An executive summary for managers and executive readers can be found at the end of this article. Consumner ethnocentrism and willingness to buy domestic products in a developing country setting: testing moderating effects Cheng Lu Wang and Zhen Xiong Chen Introduction Globalization presents considerable challenges and opportunities for international marketers. The relaxation of trade policies has provided consumers with more foreign product choices than ever before. Consequently, their attitudes toward products originating from foreign countries have been of interest to international business and consumer behavior researchers for decades. Previous studies on the country-of-origin effect (COE), most of which have been conducted in developed countries, have found that consumers have a general preference for domestic over foreign merchandise, particularly when they lack information about the product (Bilkey and Nes, 1982; Damanpour, 1993; Elliott and Camoron, 1994; Wall and Heslop, 1986, 1989). The reasons for this preference range from a risk-reducing bias toward merchandise made in developing countries to a patriotic bias against foreign products (Bilkey and Nes, 1982; Herche, 1992). The relationship between country-of-origin and the quality image of imported products is especially strong when consumer ethnocentrism (CE) is involved (Agbonifoh and Elimimian, 1999; Shimp and Sharma, 1987). The authors Cheng Lu Wang is an Associate Professor based in the Department of Marketing & International Business, University of New Haven, West Haven, Connecticut, USA. Zhen Xiong Chen is a Senior Lecturer based at the School of Business and Government, University of Canberra, Canberra, Australia. Keywords Consumers, Ethnocentrism, Product quality, China The tendency of consumers to be ethnocentric represents their beliefs about the appropriateness and moral legitimacy of purchasing foreign products (Shimp and Sharma, 1987). Ethnocentric consumers prefer domestic goods because they believe that products from their own country are the best (Klein et al., 1998). Moreover, a concern for morality leads consumers to purchase domestic products even though the quality is poorer than that of imports (Wall and Heslop, 1986). CE may play a significant role when people believe that their personal or national well-being is under threat from imports (Sharma et al., 1995; Shimp and Sharma, 1987). The more importance a consumer places on whether or not a product is made in his/her home country, the higher his/her ethnocentric tendency (Huddleston et al., 2001). Research from the US and other developed countries generally support the notion that highly ethnocentric consumers overestimate domestic products, underestimate imports, have a preference for, and feel a moral obligation to buy, domestic merchandise (Netemeyer et al., 1991; Sharma et al., 1995; Shimp and Sharma, 1987). Abstract Previous studies conducted in developed countries have demonstrated that ethnocentric consumers are more willing to buy domestic products. This study investigates the moderating roles of quality judgment of domestic products and conspicuous consumption (CC) in the relationship between consumer ethnocentrism and willingness to buy domestic products (WBD) in the context of a developing country, namely the People's Republic of China. The results support the hypothesis that the impact of ethnocentrism on consumer WBD tends to be weaker when consumers judge them as being of lower quality, or when consumers hold higher CC values. The conceptual and managerial implications for developing countries, including China, are discussed. Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/0736-3761.htm Journal of Consumer Marketing Volume 21 - Number 6- 2004 - pp. 391-400 Emerald Group Publishing Limited - ISSN 0736-3761 DOI 10.1108/07363760410558663 While CE may be regarded as a means by which to differentiate between consumer groups who prefer domestic to foreign products 391 Consumer ethnocentrism and willingness to buy domestic products Cheng Lu Wang and Zhen Xiong Chen Journal of Consumer Marketing Volume 21 Number 6- 2004 - 391-400 (Huddleston et al., 2001), its influence on willingness to buy domestic products (WBD) is likely to vary between technologically/ economically-developed and developing countries. Research shows that consumers in developed countries tend to perceive domestic products as being of higher quality than imported products (Damanpour, 1993; Dickerson, 1982; Eliott and Cameron, 1994; Herche, 1992; Morganosky and Lazarde, 1987) whereas the reverse is true for consumers in developing countries (Agbonifoh and Elimimian, 1999; Batra et al., 2000; Bow and Ford, 1993; Sklair, 1994; Wang et al., 2000). Given that consumers evaluation of the quality of domestic/imported products will influence their purchase preferences, the impact of ethnocentrism on willingness to buy will be different between developing and developed countries. This discrepancy will be more pronounced when the import is related to conspicuous consumption (CC), as consumers in developing countries often regard foreign