National Identity, Consumer Ethnocentrism and Product Preferences in Vietnam

ABSTRACT - This paper explores the concepts of national identity and consumer ethnocentrism in regard to product preferences in Vietnam. A conjoint analysis is used to determine purchase preferences of motorbikes manufactured in Thailand, Vietnam and China. The conjoint analysis and perceived product quality indexes indicate that the order of preference among Vietnamese respondents is: Thailand, Vietnam and then China. Further, regression analysis indicates that national identity is positively related with consumer ethnocentrism and consumer ethnocentrism is positively related to 1) perceived product quality of domestic products and 2) purchase preference of domestic products.

Citation:

Garold Lantz, Sandra Loeb, Tuyet Thi Mai Nguyen, and Tang Van Khanh (2002) ,"National Identity, Consumer Ethnocentrism and Product Preferences in Vietnam", in AP - Asia Pacific Advances in Consumer Research Volume 5, eds. Ramizwick and Tu Ping, Valdosta, GA : Association for Consumer Research, Pages: 169-173.

Asia Pacific Advances in Consumer Research Volume 5, 2002      Pages 169-173

NATIONAL IDENTITY, CONSUMER ETHNOCENTRISM AND PRODUCT PREFERENCES IN VIETNAM

Garold Lantz, Monmouth University, U.S.A.

Sandra Loeb, Institute of Economics and Information Technology, Ukraine

Tuyet Thi Mai Nguyen, National Economics University, Vietnam

Tang Van Khanh, National Economics University, Vietnam

ABSTRACT -

This paper explores the concepts of national identity and consumer ethnocentrism in regard to product preferences in Vietnam. A conjoint analysis is used to determine purchase preferences of motorbikes manufactured in Thailand, Vietnam and China. The conjoint analysis and perceived product quality indexes indicate that the order of preference among Vietnamese respondents is: Thailand, Vietnam and then China. Further, regression analysis indicates that national identity is positively related with consumer ethnocentrism and consumer ethnocentrism is positively related to 1) perceived product quality of domestic products and 2) purchase preference of domestic products.

Vietnam is a relatively poor country with many people and a significant opportunity for economic growth. At present, there are few occasions when consumers have a wide range of choices regarding product brands, features, etc. As the country grows in economic wealth, there will likely be increased choices to make in increasing numbers of product categories. As the Southeast Asia region continues to grow and develop, manufacturers, likewise, will have to choose locations for new factories. For this reason, the country image of Vietnam and its trading partners, as well as other consumer traits, will have importance in the marketing of products in Vietnam. This paper considers aspects of country image of Vietnam and its neighbors as well as the influence of national identity and consumer ethnocentrism on how people make judgments of perceived product quality and purchase preference.

This paper makes theoretical and practical contributions about peoples’ assessments of perceived product quality and product preferences. It adds a theoretical aspect to the literature on country image, or the country-of-origin effect by including the impact of national identity on the perceived product quality and purchase preference of domestically manufactured products. It also offers practical suggestions about such things as the values of brand equity felt by Vietnamese people and of the selection of factory locations.

The country-of-origin effect is the tendency people have to express a preference for a product based upon the country where it was manufactured. Research in this general subject area has been carried out since 1965 (Schooler 1965; Reierson 1966; Nagashima 1970). There have been many contributions showing the effect in a variety of ways. There are two distinct parts of the country-of-origin effect: a part relating to product assessment, which is where stereotyping or country image is concerned; and another part which does not directly involve assessment of the product, but is concerned with the consumers’ feelings associated with the home country. This portion of the country-of-origin effect can be attributed to what has been called loyalty, consumer ethnocentrism (Shimp and Sharma 1987), ethno-national affinity (Waheeduzzaman and Marks 1991) or simply a home country bias (Samiee 1994). The home country bias is a noticeable tendency, but with numerous exceptions.

