purchase intentions, specifically when assessing product-sourcing issues.

Exploring how young Chinese consumers and others in emerging Asian markets,view products from their home and foreign countries is therefore important (Han, 1988;Wang and Chen, 2004), however, consumers’ attitudes are not simply based on the COOof goods. A number of studies have documented that consumers have a bias againstforeign products, in favor of domestic products (Chung and Pysarchik, 2000; Petersonand Joilert, 1995; Verlegh and Steenkamp, 1999). Therefore, consumers’ level ofethnocentrism is an important consideration in COO studies (Shankarmahesh, 2006;Kaynak and Kara, 2002).

This study examines the extent to which varying the COD, COA and COM of homeand foreign products affects young Chinese consumers’ product quality perceptionsand purchase intentions for high involvement products. It also explores the extent towhich consumers’ level of ethnocentrism affects their product quality perceptions orpurchase intentions for home goods and how this interacts with the dimensions ofCOO.

The remainder of the article is organized in the following way. First, we review theCOO literature specifically highlighting the transformation of the COO concept from asingle construct to a construct with multiple sub-components, and its effect onconsumer behavior, namely, its impact on product quality perceptions and purchaseintentions. Second, we examine the role of consumer ethnocentrism on the perceptionsof product quality and purchase intentions of young Chinese consumers. Third, wediscuss the empirical study used to explore the relationship between the COOdimensions and consumers’ level of ethnocentrism on their assessments of productquality and purchase intention. In doing this we have drawn on available literature forsupport. Fourth, we discuss our findings and offer some future research directions.

Literature reviewTransformation of the COOGlobalization has become an imperative in today’s competitive marketplace with firmsoften outsourcing various parts of their production and operations to differentcountries in search of the lowest possible cost and expertise (Chao, 2001).Consequently, researchers have found that defining COO has become more complexgiven the rise in the practice of global production. This phenomenon has led toproducts being designed in one country with component parts supplied by anothercountry, and manufactured in yet another country (Ettenson and Gaeth, 1991; Jaffe andNebenzahl, 2001; Tse and Lee, 1993). For example, General Motors (GM) cars could bedesigned in Italy, have the engine and transmission components produced in Japan andbe assembled in Mexico ( Jaffe and Nebenzahl, 2001). Such multinational productionhas generated a vast number of hybrid goods not only in the automobile sector but alsomany other product categories, especially electronic items such as TVs or computers(Chao, 2001; Ettenson and Gaeth, 1991; Lee et al., 2001; Li et al., 2000; Tse and Lee,1993).

The practice of global sourcing has motivated several researchers to makedistinctions between the countries where products are manufactured, designed, or

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where parts/components were made (Ahmed and d’Astous, 2001, 2007; Chao, 1993; Tseand Lee, 1993). While various studies have confirmed that each of these activities havedifferent levels of influence on consumer perceptions of product quality (Ahmed andd’Astous, 2001; Brodowsky, 1998; Chao, 1998; Insch and McBride, 1998), it is becomingclear that a decomposition of the COO construct into sub-components, namely COD,COA and country of parts/components, is essential given the current globalmarketplace.

Chao (1993) was one of the first to divide the COO construct into multipledimensions: COA/COM and COD. He found that both criteria were important, althoughthere was no interaction effect between the two COO components. Tse and Lee (1993)decomposed the COO construct into components origin and assembly origin, andfound both were important in terms of consumer behavior. Insch and McBride (1998)further extended the COO construct to that of country of components/assembly (COA)in addition to COD and country of production (COP). They found that all three COOdimensions varied based on the type of product considered. This work was followed byothers exploring the three dimensions of COD, COA and COP, including Ahmed andd’Astous (2001), Chao (2001), Insch and McBride (2004), Li. et al. (2000) and Ahmed andd’Astous (2007). The research generally supports the view that consumers evaluate theCOO sub-components differently depending on the products and countries beingexamined (Insch and McBride, 1998).

The effect of COOThe impact of COO on consumer behavior has been examined in the business andmarketing literature for many years (Al-Sulaiti and Baker, 1998; Papadopoulos andHeslop, 2002; Dinnie, 2004). These empirical studies have shown that COO can affectconsumers in a range of ways including perceived social status, store or productchoice, and perceived risk (see Al-Sulaiti and Baker, 1998; Dinnie, 2004; Peterson andJolibert, 1995; Verlegh and Steenkamp, 1999, for comprehensive reviews of theliterature). The majority of studies have explored how COO effects consumers’perception of a product’s quality, consumers’ attitudes toward a product or theirpurchase intentions (Brodowsky, 1998; Chao, 1998; Chinen et al., 2000; Huddleston et al.,2001; Kaynak et al., 2000; Liefeld, 1993; Li et al., 2000; Papadopoulos, 1993; Pecotich andRosenthal, 2001). While there has been extensive research exploring how COO effectsconsumer attitudes, the body of research has been criticized for sometimes beingcontradictory, atheoretical and weakly supported by empirical evidence (Baker andBallington, 2002; Peterson and Joilbert, 1995).

