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Willingness to pay for “taste of Europe”: geographical origin labeling controversy in China

Willingness to pay for “taste of Europe”: geographical origin labeling controversy in China PurposeContinuing economic growth in emerging markets offers large market opportunities to producers and marketers worldwide; however, market failures due to asymmetric information are often seen when high-quality products enter these “new markets” where recognition rates among consumers are low. The use of “geographical origin” labels as quality signals to overcome asymmetric information problem plays an important role. The purpose of this paper is to compare consumers’ perception and willingness to pay (WTP) for different levels of geographic origin labels to provide insights to the strategic use of origin labels in emerging markets.Design/methodology/approachA consumer survey on geographic labeling for imported dairy products was carried out in Beijing, China in May 2015. Under the “products of European Union (EU)” range, the authors used “product of Ireland” as a case study for the country-specific origin label. Information on consumer demographic, dairy consumption, safety perceptions, knowledge on Ireland and Irish products, as well as WTP for different geographic labeling and product attributes were collected from 307 face-to-face interviews. WTP was elicited using double-bounded contingent valuation method, and estimated with maximum log-likelihood function.FindingsThe authors found that consumers are willing to pay premium prices for both of these geographical origin indicators, but the EU label had slightly higher WTP results. However, the controversial situation is that although the EU label has a better chance than the country-specific label in signaling premium quality to Chinese consumers, EU labeling at its best signals an average quality across the EU counties. For premium products with above average quality, using generic EU labeling has a potential drawback to the establishment of product differentiation.Originality/valueThis study is the first to evaluate Chinese consumers’ WTP for EU generic origin label for dairy products in comparison to country-specific origin label. Findings of the study have immediate policy and marketing implications in emerging markets. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png British Food Journal Emerald Publishing

Willingness to pay for “taste of Europe”: geographical origin labeling controversy in China

British Food Journal , Volume 119 (8): 18 – Aug 7, 2017

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0007-070X
DOI
10.1108/BFJ-11-2016-0580
Publisher site
See Article on Publisher Site

Abstract

PurposeContinuing economic growth in emerging markets offers large market opportunities to producers and marketers worldwide; however, market failures due to asymmetric information are often seen when high-quality products enter these “new markets” where recognition rates among consumers are low. The use of “geographical origin” labels as quality signals to overcome asymmetric information problem plays an important role. The purpose of this paper is to compare consumers’ perception and willingness to pay (WTP) for different levels of geographic origin labels to provide insights to the strategic use of origin labels in emerging markets.Design/methodology/approachA consumer survey on geographic labeling for imported dairy products was carried out in Beijing, China in May 2015. Under the “products of European Union (EU)” range, the authors used “product of Ireland” as a case study for the country-specific origin label. Information on consumer demographic, dairy consumption, safety perceptions, knowledge on Ireland and Irish products, as well as WTP for different geographic labeling and product attributes were collected from 307 face-to-face interviews. WTP was elicited using double-bounded contingent valuation method, and estimated with maximum log-likelihood function.FindingsThe authors found that consumers are willing to pay premium prices for both of these geographical origin indicators, but the EU label had slightly higher WTP results. However, the controversial situation is that although the EU label has a better chance than the country-specific label in signaling premium quality to Chinese consumers, EU labeling at its best signals an average quality across the EU counties. For premium products with above average quality, using generic EU labeling has a potential drawback to the establishment of product differentiation.Originality/valueThis study is the first to evaluate Chinese consumers’ WTP for EU generic origin label for dairy products in comparison to country-specific origin label. Findings of the study have immediate policy and marketing implications in emerging markets.

Journal

British Food JournalEmerald Publishing

Published: Aug 7, 2017

References