Hedonic valuation of country of origin in the Chinese dairy market

Abstract

The implicit value to Chinese consumers of the country-of-origin (COO) characteristic of dairy products is of great importance to estimate. This study adopted the hedonic price model to evaluate the shadow price of the COO attribute of both UHT fluid milk and infant formula collected from the five leading e-commerce platforms (Alibaba’s Tmall Supermarket, Jingdong, Suning Purchase, COFCO I buy nets, and Yihaodian) in China. The target countries were Germany, France, the Netherlands, and Spain from the EU, and Australia and New Zealand from Oceania. The results show that the implicit values of the COO of UHT fluid milk and infant formula are reversed. Having a COO of Spain and Germany decreased the price of UHT fluid milk compared with China, while Germany, New Zealand, France, the Netherlands, and Spain all earned a price premium on infant formula. The B2C platforms Yihaodian, Jingdong, Alibaba’s Tmall Supermarket and Suning Purchase all earned a price premium above COFCO I buy nets. These findings have important implications for dairy industry of EU countries, Australia, New Zealand, and China in terms of the promotion of domestic dairy products. Moreover, this study contributes to the existing body of literature by innovating in employing sales data from e-commerce scanners to study the implicit value of food attributes.

Hometown effect on consumer preferences for food products

“…Newman et al, 2014;Thøgersen et al, 2017;Yang et al, 2021). Among these studies, the COO effect is a popular topic: a food product is preferred or judged on the basis of the country it associates with (Aizaki and Sato, 2020;Balcombe et al, 2016;Zhang and Zin, 2020). If food produced in the home country is preferred by the consumers, this shows the domestic orientation.…”

Trust and consumer confidence in the safety of dairy products in China

“…Many Chinese consumers have attributed food safety scandals to lax enforcement and poor governance (Han et al, 2020), thereby a long-lasting negative effect on related dairy markets both at home and abroad: increasing imported dairy products (Chinese Dairy Yearbook, 2009, banning dairy imports from China (Ortega et al, 2011), a direct loss of products recall, damage to the dairy industry image as well as China's national image, and a consumer trust loss in domestic dairy products (Qian et al, 2011;Li et al, 2018). The series of dairy safety issues have a long-standing negative effect that hampered the credibility of regulators and led to a decrease in Chinese consumer confidence in food risk management and dairy supply chain, and thereby, a significant drop in dairy purchase (Qiao et al, 2010;Li et al, 2019Li et al, , 2021Zhang and Jin, 2020;Zhang et al, 2021).…”