Past studies have indicated that the influence of COO exists in both productassessment and decision making processes (Balabanis and Diamantopoulos, 2004;Bilkey and Nes, 1982; LaTour and Henthorne, 1990; Jaffe and Martinez, 1995; Reierson,1966; Solomon, 2004; Verlegh and Steenkamp, 1999; Zain and Yasin, 1997). Gurhan-Canli and Maheswaran (2000) have gone farther to suggest that COO can influencecognitive responses, product evaluations and broader beliefs about products. All theseeffects may exist because COO cues give information, which consumers then use topredict the likelihood that a product manufactured in a certain country, will havecertain desirable features (Baker and Ballington, 2002, Roth and Romeo, 1992; Yu andAlbaum, 1999). Moreover, a large number of studies have pointed to a systematic biasin favor of products from developed countries such as Germany, USA, Japan orAustralia, while consumers are unfavorable of products from developing countriessuch as Indonesia, Vietnam or China (Ahmed and d’Astous, 2007; Wang and Chen,

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2004). The positive stereotype held by consumers toward developed countries ispossibly understandable since these countries are perceived as having high levels ofeconomic and technological development (Ahmed and d’Astous, 2001, 2007; Chinenet al., 2000; Hsieh, 2004; Huddleston et al., 2001; Wang and Lamb, 1983). As such,consumers usually feel that products from highly industrialized countries offer betterquality and performance. This also helps to explain why consumers responddifferently toward identical products coming from various countries. A conceptualframework is presented in Figure 1, which highlights the link between the sub-components of COO and consumers’ assessment of product quality and purchaseintentions and includes consumer ethnocentrism (discussed below), which has alsobeen shown to effect how consumers assess products.

Some researchers also suggest that the level of importance consumers place on COOdepends on the type of product being examined (Ahmed and d’Astous, 2001; Balabanisand Diamantopoulos, 2004; Liefled, 1993; Zhang, 1996). The majority of studies haveconfirmed that products with high complexity or luxury items such as cars, personalcomputers, cameras, VCRs, TVs and home theatre systems may be more prone to beaffected by where the product is made (Ahmed and d’Astous, 1993; 2001; Liefled, 1993;Okechuku and Onyemah, 1999; Piron, 2000), as these products involve greaterconsumer expenditure or are seen as more risky.

Highly industrialized countries such as Japan, USA or Germany tend to beevaluated as more superior in the case of design capabilities compared with assembly/manufacture and components/parts aspects (Ahmed and d’Astous, 2001, 2007; Inschand McBride, 1998). While developing countries (e.g. Mexico, Indonesia and China) aregenerally viewed as inferior across design, assembly and parts ability but they areperceived somewhat less negatively in regard to the capability of assembly and parts(Ahmed and d’Astous, 2001; Insch and McBride, 1998).

Since past studies have revealed that the importance of the three COO dimensionsare varied by product types (Tse and Lee, 1993; Insch and McBride, 1998), thissuggests even if a product is not sourced from a country with a favorable image acrossall the COD, COA and COP sub-components, it is expected that the negative productrating due to one sourcing location (e.g. assembled in Malaysia) possibly can beovercome by another favorable sourcing location (e.g. designed in Japan). For instance,COD found in previous studies tended to be more important than COA for quality

Figure 1.Theoretical framework

for assessing consumers’product judgment

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evaluations in TV sets (Li et al., 2000). In order words, if a TV is designed andassembled in Mexico, consumers may hold negative perceptions toward such aproduct. However, this negative rating probably can improve if it is associated withJapanese design because consumers seem to place more concern on COD over COA inproduct assessment. The interaction of unfavorable assembly location by favorabledesign location may reduce negative evaluation due to negative assembly countries.Based on this, it further supports that consumers do make a cognitive distinctionbetween the COO sub-components. However, in the literature there is no generalizedhypothesized ordering of COO dimensions in terms of their importance on consumerviews, nor are there hypothesized directions in regards to interaction effects.

As such we propose the following hypotheses:

H1a. Consumer perceptions of product quality will be influenced by home andforeign: (1) COD, (2) COA, and (3) COP.

H1b. Consumer purchase intentions will be influenced by home and foreign: (1)COD), (2) COA, and (3) COP.

H2. There will be two way and three way interaction effects between: (1) COA, (2)COD and (3) COP in regards to consumers’ (a) perceptions of product qualityand (b) purchase intentions.

For H1a and H1b, based on the literature it would be assumed that young Chineseconsumers will be more positive toward goods with foreign COO dimensions (i.e.Germany). We have not proposed a directional effect for the interaction between theCOO dimensions (two or three way interactions). Overall, we would propose that incases where the three COO dimensions were from the foreign country, young Chineseconsumers’ assessments would be highest and assessments in situations where thethree COO dimensions are from the home country would be lowest. This research doesnot explore the relative importance of the three COO dimensions. Thus, young Chineseconsumers’ perceptions of hybrid products (i.e. where at least one COO dimension isfrom the home country and one from the foreign country) will fall in between.