products as status symbols (Alden et al., 1999; Batra et al., 2000; Ger et al., 1993; Marcoux et al., 1997; Mason, 1981). In particular, we believe that the negative effect of CE on willingness to buy products imported from developed countries will interact with the positive effect of such imports' brand image. In other words, the functional (perceived product quality) and symbolic (CC) benefits that consumers expect from imported products will counteract the influence of their ethnocentrism. the following section). With income levels increasing significantly and a growth in westernized consumption values, a growing segment of Chinese consumers is both willing and able to buy brand- name imports. In addition, China is one of the largest developing countries in the world. With a population of 1.2 billion, it is a vast marketplace for international business and as it enters the World Trade Organization, more opportunities are opening up for international marketers. As such, managerial implications are significant. For the purposes of this study, imports or foreign products mean those imported from countries of higher origin (i.e. technologically/economically- advanced countries) to developing countries (such as China). In the following sections, we will first develop the concepts and set out our hypotheses regarding the moderating roles of PJ and CC in the relationship between ethnocentrism and WBD. Secondly, we will report the results of a large-scale consumer survey carried out with a Chinese sample. Finally, we will discuss the implications for theory and for management practice and set out some future directions for research. Quality judgment of domestic products and ethnocentrism Consumers' intention to purchase domestic/ foreign products will be influenced by perceived quality. In the literature, quality perception is treated as a multi-dimensional concept including appearance, color and design, durability, fashion, functionality, prestige, reliability, technical advancement, value for money, and workmanship (Darling and Arnold, 1988; Darling and Wood, 1990; Klein et al., 1998; Scott et al., 1997; Watson and Wright, 2000). As a product comprises many diferent physical and symbolic attributes, the country-of-origin is regarded as an extrinsic cue often used by consumers in the process of evaluation (Bilkey and Nes, 1982; Cordell, 1992; Elliott and Camoron, 1994). Research also suggests that a significant proportion of consumers will be interested in country-of-origin information before making a purchase (Hugstad and Duur, 1986). The country-of-origin cue helps consumers to make inferences about quality, and affects their beliefs about product attributes (Han, 1989). Due to the differences in levels of economic and technological development, values and attitudes toward consumption will also differ between developed and developing countries. This means that findings about CE and purchasing behavior in the former may not be generalizable to the latter, especially when considering the effects of interaction with product judgement (PJ) and/or CC. Despite this, so far little research on this issue has been conducted in developing countries. There is a particular lack of research looking at the variables which may moderate the relationship between CE and WBD in developing countries (Batra et al., 2000). This study attempts to investigate the moderating effects of PJ and CC on this relationship in the context of a developing country. We conducted the study in China because it is a suitable environment to test our hypotheses. First of all, like consumers in other developing countries, Chinese people tend to perceive imported products as superior to domestic (Wang et al., 2000). Secondly, the emphasis on face in Chinese cultural values makes the country an ideal setting to test the effect of CC value on product choice behavior (a more detailed discussion of this can be found in Previous studies have suggested a positive correlation between the evaluations of domestic products and a country's level of economic development (Gaedeke, 1973; Toyne and Walters, 1989; Wang and Lamb, 1983). A consumer will tend to purchase a product made in a technologically-advanced country if he or she judges its quality as better than that of merchandise produced in a less-developed 392 Journal of Consumer Marketing Volume 21 Number 6- 2004 - 391-400 Consumer ethnocentrism and willingness to buy domestic products Cheng Lu Wang and Zhen Xiong Chen country. Moreover, a product's country-of-origin often serves as a cue activating a consumer's ethnocentric tendency (Huddleston et al., 2001). As such, willingness to buy domestic/foreign products is influenced by both ethnocentrism and quality judgment. former. Therefore, we hypothesize that, in developing countries, the quality perception of domestic products will have a moderating effect on the relationship between CE and WBD: H1. In a developing country, such as China, the relationship between consumer ethnocentrism and willingness to buy domestic products will be weaker for consumers with a low quality judgment than for those