There appear to be two main exceptions to the home country bias: 1) when a particular country has a reputation for being particularly good at some product category i.e. French wine or Japanese consumer electronics, or 2) when the home country has a reputation among its own people for poor product quality. The bias against home country products has most commonly been observed in transitional economies, particularly those that formerly had centrally planned economies (Johansson, Rokainen and Czinkota 1994; Ettenson 1993). In these cases, domestic product quality is perceived as being poor and many foreign products carry significant prestige value simply due to their foreign origin. Vietnam is a transitional economy, so this negative perceived product quality may be present. However, there are likely also strong feelings of loyalty and a common desire to support the national economy. The interaction of negative perceived product quality and national loyalty suggests an interesting interaction not present in many country of origin studies.

Recent literature has begun to focus on factors making distinctions between countries where products are manufactured and countries where companies’ headquarters are located (Samiee 1994) and some research has shown that a high quality brand can overcome the negative effect of having been manufactured in a country with a low quality image (Stewart and Chan 1993). These more finely drawn variations on the original country-or-origin concept have become necessary due to the proliferation in companies engaging in multinational sourcing, multinational production of subassemblies and locating manufacturing plants outside the home country. In addition, with unique and varying labeling laws the scope of the country-of-origin issue is expanding even further. Samiee (1994) identifies three variables of interest: "country-of-origin" which is the country a firm is associated with, "country of manufacture", which is the location of manufacture or assembly, and the "country stereotyping effect", which is the bias or influence resulting from the consumer’s perception of either country of origin or country of manufacture of the product. In this study, the products (motorbikes) are known Japanese brands that are manufactured in other countries. This is commonly known in Vietnam, and further, the fact was presented to respondents. So, we are technically referring to the 'country of manufacture’ effect or the country image of those countries.

At the time of the study Vietnamese policy was to encourage foreign direct investment and the country was conducting a large amount of trading with near neighbors. So the countries that might most realistically have an impact on purchases are not Japan or the United States, or even Hong Kong or Singapore. For Vietnam, the major trading partners, in regard to imports, are close to home. China, covering the northern border and with cheap labor, provides many products to Vietnam, many of which are smuggled across the border. Likewise, Thailand, while it does not share a land border with Vietnam, does provide many products. Japan is a country with a positive image for product quality, but firms from Japan have increasingly located manufacturing facilities in other countries. It is with this in mind, as well as the local trading characteristics mentioned above, that the countries Vietnam (home country of the survey respondents), Thailand and China were selected for use in this study using a product where the leading firms are Japanese firms manufacturing outside Japan.

In some product categories, such as motorbikes, Vietnamese people have a choice of products manufactured domestically or in another country. For this reason, the motorbike category was selected for study.

National Identity

A theory borrowed from the field of social psychology that appears to complement the study of the country image effect is self-categorization theory. The general proposition of self-categorization theory is that individuals define themselves, partly, in terms of the groups with whom they associate (Turner 1987). This is true for large groups such as the community and nation as well as small-scale groups such as the family.

According to self-categorization theory, when a personal sense of identity is shared with a group the outcome can take the form of social cooperation and ethnocentrism (Turner 1987). In the context of national identity and product preference, ethnocentrism implies a preference for domestically manufactured goods and a tendency to perceive product quality of domestic goods as being higher than foreign products. Social cooperation implies that people will show a willingness to pay more for domestically manufactured goods. In effect, they are paying a premium to keep the business within the social group.

The degree of national identity a person feels may have implications for the tendency to show a home country bias in products. National identity may be the underlying value that motivates a more visible manifestation of nationalism such as an ethnocentric tendency to support a nation economically, through purchase choices.

Consumer Ethnocentrism

Consumer ethnocentrism is the tendency for a consumer to make normative judgments, expressed in regard to the appropriateness of supporting the national economy (and its workers) by buying domestically manufactured goods and not buying products manufactured in other countries (Shimp and Sharma 1987). Original findings suggested that consumer ethnocentrism in the United States was greater in parts of the country where economic hardship was greater. Other studies found a significant presence of consumer ethnocentrism in homogeneous cultures in other countries (Sharma, Shimp and Shin 1993; Netemeyer, Durvasula and Lichtenstein 1991).