The role of consumer ethnocentrismConsumer ethnocentrism focuses on the appropriateness and morality perceived whenpurchasing foreign goods, as well as consumer loyalty to domestically produced goods(Shimp and Sharma, 1987). Lantz and Loeb (1996, p. 376) assert that, ‘‘ethnocentrism isthe term which has often been applied to the home buying portion of the COO effect’’.Consumers with high levels of ethnocentrism tend to emphasize the positive aspects ofdomestic products and discount the virtues of foreign made items (Rawwas et al., 1996),and are also more likely to purchase local products (Acharya and Elliott, 2003;Balabamis and Diamantopoulos, 2004; Shoham and Brencic, 2003; Suh and Kwon,2002; Watson and Wright, 2000). Shankarmahesh’s (2006) review of the literature onethnocentrism supports these views as he identified that previous research has foundthat ethnocentrism affects consumers’ attitudes toward foreign product’s quality, aswell as purchase intentions.

Sharma et al. (1995) revealed that consumer ethnocentrism might, in fact, result inan overestimation of product attributes and overall quality of domestic products aswell as an underestimation of the quality of foreign products. The theoreticalunderpinning of this behavior can be traced to Sumner’s (1906) general construct ofethnocentrism in which ‘‘the view of things in which one’s own group is the center of

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everything, and all others are scaled and rated with reference to it’’ (p. 13). On the basisof past studies, it is evident that ethnocentrism does impact on consumer attitudesand behavior in regards to local versus foreign made products (Balabanis andDiamantopoulos, 2004; Pecotich and Rosenthal, 2001; Shankarmahesh, 2006; Wang andChen, 2004; Yagci, 2001). However, most of these studies have generally not beenexamined in developing markets such as China.

Several studies have extended the research of ethnocentrism by exploring how thisaffects the constructs of COD, COA and COP (Acharya and Elliott, 2003; Brodowsky,1998; Pecotich and Rosenthal, 2001; Wong et al., 2005). Brodowsky (1998) found thatindividuals with high levels of consumer ethnocentrism expressed positive beliefs andattitudes toward buying products that are locally designed and assembled. Pecotichand Rosenthal (2001) also found that ethnocentrism had a direct effect on consumersviews in regards to price and purchase intentions, but not product quality, as well as avarying interaction effect with COO dimensions. This is somewhat consistent withAcharya and Elliott (2003) who found a weak relationship between consumerethnocentrism and the quality perception of domestically designed products, but astrong relationship for products domestically assembled and manufactured.

The examination of ethnocentrism across the three COO sub-components hasexpanded our knowledge of how ethnocentrism might interact with the effect ofvarious COO dimensions. However, the inconsistent results found in earlier studieshighlight that further studies are needed to investigate the influence of consumers’ethnocentrism tendencies associated with COD, COA, and COP. Based on the abovediscussion of ethnocentrism, the following hypotheses are proposed:

H3. There will be no difference in how consumers view products based on theirlevel of ethnocentrism alone, in regards to (1) perceptions of product qualityand (2) purchase intentions.

H4. Young Chinese consumers with high levels of ethnocentrism will have morepositive assessment of product quality, where the (1) COD; (2) COA and (3)COP is local (Chinese), i.e. there is an interaction between ethnocentrism andeach of the COO dimensions.

H5. Young Chinese consumers with high levels of ethnocentrism will have morepositive purchase intentions, where the (1) COD; (2) COA and (3) COP is local(Chinese), i.e. there is an interaction between ethnocentrism and each of theCOO dimensions.

H6. Young Chinese consumers with high levels of ethnocentrism will have morepositive purchase intentions across three and four-way interactions among (1)COD; (2) COA and (3) COP, when there is local COO components for both (a)perceptions of product quality and (b) purchase intentions.

MethodologyThis study used a full factorial (laboratory) experimental design to explore the issuesdiscussed above. This approach is prevalent in many COO studies, especially researchinvolving hybrid products (e.g. Acharya and Elliott, 2003; Brodowsky, 1998; Chao,1998; Insch and McBride, 1998, 2001; Pecotich and Ward, 2007). This experimentaldesign was deemed appropriate as it enables the measurement of the effects of two ormore independent variables at various levels and allows for interactions betweenvariables (Bordens and Abbott, 2002; Malhotra et al., 2002, Wason et al., 2002). Within

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this study, a 2� 2� 2 factorial design was used to test each of the three COO sub-components, with two countries examined – China (the home country) and Germany(the foreign country). Hence, eight treatment scenarios are examined. As indicatedearlier, the COO effect is more likely to occur with high involvement products (Ahmedand d’Astous, 1993, 2001; Insch and McBride, 2004; Okechuku and Onyemah, 1999;Piron, 2000). Thus, two high involvement products, namely automobiles and digitalcamera were each examined (i.e. total of 16 scenarios).

Each respondent was randomly assigned into two of the eight different treatments,with a scenario for an automobile and digital camera. The scenario presented a photoof the product and a price that was consistent with current Chinese prices for entrylevel products (see Appendix). This was done to ensure that price assessments werenot undertaken by consumers. Brands of products were not included in thephotographs or stimuli, to ensure that this factor was not considered by consumers.There was a brief description of the product in which the three COO dimensions werevaried. The appendix provides the stimulus used for each of the products. In additionto the picture, price and description of COO characteristic, information on basicfeatures was also provided, which has been done in other studies, such as Lee et al.(2005). The stimuli used in the experimental design allowed the researchers to focus onthe three COO dimensions and control other product factors (brand, price, etc.) thatmight influence consumers’ assessments.

