Consumer Behavior and Purchasing Intention Toward Country of Origin Labeling Products: An Empirical Study in Vietnam

Abstract

The role of the garment and textile industry is particularly important in the economies of many countries in the context of international goods trade. There is no denying that the garment and textile industry contributes significantly to the economic growth in the global economy. The study seeks to investigate the relationship between control variables and Vietnamese consumers' intention to buy Chinese garment products. While previous research has found some control variables influencing consumers' intention to buy products, little research has been done about the influence of control variables on consumers' intention to buy Chinese garment products, in developing countries like Vietnam. In particular, the textile industry plays an important role in export, but outsourcing is accounting for a high proportion of trade, hence, it is necessary to increase innovation to increase consumers' intention to buy domestic garment products. The data is collected from a survey of 406 Vietnamese consumers' in Hanoi city and Ho Chi Minh City. The methodology includes a mixed-method, i.e. qualitative method and quantitative method. The quantitative method applies SPSS analysis to measure the control variables' influence on Vietnamese consumers' intention to buy Chinese garment products. The results identify 1 control variable that impacts Vietnamese consumers' intention to buy Chinese garment products, which is domicile.

1. Introduction

For any functioning economy, international trade is a necessary feature for a nation. The exchange of goods, services, and resources can not only bolster a nation’s economy but can also promote peace among trading partners Globalization has significantly reduced trade barriers, increased the chances of trading goods and services outside each country. With globalization and the progressive removal of barriers to trade, an increasing number of companies develop international activities. To access foreign markets, firms face a choice between producing goods at home for exports and producing abroad (Mien, 2017).

Young consumers are an interesting segment that can represent the level of cultural adoption and variability of consumers within a country (Carpenter et al., 2012). They become the target of marketing strategies (Xie & Singh, 2007) based on their autonomy and high purchasing power (Grant & Waite, 2003), and their cosmopolitanism cultural openness is greater than those of consumers of other ages (Thompson & Tambyah, 2009).

Vietnam and China are the two leading countries in the world in garment exports and are also major trading partners in this industry. Over the past 20 years, Vietnam’s textile and garment industry has been constantly developing. Vietnam’s textile and garments mainly serve for export, becoming a key export industry of Vietnam. According to data from USDA, the total export value of the textile and apparel in Vietnam reached USD 27.2 billion in 2015 (an increase of 9.43% from the previous year), of which exports to the US increased by 11.5%, reaching $10.9 billion. From 2016 to 2017, textile and apparel export growth is projected slightly up from 5% to 7% compared to the industry’s routine two-digit growth (Mien, 2017). With an export value of nearly 40.82 billion USD in 2019, the textile and garment industry has risen to the third position in the country as well as the third in the world in terms of export turnover. Since 2016 Vietnam has been the second largest garment exporter in the world after China, accounting for 6.09% of total apparel exports worldwide. Meanwhile, China has become one of Vietnam’s main garment export markets in recent years. From being the 46^th largest garment export market in 2000, China became the 17^th largest market in 2010 and the 4^th largest market in 2018 of Vietnam with an export market share of 40.06% (Anh, 2020).

Vietnam’s textile and apparel industry has long been one of the most important contributors to the country’s high growing export-oriented economy, representing over 15% of the country’s total GDP and 18% of its exports. Today, Vietnam is ranked among the world’s top five textile and apparel exporting countries. Its robust growth rate of textile and apparel exports is expected to continue through 2017, due to the development of technology, the growing number of skilled workers, and newly issued preferential policies from the government (Anh, 2020). However, the quality control of imported goods is currently too lax, causing many poor quality products to be massively imported into Vietnam, and causing damage to consumers. In addition, when Vietnam had controlled the COVID-19 epidemic, smuggling and illegal transportation of goods across the border started again. Smuggling takes place near the northern border comprising key provinces such as Quang Ninh, Lang Son, Cao Bang, Lao Cai, Son La, Lai Chau, Dien Bien. Goods smuggled and illegally transported at this border are mainly clothes, toys, machinery, and electronic components, etc. (Minh, 2020). Therefore, it is necessary to study Chinese garment buying behavior. This study analyzes, evaluates, and measures the influence of control variables including gender, age, income, domicile, and education, on Vietnamese consumers’ buying behavior of Chinese garments.

