Consumer Boycotts, Country of Origin, and Product Competition: Evidence from China’s Automobile Market

45 Pages Posted: 21 Mar 2018 Last revised: 27 Jul 2020

See all articles by Qi Sun

Qi Sun

Shanghai University of Finance and Economics-College of Business

Fang Wu

Shanghai University of Finance and Economics - School of International Business Administration

Shanjun Li

Cornell University - School of Applied Economics and Management

Rajdeep Grewal

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Date Written: July 10, 2020

Abstract

Triggered by a territorial dispute, as well as historical animosity, a nationwide civilian boycott of Japanese products took place in China in summer of 2012. Using detailed data on vehicle sales in four major Chinese cities (Beijing, Tianjin, Shanghai, and Nanjing), this study investigates the impact of boycotts on sales and advertising effectiveness of products from different countries of origin. The boycott dramatically reduced the market share of Japanese brands, and benefitted Chinese and non-Japanese foreign brands. Consumer switching to other brands accounted for the majority of the loss in sales. Advertising became less effective for Japanese brands during the boycott but more effective for non-Japanese brands, especially at the parent-brand level (e.g., Toyota) than sub-brand level (e.g., Camry). The sales impacts were strongest in Nanjing, the city that had the most atrocious war experience with Japan during the Battle of Nanjing in 1937, and weakest in Beijing, where local government agencies explicitly discouraged public demonstrations. Finally, although the decline in sales of Japanese brands did not vary by quality or production location, competing non-Japanese brands that were with better quality or manufactured locally benefitted more.

Keywords: advertising, animosity, automobile, before-after research design, boycott, country of origin

Suggested Citation

Sun, Qi and Wu, Fang and Li, Shanjun and Grewal, Rajdeep, Consumer Boycotts, Country of Origin, and Product Competition: Evidence from China’s Automobile Market (July 10, 2020). Available at SSRN: https://ssrn.com/abstract=3142667 or http://dx.doi.org/10.2139/ssrn.3142667

Qi Sun (Contact Author)

Shanghai University of Finance and Economics-College of Business ( email )

777 Guoding Road
Shanghai, 200433
China

Fang Wu

Shanghai University of Finance and Economics - School of International Business Administration ( email )

777 Guo-ding Road
Shanghai, 200433
China

Shanjun Li

Cornell University - School of Applied Economics and Management ( email )

248 Warren Hall
Ithaca, NY 14853
United States

Rajdeep Grewal

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

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