who make a high quality judgment of domestic products. Due to large differences in market structure and consumer behavior, research on these topics conducted in developed countries may not be generalizable to less-developed countries (Papadopoulos et al., 1990; Ralston et al., 1993). The empirical work of Yagci (2001) indicates that when CE and country-of-origin are taken together to predict attitudes toward the product and intention to purchase, the former becomes a significant predictor only when the product has been manufactured in a less-developed nation. On the other hand, consumers will be less influenced by ethnocentrism when considering a product imported from a higher origin country because of the association between their judgment of the merchandise and the positive image of the country-of-origin. Conspicuous consumption and ethnocentrism CC refers to consumers' desire to provide prominent visible evidence of their ability to afford luxury goods (Piron, 2000). Motivated by a desire to impress others with their ability to pay particularly high prices for prestige products, conspicuous consumers may be inspired by the social rather than the economic or physiological utility of merchandise (Mason, 1981). CC is not confined to the leisure class but can be found in all social and income groups from richest to poorest. By advertising their wealth, people who engage in CC thereby achieve greater social status (Bagwell and Bernheim, 1996; Basmann et al., 1988; Mason, 1981). In a developed country, consumers in general tend to have a higher quality perception of domestic than foreign products (Ahmed and d'Astous, 2001; Bilkey and Nes, 1982; Dickerson, 1982; Morganosky and Lazarde, 1987; Samiee, 1994). This favorable perception would tend to enhance the influence of ethnocentrism on both the purchase of domestic and the rejection of foreign products. The reverse has been observed, however, in developing countries such as Nigeria (Agbonifoh and Elimimian, 1999), Romania and Turkey (Ger et al., 1993), India (Batra et al., 2000), and China (Li et al., 1997; Sklair, 1994). In these countries, consumers typically perceive foreign products, particular those made in higher origin countries, as being of higher quality than domestic products. Even ethnocentric consumers may positively evaluate the quality of imports to some extent if they are perceived as being associated with a country with a better image (e.g. it is highly-industrialized or economically-developed) (Yagci, 2001). The observed relation between ethnocentrism and PJ (Klein, 2002; Klein et al., 1998; Netemeyer et al., 1991) will therefore be weaker in developing than developed countries. In other words, in a developing country, a consumer with strong ethnocentric tendencies mnay not necessarily perceive domestic products as being of higher quality than imports, even though she/he rejects foreign products on moral grounds. Consequently, the negative perception of domestic-made products coupled with an admiration of imported products would mitigate the effect of ethnocentrism on intention to purchase the In a developed country, CE and CC are positively correlated in most situations since domestic productS, compared to imports from developing countries, are associated with positive brand image and status. Ethnocentric consumers with CC values will, therefore, be more likely to buy domestic products. However, in a developing country, where imports generally carry symbolic meanings of high fashion and social status, CC may counteract the influence of ethnocentrism on the purchase of domestic products. On the one hand, ethnocentric consumers tend to believe that purchasing imports is unacceptable and are proud of their decision to buy domestic products, so are more willing to do so. On the other hand, conspicuous consumers tend to show off their wealth by purchasing imports (Ger et al., 1993). In the choice of domestic vs imported, then, a consumer may be in a situation of conflict between two consumption values: ethnocentrism vs CC. Research on Polish consumers has shown that demonstration of social status, as a dimension of CC, is related to preference for Western products whereas patriotism, a dimension of ethnocentrism, is related to preference for Polish products (Marcoux et al., 1997). As such, the tendency to buy domestic and reject imports may be negated by the fact that the latter are perceived as important and salient symbols of social status. 