2. Literature Review

Previous studies on control variables include gender, age, income, domicile, and academic standard which affect typical foreign purchases such as:

Considering the role of age, Lambert-Pandraud et al. (2005) showed that older consumers tend to be more loyal than younger ones. However, research shows that young and old consumers are equal in terms of loyalty or disloyalty. Research on the issue of time for choice behavior (East et al., 1995, 2000) showed that older consumers have more free time than younger customers, hence they have more time to review and search for information about products. Moreover, Mittal and Kamakura (2001) showed that consumers with different characteristics have different thresholds such that, at the same level of rated satisfaction, repurchase rates are systematically different among different customer groups. Besides, research by Leventhal (1997) showed that older consumers are often less pressured by peer groups. Research by Josiassen et al. (2011) showed that consumer tendencies for ethnocentrism are directly influenced by the characteristics of the customer. The authors also found that the strength of the relationship between consumer ethnocentrism and willingness to buy is influenced by customer characteristics. Specifically, age and gender are found to be important moderators of the consumer ethnocentrism-willingness to buy relationship. Burton et al. (1995) showed that women have more agreement between attitudes and behaviors than men.

The strength of the relationship between customer satisfaction and loyalty is strongly influenced by the characteristics of the customer. Specifically, variety seeking, age, and income are found to be important moderators of the satisfaction–loyalty relationship (Homburg & Giering, 2001). Older consumers, who constitute an important market segment, repurchase a brand more frequently when they buy a new product. Older consumers consider fewer brands, fewer dealers, and fewer models, and they choose long-established brands more often (Lambert-Pandraud et al., 2005). According to the research report on fashion consumption habits of Vietnamese people, the spending level on clothes of Vietnamese consumers ranks third (after food and savings), accounting for 13.9% of total personal spending. Women have a higher rate of choosing and buying clothes for themselves than men by 13.6%. Women shop more often than men, but this level decreases with age. At the same time, the research results also showed that the shopping needs of consumers often increase after they receive their salary or when there is a lot of money.

Most research in marketing (Cooil et al., 2007; Crask & Reynolds, 1978) showed that income is closely related to consumers’ attitudes and purchase intention. Consumers with higher incomes have fewer financial constraints on what they can buy and therefore can shop anywhere. High-income consumers are said to have more time value than low-income consumers (Murthi & Srinivasan, 1999), thus reducing the time spent searching for information to purchase products. Josiassen et al. (2011) also showed that the influence of ethnocentrism on willingness to buy increases as consumers’ income increases, and vice versa.

3. Data Collection and Methodology

3.1. Context and Research Sample

Marketing and distribution activities were weak stages of the textile industry in Vietnam. The difficulties in exporting were a good opportunity for domestic textile and garment firms in Vietnam to seriously recognize the domestic market. Vietnam ranked among the top 10 textile and garment exporting countries in the world but had not yet been dominant in the domestic market. So far only about one-third of Vietnamese textiles and garments were consumed domestically. Chinese garments products were present throughout the domestic market of Vietnam, both in large cities and in rural areas, attracting the majority of low income and low-end customers (Van et al., 2021). There is no denying that the garment and textile industry contributes significantly to economic growth in the global economy. Vietnamese garment and textile firms play an important role in the development of the country’s economy, contributing about 15% to GDP and creating jobs for nearly four million Vietnamese workers. In the global supply chain, Vietnamese garment and textile firms are mainly in the stage of product processing (Le et al., 2019).

The role of the garment and textile industry is particularly important in the economies of many countries in the context of international goods trade. Exports of garments and textile products bring in a large amount of foreign currency to buy machinery and equipment and modernize production, which serves as a basis for the economy to grow up. Especially, this is seen in Vietnam’s economic development history. In Vietnam, today the garment and textile industry is contributing to the development of agriculture and rural areas through the growth of cotton, jute, silk production and is a means for economic structure shift from an agricultural economy to an industrial one (Le et al., 2019).

The sample of this study is customers in Hanoi city and HoChiMinh city. We send questionnaires to them through email, by post, or in person. We tried to include all customers who used Chinese garment products as a sample for this study. As a result, we received about 406 questionnaires which were used to analyze the data and test research hypotheses. We choose Hanoi city and HoChiMinh city because they are the leading economic center of Vietnam. In addition, with limited time and resources, we chose Hanoi city and Ho Chi Minh City with the desire to represent the Vietnamese economy.