Vietnam has a largely homogeneous population, but also is a transitional economy. As mentioned earlier, transitional economies have shown a tenency to value products from more developed countries. So, an issue is presented as to whether people of Vietnam would show a preference for products from more developed countries or is there the same tendency to support domestic products, as has been found in other countries.

The degree of national identity a person feels may be a deeply held value while consumer ethnocentrism is a specific expression of that value. In other words, the effect of consumer ethnocentrism may largely be a manifestation of the degree of the national identity felt by an individual. Therefore, national identity may precede consumer ethnocentrism

H1a: There is a positive relationship between the degree of national identity and the degree of consumer ethnocentric tendencies.

Self-categorization theory suggests that when a person’s sense of group identity becomes sufficiently great, the interest of the collective group and that person’s self-interest will essentially merge. So, people with a high sense of national identity will want to see the nation in a positive light and expressing an opinion of high product quality for the domestic product will manifest this.

H1b: There is a positive relationship between the degree of national identity and perceived quality of domestic products.

Consumer ethnocentrism has been associated with a preference for domestic products (Shimp and Sharma 1987; Sharma, Shimp and Shin 1993) so a natural extension is to find an association between consumer ethnocentrism and specific measures of perceived product quality of a domestic product.

H2: There is a positive relationship between consumer ethnocentric tendencies and perceived domestic product quality.

Due to its relatively advanced economy, Thailand is likely to be the most preferred country of manufacture by Vietnamese. Vietnam and China are both transitional economies and so are likely to have lower perceived product quality than Thailand. Between Vietnam and China, the country of manufacture most preferred by Vietnamese consumers is likely to be Vietnam, due to either consumer ethnocentrism or the degree of national identity.

H3a: The ranking of perceived product quality for Vietnamese respondents is Thailand first, Vietnam second and China third.

H3b: The ranking of product purchase preference for Vietnamese respondents is Thailand first, Vietnam second and China third.

METHOD

Subjects

The subjects were selected using the Vietnamese equivalent to a mall intercept. A convenience sample was selected from public places in a non-random method, but approximating the demographic make-up of the general population in the city of Hanoi. The sample was 48% female and 52% male with an average age of 28. Average income of the sample was $68/month. Of the 197 questionnaires collected, 12 were not useable due to missing data. The final sample was comprised of 185 respondents. The conjoint was carried out first and then the questionnaire was administered.

Model

Elements of the model to be examined included: national identity, consumer ethnocentric tendencies, perceived product quality of each country, perceived product quality of each of the selected brands, and purchase preference. The items were presented in a seven point Likert-type (1=strongly disagree 7=strongly agree) format. The same format was used to measure all concepts in this study except purchase preference. Purchase preference was determined with a conjoint analysis using a combination of country, brand and price. Each of these measures is discussed next.

National Identity. National Identity was measured with a four-item index (i.e. "I feel good about living in Vietnam"). The items were derived from Luhthernan and Crocker=s (1992) collective self-esteem scale.

Consumer Ethnocentric Tendencies. The concept of Consumer Ethnocentric Tendencies (Cetscale) was originated by Shimp and Sharma (1987). It has been used on many occasions since then and is widely accepted (Netemeyer, Durvasals and Lichtenstein 1991; Sharma, Shimp and Shin 1993). The ten item reduced scale was used rather than the seventeen item full scale.

FIGURE 1

SAMPLE OF TWO OF THE NINE CARDS USED IN CONJOINT ANALYSIS EXERCISE

Perceived Country Product Quality. Perceived country product quality was measured for Thailand, Vietnam and China. The questions were initially divided into two parts, three questions about the utilitarian quality of the products and three questions about the status of owning a product from that country. The intent was to see if status was related to each country, particularly the home country. Exploratory factor analysis showed that all the questions together formed a single factor and the reliability was high, so the country quality questions were combined to form a single summated variable of 'perceived country product quality'. An example of an item from the scale would be "The quality of products from 'x' is

Perceived Brand Quality. Perceived brand quality was not part of a hypothesis but it was included because brands were a product attribute included in the conjoint analysis. Brand equity is an integral part of a product such as motorbikes so it was dealt with explicitly rather than letting respondents include it implicitly. Three common manufacturers and models of motorbikes were used and three items were used to measure the perceived quality of each brand.