The products selected have relevance to Chinese consumers, which is the focus ofthis paper. The automobile market is growing rapidly and over 70 per cent of Chineseurban households were planning to buy cars (Xinhua, 2000). COO literature has alsoextensively used automobiles (e.g. Ahmed and d’Astous, 1993, 2001; Lawrence et al.1992; Okechuku and Onyemah, 1999). German–Chinese automobiles are the largestsellers in China (ARA, 2003), with German firms being the early foreigner investors inthe Chinese market (Liu and Deng, 2003; Wattanavitukul, 2002). Digital cameras arealso highly demanded in China, with sales growing at 120 per cent in 2002 (TRI, 2002).While cameras have not been used in other studies, electronics goods have beenexplored (e.g. Ahmed and d’Astous, 2007; Insch and McBride, 2004). Thus, whilepurchase decisions for digital cameras are not as complex or expensive as automobiles,they generally require high involvement and have also been found to indicate a level ofmaterial success in China (Anderson and He, 1998).

In regards to the two countries selected, China was the home product market giventhe study was undertaken in China. Germany was selected as the foreign country as ithas been an active trading partner with China, especially in the automobile market. Inaddition, German firms have invested in over 2,000 projects in China over the last twodecades (People’s Daily, 2000).

EthnocentrismTo explore ethnocentrism, we used Shimp and Sharma’s (1987) original CETSCALE.Respondents are asked to respond to a set of 17 statements, which assessed consumersethnocentric tendencies, using a 7-point scale (1¼ strongly disagree to 7¼ stronglyagree). The 17 items were aggregated to form a total ethnocentrism score for eachrespondent. This scale has been used extensively in the COO literature (e.g. Balabanisand Diamantopoulos, 2004; Wang and Chen, 2004; Yagci, 2001). Pereira et al. (2002)demonstrated that the CETSCALE is uni-dimensional and possesses internalconsistency and reliability among Chinese respondents. The CETSCALE is deemedreliable in this study which produced an acceptable alpha value of 0.88.

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A mean split of the data was used to classify respondents as either high or lowethnocentric consumers. This approach has been used elsewhere in the COO literature(Shimp and Sharma, 1987). Within this study the mean CETSCALE score was 56.25and the SD is 14.6. This is similar to results in other countries in the Asia Pacific suchas Australia, where the mean CETSCALE value has been reported to be 56.31(Acharya and Elliott, 2003), and Taiwan, where the average level of consumer’sethnocentrism is 56.1 (Pereira et al., 2002). Demographic information on respondentswas also collected, including whether the respondent or a family member owned anautomobile or digital camera.

Dependent variablesTwo dependent variables were used in this study: product quality and purchaseintentions. Respondents were required to make product quality judgments using fouritems drawn from Chao (1998) using a seven-point semantic differential scale. Theseincluded consumers’ perceptions of: workmanship (poor to excellent); durability (notdurable to very durable); reliability (not reliable to very reliable) and overall quality(poor quality to excellent quality). Chao (1998) had explored these dependent variablesin regards to perceptions of country of design, manufacture and components and thusthe context was similar to this study. This study found that the product qualitymeasure was reliable in both product contexts, with an alpha of 0.86 for the automobilesurvey and 0.88 for the camera survey.

A seven-point single item scale was used to measure future purchase behavior,where respondents were asked to indicate their purchase intention from very unlikelyto purchase to very likely to purchase. This measure was used by Chao (1998) andother COO studies (Okechuku and Onyemah, 1999; Wang and Chen, 2004).

Analytical tools usedTo test the seven hypotheses, we undertook MANOVA, which has been extensivelyused in past COO and/or ethnocentrism studies (Brodowsky, 1998; Insch and McBride,2004; Jaffe and Martinez, 1995; Lee et al., 2005; Pecotich and Rosenthal, 2001; Pecotichand Ward, 2007; Rawwas et al., 1996). MANOVA was also selected as it allows for thedetection of the main effect of individual independent variables and the interactioneffect between different independent variables under a given experimental situation(Hair et al., 1995; Tabacknick and Fidell, 2001). In cases where statistical differenceswere identified, we undertook an examination of mean differences to determine thedirection of these differences.

Survey development and testingAfter the survey was developed in English it was translated into Chinese and thenback translated into English to ensure the items explored covered the intended issues(Ahmed and d’Astous, 2007; Insch and McBride, 2004; Pereira et al., 2002). The surveywas then pretested with 50 Chinese students based in Australia taking an Englishcourse. These individuals had only recently arrived in Australia. Given that researchsuggests that acculturation takes several years (Chung and Pysarchik, 2000; Dion andDion, 1996), these Chinese students in Australia were deemed to be representative ofthe students in China. The pretest students were asked not only to complete the surveybut also to assess the instrument for clarity and phrasing. No substantial design issueswere identified in this process. Reliability testing was undertaken on the product

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quality and ethnocentrism construct in the pretest, with both having acceptable alphalevels (0.89 and 0.88, respectively).