3.2. Research Models

Control variables include gender, age, income, domicile, and academic standard. The scales are measured by a 5-point Likert scale, a type of psychometric response scale in which responders specify their level of agreement to a statement typically in five points: (1) Strongly disagree; (2) Disagree; (3) Neither agree nor disagree; (4) Agree; (5) Strongly agree

The intention to buy Chinese garment products of Vietnamese consumers (IBCG) includes 4 items adapted from Van et al. (2021).

Research hypotheses are as follow (Figure 1).

Figure 1: Research Models

H1: Gender has an impact on Vietnamese consumers' intention to buy Chinese garment products.

H2: Age has an impact on Vietnamese consumers' intention to buy Chinese garment products.

H3: Income has an impact on Vietnamese consumers' intention to buy Chinese garment products.

H4: Domicile has an impact on Vietnamese consumers' intention to buy Chinese garment products.

H5: Academic standard has an impact on Vietnamese consumers' intention to buy Chinese garment products.

3.3. Analytical Techniques

Assessing the reliability of scales: the commonly used reliability test is the internal consistency of the scale reflecting the relationship of observed variables in the same scale. The reliability of the scale used in this study is Cronbach’s coefficient Alpha. The collected data is entered into the computer via SPSS 20.0 statistical software. After coding and cleaning the data, it is acceptable since according to Hair et al. (2009, 2014) a Cronbach’s Alpha coefficient of 0.6 or more is desirable.

3.4. Research Methodology

To accomplish the research objectives, we used quantitative and qualitative methods in the research. The qualitative research method is used to describe and analyze the business characteristics of domestic garment and textile firms. The qualitative method is done by collecting data in the form of documents and decisions (word data) to describe and analyze the characteristics of the research object. The process of data collection includes data validation, data editing, spreadsheet creation, identification and calculation of data characteristics, data entry into computers, and we use suitable software for processing and analyzing data to meet research objectives. Specifically, to process the primary data collected, the authors used software such as Google Docs, SPSS 22 software, and Microsoft Excel. In addition, the study also used other professional technical analysis methods such as comparison, synthesis, evaluation, and expert methods to judge appropriately with dialectical thinking and history.

4. Results

4.1. Descriptive Statistics

Information of data collected is shown in Table 1. It shows that among the 406 respondents, about 23.2% were males while the remaining 312 (76.8%) were females. Of these, 245 of them (or 60.3%) were between 18 to 25 years old, 92 of them (or 22.7%) were between 26 to 35 years old, 68 of them (or 16.7%) were between 36 to 54 years old, and 0.3% of the participants were over 55 years old. Among the respondents, 55.7% of the participants have income less than 5 million VND, 17.2% of the participants have income between 5 million VND to 7.5 million VND, 13.3% of the participants have income between 7.6 million VND to 10.0 million VND, 6.2% of the participants have income between 10.1 million VND to 12.5 million VND, 2.2% of the participants have income between 12.6 million VND to 15.0 million VND, 0.5% of the participants have income between 15.1 million VND to 17.5 million VND, 0.7% of the participants have income between 17.6 million VND to 20.0 million VND, and 4.2% of the participants have income over 20 million VND. Among the 406 respondents, about 54.9% were residents of Hanoi city while the remaining 183 (45.1%) were residents of Ho Chi Minh city. Of these, 6 of them (or 1.5%) are secondary school graduates, 99 of them (or 24.4%) high-school graduates, 230 of them (or 56.7%) associate in Science or Graduate profession, and 17.5% of the participants had a master’s degree/Ph.D. degree. See Table 1 below.

Table 1: Respondents by Gender, Age, and Income

4.2. Cronbach Alpha

The Vietnamese consumers’ intention to buy Chinese garment products has been measured by the Cronbach’s Alpha. Results of testing Cronbach’s alpha of attributes are presented in Table 2. The results also show that attributes of the dependent variables have Cronbach’s Alpha coefficients that are greater than 0.6, and the correlation coefficients of all attributes are greater than 0.3. So, all the attributes of the dependent variables are statistically significant (Hair et al, 2009; Hoang & Chu, 2008).

Table 2: Results of Cronbach’s Alpha Testing of Attributes

4.3. Regression Results

Results of Tables 3 and 4 show the following.