Purchase Preference. Purchase preference was determined using a conjoint analysis. Conjoint analysis was selected because it allows the respondents to indicate their preferences in a way that would not draw undue attention to the country-of-origin aspect. It also allowed the inclusion of other valuable product attributes. The conjoint analysis was administered first, before any other questions were asked.

Product features included in the analysis were brand, price and country of manufacture. A scenario was presented where respondents were supposed to be evaluating motorbikes for purchase. Motorbikes were selected as they are the primary mode of motorized transportation in Vietnam, and as such, people are relatively familiar with brands and models. Respondents were to evaluate specific brands of motorbikes in the 100cc motor size range. 100cc is the motor size most typical in the Vietnam market for new motorbikes. The brands were Honda, Yamaha and Suzuki, all brands common n Vietnam, and known to be made in various locations. Prices were $2000 and $2150. While these were realistic prices for the 100cc motorbike, the range of price was made relatively narrow (7.5% difference) because this feature was incidental to the study. Country of manufacture was Thailand, Vietnam and China. The actual measure of purchase preference was the partworth, or utility score for the countries.

When there are three product features and three levels of two of them and two of another, there are a total of eighteen combinations. Using SPSS Orthopan the choices were orthogonally reduced to nine combinations. Respondents were asked to rank order these nine combinations. To illustrate, examples of two choices are shown in Figure 1.

RESULTS

All items except purchase preference are multi-item indexes. Means, standard deviation and Cronbach's alpha are reported in Table 1. Except for consumer ethnocentrism, all summated variables formed one factor under exploratory factor analysis and all showed an acceptable degree of reliability. Consumer ethnocentrism formed two factors. But, due to the long and accepted use of the Cetscale, it was retained as a single measure of consumer ethnocentrism.

The most notable finding from the descriptive statistics is that the average score for national identity is so high. Indeed, a full 28% of valid respondents indicated the maximum degree of national identity on all four questions of the four-item index. The highly skewed level of national identity could have implications for its relationships with consumer ethnocentrism and perceived product quality of Vietnamese products. Nevertheless, the alpha was acceptable and the correlation with consumer ethnocentrism was significant, as expected. Regression analysis showed a significant relationship between national identity and consumer ethnocentrism, F=18.67, Sig.<.000, supporting H1a.

Also consistent with expectations was the correlation between consumer ethnocentrism and perceived product quality of Vietnamese products. A regression of this relationship supports H2, F=16.31, Sig.<.000.

However, the relationship between national identity and domestic product quality is more equivocal. A regression of national identity on perceived product quality of Vietnamese products shows a significant relationship, F=5.73, Sig.<.018, supporting H1b. But with national identity and consumer ethnocentrism regressed together on perceived product quality of Vietnam only consumer ethnocentrism is significant. In this case, national identity contributes nothing to explaining perceived product quality for domestic products not already explained by consumer ethnocentrism.

H3a concerns the difference between perceived product quality of products from Thailand, Vietnam, and China. The means are shown in Table 1. Again, perceived product quality was a three-item index on a scale of 1-7. Paired sample T-tests support the order of perceived quality, Thailand-Vietnam, T=14.16, Sig.<.000 and Vietnam-China, T=14.79, Sig.<.000. There is a clear belief that Thai goods are superior to Vietnamese goods. Even more notable may be the comparison of Vietnamese goods to Chinese goods. The attitude towards Chinese goods is very negative.

The results of the conjoint analysis are shown in Table 2. In a conjoint analysis, there are two types of result: 1) the relative importance of each product attribute (country, brand and price), expressed here as a percentage of overall importance, and 2) the value of each level of each attribute represented by the partworth or utility scores. For instance, each brand has three levels (Honda, Suzuki and Yamaha) and each of them has a partworth score that is relative to the others. Partworth scores must sum to zero.