Data collectionData for the main study was collected using a questionnaire that was administered torespondents using the ‘‘drop off’’ method, a technique commonly used in COO studies(Ahmed and d’Astous, 1993; Balabanis and Diamantopolous, 2004). A total of 320questionnaires were distributed to Chinese students studying in an Australianbusiness program taught in conjunction with a Chinese University in Northeast China.The usable response rate was 85 per cent (i.e. 272 completed surveys). Similar types ofstudent samples have been used in previous COO studies (Bilkey and Ness, 1982;Crnjak-Karanovic et al., 2005; Peterson and Jolibert, 1995), hence the sample is deemedappropriate. Some researchers have been concerned that student-based samples mayproduce biased findings, which limits the level of applicability in actual consumers(Liefeld, 1993; Peterson, 2001; Samiee, 1994). However, in their meta-analysis of theCOO literature, Verlegh and Steenkamp (1999) identified that in studies using studentsamples there were no statistically different effects as compared to those identified instudies using representative consumer samples. Thus, the problems associated withusing student samples identified in more generalized research (i.e. Peterson, 2001) donot appear to be an issue in COO studies.

Additionally, this study focuses on young Chinese consumers rather that Chineseconsumers generally and thus university students would be more representative of thisspecific group. As was identified earlier in China, 18-34 year olds are the most dynamicconsumer segment (DSMR, 2001; Gong et al., 2004; Li, 1997). The one child policy hasresulted in these ‘‘Little Emperors’’ (DSMR, 2001) having significant influence over theirfamily’s consumption behavior such as brand choice, shopping location, informationaccess, entertainment programs and family fashion as well as creating a high demand forhousehold goods (DSMR, 2001). Young Chinese consumers’ behavior has also beenexplored in other studies by sampling university students in China (Fan and Xiao, 1998).As such, a student sample is even potentially more applicable in China than other countries.

Sample characteristicsAll respondents were Chinese university students, who were enrolled in an AustralianUniversity program based in China. Table I provides the demographic characteristics ofthe sample. As the sample was university students it was not expected that there wouldbe a wide age variation. The average age of respondents was 21.3 years with a rangebetween 19 and 24. Sixty-eight per cent of the respondents were female. The majority(74.3 per cent) of students came from relatively wealthy families, i.e. that had more thandouble the average Chinese family income of 15,000 Yuan (World bank, 2007), whichwould be expected given they are undertaking a university program through a foreignprivate provider. In terms of family ownership of products being examined, 38 per centowned cars, which again is high reflecting the economic status of the families. Withrespect to digital cameras, 34 per cent owned a digital camera, but this may not haveincluded those whose phone incorporated a camera, which was not explored.

Ethnocentrism is technically not a demographic variable, although it does describecharacteristics of the sample. As was mentioned earlier, the mean CETSCALE scorewas 56.25 with a SD of 14.6. Based on a mean split sample, there were 54 per cent ofrespondents classified as having low levels of ethnocentrism and 46 per cent havinghigh levels of ethnocentrism.

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ResultsTests were run to ensure all the assumption of MANOVA were satisfied. Each cell sizewas greater than 30, hence normality is assumed. Homeogeneity of the variance-covariance is assumed as the Box’s M test was non-significant for the automobile(P¼ 0.404) and camera (P¼ 0.447) experiments. The univariate test of homeogeneity ofvariance for the dependent variables was not violated.

The results of the MANOVA are reported in Table II and are used to explore thehypothesis. We first explore the direct and interaction effects of the three COOdimensions on quality perceptions and purchase intentions (i.e. H1-H2). We thenexamine the results related to ethnocentrism (H3) and the interactions betweenethnocentrism and the three COO dimensions (H4-H6). The results for bothexperiments were consistent across the three multivariate criteria, all main effects andinteractions are insignificant, except for the interaction between ethnocentrism andCOP in the camera experiment. The univariate F-test presented in Table III alsoconfirms these findings.

The effect of COO sub-componentsIn both product cases, automobiles and digital cameras, there is no direct effect for anyof the three COO dimensions (COD, COA or COP) on quality perceptions or purchaseintentions. As such H1ai-iii and H1bi-iii are not supported. For both the products, there

Table I.Demographic

characteristics of thesample

Respondents’ characteristics Frequency (n¼ 272) Percent

GenderFemale 185 68Male 87 32

Age (years)19 2 0.720 37 13.921 125 46.822 85 31.823 16 6.024 2 0.7

Annual household income levelBelow RMB30,000 70 25.7RMB30,000-RMB50,000 72 26.5RMB50,000-RMB70,000 53 19.5RMB70,000-RMB100,000 35 12.9Over RMB100,000 35 12.9Missing data 7 2.6

Family car ownershipYes 103 38No 169 62

Digital camera ownershipYes 92 34No 180 66

EthnocentrismHigh (mean above 56.25) 125 46Low (mean below 56.25) 147 54

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are no statistically significant two-way or three-way interactions between the COOdimensions for either purchase intentions or quality assessments, i.e. H2 is rejected.

The rejection of H1 and H2 suggests that for young Chinese consumers there isminimal, if any impact of the three COO dimensions on quality assessments orpurchase intentions. These results are inconsistent with much of the past research,which has tended to find that COO dimensions have direct or interaction effects withregard to consumers’ product evaluation and purchase behavior (Ahmed and d’Astous,2001; Chao, 2001; Insch and McBride, 1998). However, it does not seem to be the case inthe context of young Chinese consumers. Thus, the present study fails to confirm thatany COO cues are important to young Chinese consumers’ purchasing intentions orperception of quality. This implies that young Chinese consumers do not place thesame value on these COO sub-components in discriminating product quality orestimating purchase intentions as per those studies found in other countries.