Table 3: Anova

Table 4: Coefficients

The results of the analysis show that coefficient of R² (R Square) = 0.023, which means 2.3% of the total variation in the Vietnamese consumers’ intention to buy Chinese garment products will be explained by the regression model (Hair et al., 2009; Hoang & Chu, 2008). This shows that the compatibility of the model with the control variables was reasonable.

ANOVA testing result: F = 2.082; level of significance (Sig.) = 0.030 implies that multiple regression model is suitable with data (Hair et al., 2009; Hoang & Chu, 2008).

Multicollinearity testing: The variance inflation factor (VIF) of all control variables is below 10, so the multicollinearity of the model is low (Hair et al., 2009, Hoang & Chu, 2008). Therefore, this regression model does not violate the CLRM basic assumption (Hair et al., 2009; Hoang & Chu, 2008).

Table 4 shows that domicile has an impact on Vietnamese consumers’ intention to buy Chinese garment products (Sig. = 0.024 < 0.05). Meanwhile, there is no evidence that gender, age, academic standard, and income impact Vietnamese consumers’ intention to buy Chinese garment products (Sig. > 0.05) (Hair et al., 2009; Hoang & Chu, 2008). So, H4 is accepted; H1, H2, H3, and H5 are rejected. See Table 3 below.

5. Discussion and Conclusion

According to the 2016 Provincial Governance and Public Administration Performance Index (PAPI) report in Vietnam, the majority of Vietnamese people still have little interest in domestic political news, especially women or people with low education levels. The research object of the paper is the intention to buy Chinese garments in the low cost segment, and the target customers are mostly females and consumers with low education levels. This shows that political aversion in consumption has no impact on Vietnamese consumers’ intention to buy Chinese garments.

Consumer’s garment buying behavior is influenced by many factors that depend on perception, emotion, income, etc of each individual. In the Vietnamese market, Chinese garments are in the middle-low price category, occupying a large market share, and are the leading competitive products for enterprises in the industry. Hanoi city and Ho Chi Minh City are the two largest centers of higher education in Vietnam with many universities and colleges, so the percentage of consumers who are young, low-income, or have no independent income is relatively large. Besides, these two cities are both concentrated areas of enterprises, administrative units, commercial centers, etc., and have a large proportion of the immigrant population, so consumers’ demand is very diverse. On the other hand, Chinese garments are characterized by a variety of eye-catching designs and colors, low prices, and are suitable for low-income customers.

In the global supply chain of Vietnam garment and textile industry, we are in the stage of processing, therefore, to improve the added value, Vietnam garment and textile firms have to conduct supply chain management to minimize “death” time from the production of garment and textile products to consumers. Moreover, the partners of Vietnamese garment and textile firms are mainly famous brands in the world such as Nike, HM, Zara. These firms have very high requirements on standards of corporate social responsibility (CSR). Thus, CSR activities are “laissez-faire” for Vietnamese garment and textile firms to participate in the global garment and textile supply chain (Le et al., 2019).

In Vietnam, the textile and garment industry is a focus of development as the country carries out industrialization. With large labor resources and low labor costs, Vietnam can improve its competitiveness to achieve high export value, create jobs for workers, and develop the country’s economy. However, after many years, most of the textile and apparel enterprises still serve foreign countries, and their creative capacity to increase their competitive advantage is still limited. Because of the limited innovative capacity to improve technology and products, most businesses still produce for foreign corporations. It reduces the added value and makes it difficult for local enterprises to compete with foreign corporations (Hoa et al., 2020).

Statistics show that the garment industry plays an important role in Vietnam’s economy and China is one of Vietnam’s major trading partners in this area. To increase garment exports to China, Vietnam needs to focus on investing in technology, improving labor and product quality to meet the tastes of Chinese consumers, and compete with other competitors such as Bangladesh and India in the Chinese market. Besides, Vietnam also needs to pay more attention to the development of serving domestic demand when currently our country still has to import about 10 billion USD of garments to serve domestic demand (Anh, 2020).

Despite the fact that technological progress is the main contributor to productivity growth, technology should be further innovated to strengthen the industry’s competitiveness. It is widely accepted that the 4.0 industrialization will impact all industries and especially in labor-intensive areas. Consequently, the more innovative technology can be applied in production, the higher productivity an industry can achieve (Mai et al., 2020). Foreign firms have a better ability in retaining their talents than private domestic firms. Consequently, private domestic firms need to work harder to avoid a “brain drain” of their talents leaving for foreign firms (Nguyen, 2020).