Ingredient Branding Strategy to Improve Brand Attitude for Chinese Brands Suffering From Country-of-Origin Effect in Foreign Markets: An Empirical Study on BYD Tang Electric Vehicle Model

Introduction

The use of ingredient branding is an essential marketing tool for enhancing customers' brand attitude. This strategy is similar to co-branding, where two brands associate their image within the same product. However, in ingredient branding, the host brand is dominant, and the ingredient brand is an accessory. Consumers tend to have a positive brand attitude towards the host brand when it is associated with a high-profile, high-quality brand, or a high-credibility celebrity endorsement. This study aims to investigate whether and how ingredient branding can increase brand attitude towards Chinese brands in foreign markets that suffer from a negative country-of-origin image. The results could provide Chinese brand managers with a new perspective on enhancing customer brand attitude while reducing the country-of-origin effect. The authors conducted an experiment by manipulating the ingredient branding for a Chinese brand and surveying non-Chinese respondents. After analyzing the data, the results showed that using ingredient branding for a Chinese brand has a positive effect on brand attitude among non-Chinese respondents. However, living in China did not affect brand attitude for those respondents, and familiarity with China only had a slight positive effect on brand attitude. The study discusses several implications for Chinese brand managers, as well as limitations and recommendations for future research. Using ingredient branding can help enhance brand attitude for Chinese brands in foreign markets with a negative country-of-origin image. The study's findings provide insights for marketers on how to utilize ingredient branding effectively and mitigate the impact of the country-of-origin on brand attitude.

When a brand enters a foreign market, it not only brings its product values and brand image but also carries the image of its home country, also known as the country-of-origin effect. If the country of origin image is positive, it reinforces the brand evaluation from foreign customers, but the opposite is also true. This is the challenge facing several Chinese brands trying to enter foreign markets. The “Made in China” identity is still associated with negative stereotypes, posing many challenges for Chinese brands willing to enter developed countries' markets.

In the 1980s, China's huge market demand and low-cost production factors attracted many foreign enterprises. Chinese companies produced goods using foreign branding attributes, overshadowing the country of origin in the eyes of foreign consumers. Chinese factories also produced non-branded products that were cheaper with lower quality, making the country of origin more evident to foreign consumers. This contributed to the negative stereotype associated with Chinese products. While global consumers enjoyed the price advantage of Chinese products, they faced lower tangible values, such as worse quality, poorer aesthetic design, and lower performance.

Today, this negative impression persists and poses challenges for Chinese brands. For example, BYD, a Chinese car manufacturer, began studying new energy vehicles in 2003, but it only entered the European and American markets in 2021. It is difficult for Chinese brands to enter developed countries' markets, and this issue exists with various Chinese brands in different industries, including Huawei, Lenovo, Great Wall Motors, and others.

Although “Made in China” is associated with negative stereotypes, China is fully capable of producing high-quality products. For instance, on the morning of October 16, 2021, the Chinese Space Station welcomed its second flight crew and the first female astronaut. This is the 21st mission since the establishment and implementation of China's manned space project and the second manned mission in the space station phase. Therefore, it is possible to say that if a country is able to build a space station and send a space crew into space, it can also produce good-quality consumer goods. Additionally, China exports fine processing products and high-end products in the process of transformation, such as microchips, industrial machinery, and raw materials.

This paper investigates how ingredient branding could increase the brand attitude toward Chinese brands suffering from the country-of-origin negative image in foreign markets. By conducting an experiment where ingredient branding for a Chinese brand was manipulated and surveying non-Chinese respondents, this research aims to provide marketers with a new perspective on enhancing customer brand attitude while reducing the country-of-origin effect. The authors also discuss several implications for Chinese brand managers, as well as limitations and recommendations for future research.