A possible reason for the insignificant impact of COO sub-components on qualityperception and purchase intentions might be that that global production sharing and

Table II.MANOVA results forautomobile and cameraexperiments

Variable df Pillai traceWilks

Lambda Hotelling-Lawley

Experiment 1 – AutomobileCOD 2 0.001 0.999 0.001COA 2 0.013 0.987 0.014COP 2 0.006 0.994 0.006Ethnocentrism 2 0.008 0.992 0.008COD�COA 2 0.002 0.998 0.002COD�COP 2 0.001 0.999 0.001COA�COP 2 0.011 0.989 0.011COD�COA�COP 2 0.004 0.996 0.004COD�Ethnocentrism 2 0.001 0.999 0.001COA�Ethnocentrism 2 0.008 0.992 0.008COD�COA�Ethnocentrism 2 0.002 0.998 0.002COP�Ethnocentrism 2 0.006 0.994 0.006COD�COP�Ethnocentrism 2 0.005 0.995 0.005COA�COP�Ethnocentrism 2 0.008 0.992 0.008COD�COA�COP�Ethnocentism 2 0.011 0.989 0.011

Experiment 2 – CameraCOD 2 0.004 0.996 0.004COA 2 0.009 0.991 0.009COP 2 0.008 0.992 0.008Ethnocentrism 2 0.011 0.989 0.011COD�COA 2 0.012 0.988 0.012COD�COP 2 0.014 0.986 0.014COA�COP 2 0.008 0.992 0.008COD�COA�COP 2 0.001 0.999 0.001COD�Ethnocentrism 2 0.015 0.985 0.016COA�Ethnocentrism 2 0.013 0.987 0.013COD�COA�Ethnocentrism 2 0.002 0.998 0.002COP�Ethnocentrism 2 0.027* 0.973* 0.028*COD�COP�Ethnocentrism 2 0.007 0.993 0.007COA�COP�Ethnocentrism 2 0.009 0.991 0.009COD�COA�COP�Ethnocentrism 2 0.010 0.990 0.010

Note: *p< 0.05

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alliances through inter-firm and inter-country collaboration have enabled products tobe produced anywhere in the world. A single country need not produce products andvarious countries can contribute to a product simultaneously. This multinationalmanufacturing process means that numerous products and brands are manufacturedoutside the firm’s home country (Yagci, 2001). This could also relate to the sample used(mean age 21.3 years), who may never have experienced the large volumes of importedforeign products. Given the high number of joint ventures in China, younger Chineseconsumers might perceive hybrid products as the norm, thus possibly lessening thevalue of COO sub-components. Leonidou et al. (1999) have also found that younger andbetter educated consumers tend to accept foreign products more readily or have lessprejudice toward products from developing countries.

The effect of ethnocentrismAs can be seen in Table III, the results suggest that there is no direct effect ofethnocentrism on consumers’ purchasing intentions or perception of quality for eitherproduct. Thus, H3 is supported, as ethnocentrism does not affect quality perceptions orpurchase intentions.

In exploring the two-way interactions between ethnocentrism and each of the threeCOO sub-components there is only one statistically significant effect on perceptions ofquality of cameras for ethnocentrism and COP. The results for H4i-iii are mixed,although in most cases these are not supported. Figure 2 provides a graphicrepresentation of consumers’ quality evaluations. As can be seen, young Chineseconsumers who have low levels of ethnocentrism prefer foreign goods (mean 5.21, SD

Table III.MANOVA results

F-valuesAutomobile Camera

Sources dfQuality

perceptionsPurchaseintentions

Qualityperceptions

Purchaseintentions

Main effectsCOD 1 0.044 0.126 0.711 0.005COA 1 0.262 3.367 2.257 0.830COP 1 1.418 0.833 1.203 2.002Ethnocentrism 1 0.802 0.416 0.340 2.5102-way interactionsCOD�COA 1 0.380 0.021 0.908 0.349COD�COP 1 0.127 0.011 3.340 2.234COA�COP 1 0.029 2.480 0.268 0.589COD�Ethnocentrism 1 0.027 0.144 2.859 0.028COA�Ethnocentrism 1 0.562 2.123 0.042 2.505COP�Ethnocentrism 1 0.004 1.328 6.878* 1.3013-way interactionsCOD�COA�COP 1 0.318 0.293 0.132 0.233COD�COA�EthNo. 1 0.378 0.016 0.026 0.384COD�COP�Ethno 1 0.176 1.217 0.385 1.745COA�COP�EthNo. 1 0.208 1.970 2.202 0.4914-way interactionsCOD�COA�COP�Ethno 1 0.533 1.056 0.0000 1.712

Notes: COD, country of design; COA, country of assembly; COP, country of parts/components*p< 0.05

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0.79) over domestic goods (mean 4.79, SD 0.96) and this difference is statisticallysignificant (t¼ �2.911, P¼ 0.004), which is consistent with the literature exploringCOO in developing countries (Kaynak et al., 2000; Okechuku and Onyemah, 1999).However, as would be anticipated, for consumers with high levels of ethnocentrism,they have a more positive assessment of local goods (mean 5.17, SD 0.95) as comparedto foreign goods (mean 5.01, SD 0.96), although the difference is not statisticallysignificant (t¼ 0.904, P¼ 0.368) . Thus, while across interactions there is only oneinteraction effect, when there is a statistically significant difference it is in thehypothesized direction.