393 Consumer ethnocentrism and willingness to buy domestic products Cheng Lu Wang and Zhen Xiong Chen Journal of Consumer Marketing Volume 21 - Number 6 2004391-400 In the Chinese society, the concept of "face" is extremely important in social life. "Face" means prestige and social status that an individual wishes to communicate to others (Wong and Ahuvia, 1998). It is highly related to CC and is regarded as a key to many consumer behaviors (Redding and Ng, 1983), since Chinese people place great importance on the anticipated reactions of others to their behavior (Yang, 1981). The possession of publicly visible luxuries, including foreign brand products, is important to a consumer's "public self." As such, Chinese consumers whose CC values are strong may have a stronger intention to buy imports from developed countries, even though they are also ethnocentric. Therefore, the following hypothesis is proposed: H2. each interviewer was asked to do an initial interview, after which the researchers contacted the interviewees to check the answers. The results of this process showed that the quality of the initial interviews was satisfactory. Each respondent answered a questionnaire including four scales which measured the variables in question and which also collected demographic variables to be used as controls in the analysis. Measures We adopted previously validated measures with additional testing of reliability in this study. The instrument was in Chinese but had been initially constructed in English and then translated into Chinese by one of the bilingual researchers. To validate the Chinese version, another bilingual researcher back-translated the survey instrument into English. This procedure helped ensure an accurate prose translation that was decentered from a literal English language translation (Brislin 1980; Werner and Campbell, 1970). In a developing country, such as China, the relationship between consumer ethnocentrism and willingness to buy domestic products will be weaker for consumers with high than for those who hold low CC values. All variables were measured by 7-point scales ranging from 1 (Strongly Disagree) to 7 (Strongly Agree) except for CC, which was measured by a 5-point scale ranging from 1 (Strongly Disagree) to 5 (Strongly Agree). CE was measured by a 17-item CETSCALE (Shimp and Sharma, 1987), which has been found to be inversely related to willingness to buy foreign products (Klein et al., 1998; Netemeyer et al. , 1991; Sharma et al. , 1995). In our Chinese version, the term American in the original scale was changed into Chinese, given the origins of the sample group. The Cronbach a obtained from this study was 0.90. Quality judgment of domestic products or PJ was measured by a scale adopted from Klein et al. (1998). The scale includes the following attributes: workmanship, technological advancement, quality, reliability, design, and value for the money. The Cronbach a for this scale was 0.76. CC was measured by an 18-item scale adopted from the work of Marcoux et al. (1997) on Polish consumers. This scale measures attitudes towards the meaning of CC associated with consumer products. The Cronbach a for this scale was 0.95. WBD was measured by a 5-item scale adapted from Klein et al. (1998). The Cronbach a for this scale was 0.73. Overall, the Cronbach as obtained from this study indicate good reliability for all the scales used. Method Data collection The sample for the study was dravwn from consumers in four major cities in the People's Republic of China; Beijing, Shanghai, Guangzhou, and Chengdu. Beijing is the capital city located in the north, Shanghai the largest commercial center located in the eastern region, Guangzhou the largest city in South China, which has been greatly influenced by western lifestyle due to its proximity to Hong Kong, and Chengdu the largest city in south-western China, representing the more traditional part of the country. These four cities, therefore, represent regions with different geographic, political, and commercial backgrounds. The total sample size was 800 consumers, 200 from each city. In order to ensure the sample was representative, a stratified sampling plan was followed based on the population distribution in the districts of each city. The sample comprised 48 percent male and 52 percent female. In terms of age, 28.2 percent were under 30, 24.8 percent between 30 and 39, 31 percent from 40 to 49, and 16 percent aged 50 or above. As far as educational level was concerned, 28.4 percent of the respondents had received a junior high education or below, 40.4 percent had graduated from senior high school, and 31 percent from university. Analysis and results Personal interviews were conducted at consumers' homes by university students recruited from the four cities. All interviewers completed a training program in interviewing skills before they began work. After going through the program, Confirmatory factor analyses To examine the distinctiveness of the measures for the variables studied, i.e. ethnocentric consumers, 394 Make a 150-word summary of the reading. Is your project likely to be affected by ethnocentrism? If yes or if no, please explain why and how. (minimum 150 words) Are Chinese consumers also ethnocentric? Justify your answer. (minimum 150 words) This case was written in 2004. Do you think it is still applicabletoday? (minimum 150 words) This assignment is due by the startingtime of the next synchronous lesson. Overall matches higher than 10% are not accepted. Do not directly copy any content, use your own words. You must follow the formatting template available on Blackboard. Justify your answer based on research from official sources. Wikipedia, Investopedia and equivalent sites are not accepted as references