Concept of Country Of

Origin

Meaning
Country of origin(COO), is the
countryofmanufacture, production,
or growth where anarticleor product
comes from.
There are differing rules of origin
under various national laws and
international treaties.

Definition
Rules of origin are the criteria
needed to determine the national
source of a product. Their importance
is derived from the fact that duties
and restrictions in several cases
depend upon the source of imports.

 There is wide variation in the practice of

governments with regard to the rules of
origin. While the requirement of substantial
transformation is universally recognized,
some governments apply the criterion of
change of tariff classification, others the ad
valorem percentage criterion and yet
others the criterion of manufacturing or
processing operation. In a globalizing world
it has become even more important that a
degree of harmonization is achieved in
these practices of Members in
implementing such a requirement.

Where are rules of origin used?

Rules of origin are used:

to implement measures and instruments of
commercial policy such as anti-dumping duties and
safeguard measures;
to determine whether imported products shall
receive most-favoured-nation (MFN) treatment or
preferential treatment;
for the purpose of trade statistics;
for the application of labelling and marking
requirements; and
for government procurement.

Most- Favoured -Nation

Most-favoured-nation(MFN): treating
other people equally Under the WTO
agreements, countries cannot normally
discriminate between their trading partners.
Grant someone a specialfavour(such as a
lower customs duty rate for one of their
products) and you have to do the same for all
other WTO members.
In international economic relations and
international politics, "most favoured
nation" (MFN) is a status or level of
treatment accorded by one state to another
in international trade.

country-of-origin effect
Thecountry-of-origin effect(COE),
also known as the made-in image
and the nationality bias, is a
psychologicaleffectdescribing how
consumers' attitudes, perceptions
and purchasing decisions are
influenced by products'country of
origin labeling.

History and Origins

Country of origin labelling originated
in 1887 when theBritish government
, in an effort to reduce sales of
Germanand other non-English
products to English consumers,
passed a law requiringproducts
manufactured outside England to be
labeled with their country of origin.

Description and Strength

Research suggests that country of origin (COO)
serves as a cue from which consumers make
inferences about product and product attributes.
The COO cue triggers a global evaluation of
quality, performance, or specific product
attributes.
Consumers infer attributes to the product based
on country stereotype and experiences with
products from that country. Hence, a COO cue
has become an important information cue for
consumers who are exposed to far more
internationalized product selection and
multinational marketing than ever before.

 The country of origin may even affect

consumers perceptions beyond their
conscious control.
Research into COO has focused on
various issues linking COO with other
marketing variables, including
consumer nationalism, demographics,
hybrid products, brand effects, product
quality, price, consumer perceptions,
technology sophistication, product
features, advertising images, and
country images, to measure consumer
perceptions and purchasing behavior

 It has been empirically demonstrated

that the COO effect has significant
price-related consequences and
brands with favorable COO associations
are able to charge price premiums, over
and above those attributed to observed
product differentiation.
The country of origin effect is strongest
on older consumersand those who
don't know much about the product
or product type, and weakest on
consumers who are well-informed.

 Sensitivity to country of origin varies

byproduct category. It is strongest
fordurable goodsandluxury goods
and weakest for "low involvement"
product categories such as shampoo,
candy,light bulbs, toilet paper and
athletic shoes.
When the countries ofdesign,
manufactureand the parentbrandare
different, research suggests all three
matter to consumers, but the country
of manufacture may matter most.

 Some research suggests that younger

consumers care significantly less than older
people about country of origin, but other
studies resulted in different findings. The
research on whether men or women care
more about country of origin is also
inconclusive.
A U.S. study found American college students
more willing to buy a "made in China" teddy
bear when it was sold at an American store
they believed was benevolent, competent
and honest, suggesting that negative country
of origin effects may be offset when
consumers trust the store selling the product.

Associations
In some countries consumers tend to prefer
products made in their own country(also
known asconsumer ethnocentrism)and in
others foreign-made products tend to be
preferred.
A preference for locally-made products has
been linked to a collectivist culture, and a
preference for foreign-made products is
associated with a more individualistic,
competitive culture, and also with countries
that are less economically developed.

 One of the biggest challenges many

Asian companies face as they
globalise is the perception that Asian
brands are inferior.
Research in international marketing
has proven that country associations
do lead to customer bias and this
bias depends on how a customer
views the image of a country.

 French wine, German cars, Japanese

robots, Colombian coffee, Italian fashion,
Singaporean efficiency, Swiss chocolate.
Somewhere in our minds, these products and
services are associated with particular countries
owing to their legacy or culture or lifestyle,
which automatically leads us to perceive them
as premium.
Some brands have even been given foreign
names, to create a perceived COO effect.
Hagen-Dazs, the US-based ice cream company
started by Jewish-Polish immigrants in New York,
in 1961, was deliberately given a Scandinaviansounding name to convey an aura of the oldworld traditions and craftsmanship.


Factors contributing to the country image

Most countries with a positive COO effect are

highly industrialized, developed countries
extent of technological advancement of a
country: the higher the technological capability of
a country, the more positive is the COO effect.
form of government: the success of capitalism
and the resulting market economy around the
world has created inherent perceptions (often
negative) about countries that do not follow
capitalism. A related aspect is the reputation of
the government and its corporate
governance how bureaucratic, transparent,
corrupt or efficient is a countrys government?

Made In China Syndrome

Consumers are generally felt to perceive
Chinese products as low-quality, and to
associate "made in China" labelling with
value pricing, unskilled labour and
inexpensive materials.
In 2007 and 2008 China's reputation suffered
worldwide due to product safety institutions
in many parts of the world recalling Chinesemade products, such as pet food, toys,
toothpaste and lipstick, because of concerns
about their quality and safety.

Some products are strongly associated with a particular country

(in the Western world)silkwith China

spiceswithIndia
winewithFrance
chocolatewithBelgium
cars with Germany
fashionwithItaly
electronicswithJapan. Such products
labeled as originating in that country will
benefit from ahalo effect, with consumers
assuming they are high quality.

 Countries that are less economically

developed tend to have a negative
country image and a negative
country-of-origin effect.

Associations vary by country and region

Japan is universally understood to

manufacture high-quality products,
and yet historical animosity between
it and some other Eastern Asian
countries may reduce those
countries' purchasing of Japanese
products.

 A 1965 study found Guatemalan students

gave lower evaluations to products from El
Salvador and Costa Rica than to domestic
and Mexican products because of a
general negative attitude toward people
from El Salvador and Guatemala.
French consumers avoid buying American
products due to animosity towards U.S.
politics and perceived U.S. passivity
during theFrench Revolution.Throughout
Southeast Asia, Korean goods are very
highlyvalued.