The results for H5i-iii are not supported as there is no statistically significantinteraction of ethnocentrism and the three COO dimensions in regards to purchaseintentions. As such, more ethnocentric young consumers do not view foreign goodsdifferently to local goods. This would be consistent with the view that these youngconsumers have not experienced large volumes of exported goods, or the co-brandingbetween local and foreign companies (e.g. Shanghai Volkswagen) has totally blurredthe distinction between the brands.

In exploring higher order interactions of ethnocentrism, we also did not find anyinteractions for either quality assessments or purchase intentions. Therefore, H6 is notsupported. If ethnocentrism tendencies were to have a strong influence on the COOeffects as some previous studies claimed, these two effects (H4-6) should all have beenfound to exist in regards to ethnocentrism and the COO sub-components, however, thisis not observed based on our study and there is only a limited interaction betweenethnocentrism and COO dimensions for young Chinese consumers. This is inconsistentwith the work of other researchers (Brodowsky, 1998; Han, 1988) and this mightsuggest that consumer ethnocentrism has possibly a limited effect on productjudgment and purchase likelihood between domestic foreign sourcing for youngChinese consumers. This would also lend support to Acharya and Elliott’s (2003)suggestion that consumer ethnocentrism may not have a strong influence on purchasedecisions especially for high-involvement products. In this case, the authors suggestthat consumers tend to be more objective and less emotional in order to avoid makingincorrect purchase choices.

Figure 2.Interaction effect forquality perceptions ofcamera

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It therefore appears that ethnocentrism tendencies do not play an important role inhigh-involvement purchases (Acharya and Elliott, 2003). The results may also relateback to these consumers’ expectations of hybrid products. As was mentioned earlier,there are extensive joint ventures in China and young consumers may only haveexperience with hybrid products. As such, they would not perceive these products asbeing foreign. For example, one of the largest car manufactures is China is ShanghaiVolkswagen, which is branded as such. It might be the case that this branding blursthe line between foreign and local products even more than traditional COO sub-components allow.

Conclusion and implicationsThere is general consensus from the literature that country of origin affects consumers’product evaluation. However, Papadopolous and Heslop (1993) indicated that theextent of these effects vary by product categories and different countries of origin.Indeed, authors have found that COO effects differ across countries (Brodowsky, 1998;Papadopolous and Heslop, 1993).

In decomposing the COO into COD, COA and COP, this study found no substitutivesupport for a direct effect or interaction effect of these three COO sub-components onconsumer product assessment or purchase intentions for high-involvement productsby young Chinese consumers. As such, the results of this study diverge from much ofthe past research. Thus, while the effects of various COO sub-components on consumerevaluation of products or purchase intention were identified as being significant in thepast, this study casts possible doubt on its importance in China for young consumers,especially with the increased existence of hybrid products that appear to be the normfor consumers in this country who may in fact accept or even expect thesemultinational products.

In targeting young consumers it appears that globalization leads consumers tobelieve that the world is converging and becoming one ‘‘country’’ ( Johansson, 1993). Inthis respect, consumers might perhaps gradually view globally made products ashaving the same attributes as a locally produced product for countries such as China.Chinese consumers might not be able to differentiate a product that is produced from ajoint venture with multinational firms, if it is entirely imported, or if it is solelydomestically made. However, there is some suggestion that they might feel that goodsmanufactured in China are as ‘‘good’’ as products manufactured anywhere in the world(Li, 1997). Thus, Chinese consumers may find it unnecessary to make a fine distinctionas to whether products are domestic or come from foreign sources.

With respect to ethnocentrism, we found there is limited impact on COO sub-components for the two product categories. This would seem to suggest there is littleevidence to support the existence of a relationship between ethnocentrism andfavourable evaluation of domestic sources among young Chinese consumers. Thisfurther supports the view that the acceleration of economic globalization requiring thejoint input of various countries leads consumers to possibly adopt a more globalperspective (Suh and Kwon, 2002). The fact that these foreign brands have becomelocalized through joint ventures may in fact further dilute the importance of bothethnocentrism and COO sub-components. Further, Chinese consumers may be inclinedto be more rational in judging products and purchases which may contribute to theweak impact of ethnocentrism across the three COO sub-components.

Based on the present investigation, it is suggested that for firms targeting Chineseconsumers, COO information may not be relevant and will have limited influence on

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consumer evaluation of product quality and purchase intention. Thus, firms can feelrelatively free to explore production sites of design and assembly in any country, whichmay provide competitive pricing opportunities. However this recommendation shouldbe interpreted with care as only two countries were explored in this research and giventhe animosity Chinese consumer have to some countries such as Japan (Klein et al.,1998), this strategy may not be applicable for brands from all countries.