TABLE 1

STANDARD DEVIATION, MEAN, CRONBACH'S ALPHA AND CORRELATIONS FOR SUMMATED VARIABLES

TABLE 2

RESULTS OF CONJOINT ANALYSIS

The overall importance of the product features shows that the country of manufacture is very important, accounting for 66.7% of the choice. Brand was the second most important product feature accounting for 24.5% of the choice and price was relatively unimportant to the overall choice.

The relative importance of each level of each product attribute is expressed as a partworth score. For country, Thailand was preferred first, Vietnam was preferred second and China third. This supports H3b. Anecdotal comments from some respondents suggests that some would not buy a Chinese motorbike, even at the lowest price, clue to the perceived low quality.

A limitation of conjoint analysis is that it is only valid for the product attributes included in the study. For instance, if Japan had been offered as a possible country of manufacture, the specific partworth scores would be different. And if prices had a wider range, price might have been more important.

The conjoint analysis shows that country-of-manufacture is quite an important differentiating characteristic of the product. Many people will likely use the country -of -manufacture attribute when making a product choice.

CONCLUSION

The findings of this research largely support previous research and offer an extension regarding the role of national identity and consumer ethnocentrism. While respondents in Vietnam, a transitional economy, showed a preference for products from a more developed economy, they also saw domestic products as being far superior to products from China. Evidence of this was found in a conjoint analysis of the purchase preference and respondents' perception of product quality of those countries.

The theoretical significance of this research is in the usefulness of national identity as a motivating trait. The role of consumer ethnocentrism has also been reinforced as it related quite strongly to the preference for domestic goods. A certain segment of the population will likely be influenced to make a purchase based on a feeling of consumer ethnocentrism and national identity. It is unlikely that the effect of consumer ethnocentrism or national identity will overcome a strong difference in perceived product quality, but among people with a strong feeling of national identity purchase preference may well be influenced toward domestic products.

Another contribution offered by this research concerns the role of consumer ethnocentrism in supporting the home country bias. The home country bias was evident, and it was found in a country where there are generally negative perceptions of domestic product quality. The impact of a strong national identity is measurable in both ethnocentric tendencies and perceived domestic product quality.

It is notable that the respondents were so negative towards Chinese goods. No conclusions can be drawn about the reasons for the negative perceptions toward Chinese goods because alternative explanations are available. Historically, Vietnam has been subject to Chinese influence including a short war in 1979. Historical influence may have created some animosity affecting perceptions. In the research focusing on animosity (Klein, Ettenson and Morris 1998), Chinese respondents gave the opinion that Japanese products were of high quality, but they would not purchase them because they were Japanese, due to ill feelings generated from events in the 1930's and 1940' s. In the present case, the Vietnamese respondents rated Chinese products poorly and then expressed a purchase preference consistent with the poor quality rating. So, the findings of this research are not similar to Klein, Ettenson and Morris (1998).

While it was not the focus of the research, a conclusion can be made about brand equity, too. Past research suggests that high brand image can reduce the effect of a negative country image (Stewart and Chan 1993). But, in this case the brand value carried by such a company as Honda, the Vietnam market leader, was insufficient to overcome the perceptions of country quality. So, even a highly reputable brand could not overcome quality perceptions carried by the country.

The managerial significance of this study is clear: people in Vietnam have a very poor perception of the quality of products from China and a very positive perception of the quality of products from Thailand. Further, this perception of product quality translates directly to the price that can be charged for the same brand of a product manufactured in different countries. People will pay more for products manufactured in Thailand compared to China and, to a lesser degree. products manufactured in Vietnam.

While some managers may wish to locate a new factory based on such criteria as cost of labor, infrastructure or political risk, the perceptions of product quality are also an important determinant. Among the developing countries in the region, Thailand should be considered a leader.

Finally, appeals to the sense of national identity may be an effective way to position a domestically manufactured product. The high scores for national identity suggest that Vietnamese people have a great deal of pride and identification with their country. They may welcome the opportunity to support a well-made domestic product.

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