Investigating Quality Perceptions of Foreign Services by Chinese Consumers

Consumers are known to use the country-of-origin (COO) of a product to infer the quality of products. Products of technologically advanced countries such as the US and Germany are known to enjoy positive country-of-origin effects. Conversely, products made in the developing countries typically suffer from negative COO effect. While this influence of COO is widely recognized for products, the same cannot be said about services. Only a handful of studies have empirically investigated the relationship between COO and perceived service quality. Additionally, most of these studies in this research paradigm, are undertaken in industrialized countries; hence their findings cannot be extrapolated to the newly industrialized countries (NIC) that offer tremendous market potential for global services. It has, therefore, become imperative for multinational companies to understand if and how consumers in the major NICs use COO and other cues to infer service quality. Using data collected from consumers in Beijing in the Peoples Republic of China, we demonstrate significant COO effect on two service categories: hotels and restaurants. We also highlight how these research findings will help managerial decisions about pricing and promotion