This research seems to support the view that the benefits of globalization eventuateover time, as consumers begin to evaluate product attributes, rather than thecomposition of COO dimensions. Firms targeting large markets can therefore benefit inthe long-term from localizing some aspects of their activities, as this would seem tomake hybrid products appear more global, thereby reducing the effect of COO and/orconsumers’ ethnocentric views. For ‘‘home’’ country products competing in this market,they may need to focus on broader consumer appeals, such as patriotism, whichfocuses more on the need to support local products, rather than attributes of COO or a‘‘fear’’ of foreign goods (Han, 1988).

While this study provides some insight into young Chinese consumers there aresome limitations with this study. First, the data of the present study was collected fromyoung consumers in Northeast China so that generalizing the results to the rest of thecountry should be undertaken with caution. It is also highly likely that there will bedifferences across age categories and thus products targeting older consumers mayfind COO dimensions valuable. Second, our study applied the CETSCALE to measurethe level of consumer ethnocentrism tendencies and the CETSCALE is based on the‘‘made-in’’ concept in explaining COO effect toward local goods foreign ones (Acharyaand Elliott, 2003). Thus, while the CETSCALE has been used in this way in the past, itmay not be as applicable to exploring the sub-components of COO (Acharya andElliott, 2003; Brodowsky, 1998). The CETSCALE has generally also only been used tolook at intentions not actual behavior (Shankarmahesh, 2006). Third, we only exploredconsumers’ views toward two countries in this study (China and Germany) and theremay be differences depending upon which developed countries are explored or whetherdeveloping countries are examined (Ahmed and d’Astous, 2007). In other smallcountries, where foreign companies do not have as extensive ‘‘local’’ activity, the role ofCOO may differ. Fourth, the research explored future behavioral intentions rather thanactual purchase behavior. It has been suggested that consumers in fact do not use COOdimensions as much as theory proposes (Liefeld, 2004), thus examining actualpurchase behavior using more qualitative research methods may allow for a betterunderstanding of the COO issue (Gurhan-Canli and Maheswaran, 2000).

The findings also highlight a range of avenues for future research. The importanceof joint ventures in reshaping the dimensions of COO needs to be further explored.There has been some limited work looking at the role of brand as a separate COOdimensions (Pecotich and Rosenthal, 2001) and joint ventures such as those in Chinathat create local brands may be another strategy that needs to be explored. While suchactions possibly would not be applicable to all firms expanding globally they might beeffective in some markets. This could be explored by broadening the sub-componentsof COO considered.

The role of COO in developing countries which do not have extensive joint ventureactivities is another area to consider. Consumers in these markets may possibly be lessglobal in their views, given the experience they have of imported goods, rather thanlocalized hybrids. If this is the case, then there still may be a set of countries whereCOO dimensions are still important and will remain to be important, as these countries

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will potentially view global joint ventures as combining COO characteristics of twodifferent countries. Thus, COO factors will indeed vary by country examined and thusCOO effects are not a universal phenomenon.

The experience of consumers with different forms of international products mayalso be an important issue to include in future research. How does a consumer’sexperience with hybrid products as compared to their experience with traditionalexported international products affect their attitudes toward COO dimensions? Ifconsumers have only experienced hybrid products they might have difficulty makingCOO distinctions. Such research might possibly explore different age cohorts in Chinaand other countries, who would possibly have different purchasing experiences. Thisresearch could also incorporate ethnocentrism in relation to experience with jointventure products. There may also be a range of other consumer factors that need to beconsidered in regards to COO. For example, rather than focusing on ethnocentrism, wemight explore consumers’ global orientation.

In addition, our findings also offer some future research opportunities inunderstanding how different consumers regard the COO sub-components betweenvarious types of markets. Given that the majority of COO studies are largely conductedin regards to COO dimensions associated with the West or developed countries, thiscould offer a challenge for non-western and developing counties seeking to enter newmarkets. That is, it is unclear whether existing theories regarding COO are applicableto consumers from non-western countries and/or the level of development of thecountry. Exploring how consumers in one developing country view goods from otherdeveloping countries, especially when there is animosity between countries (see forexample, Crnjak-Karanovic et al., 2005) is yet another issue to consider in futureresearch? This will be extremely important as trading blocks emerge in developingregions, where trade between markets increases.

Lastly, more cross-cultural research in COO needs to be undertaken. While jointventures may be the norm in China, these might be viewed differently elsewhere. Whileyoung Chinese consumers may see these actions as making products more local, otherconsumers may see joint ventures as making products as more foreign. For example,USA or Australian consumers might perceive Toyota to be somewhat local, as productsare produced in their home country, whereas Japanese might view Toyota as becomingmore foreign. Thus, focusing on consumers in targeted countries where such jointventures take place might enable this type of issue to be explored.

In conclusion, this paper has identified that COO and ethnocentrism are indeedcomplex constructs. Relationships that might have been found in regards to thesevariables and consumers might be affected by the purchase experiences of consumersas well as the products being explored. While globalization suggests the world isbecoming more similar, it is still the case that marketers need to understand thisphenomenon within each market, as subtle differences may have substantialimplications for practice. COO dimensions may be important in some contexts, but itappears that they may not have global relevance, or at least that relevance variesglobally.

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Appendix

Figure A1.Automobile information

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Corresponding authorChui Yim Wong can be contacted at: pinkbox_02@yahoo.com

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Figure A2.Camera information