Voluntary and Government Induced Consumer Boycotts: The Case of a Conflict between China and Korea Regarding THAAD

초록

This study investigates the effect of the recent political conflict between China and South Korea regarding Terminal High Altitude Area Defence system (THAAD) deployment in South Korea on Chinese consumers’ boycott of South Korean cosmetics and apparel. Because the Chinese government is believed to have strong control over its market and mass-media, the political conflict provides us with the opportunity to measure the extent by which the Chinese government’s interventions can affect boycotts. For this purpose, we collected Chinese consumers’ reported actual consumption data of the South Korean products before and after the conflict. Our difference-in-difference (DID) analyses show that the political conflict significantly reduced Chinese consumers’ purchase of the South Korean products. More importantly, the reduced consumption is largely due to their voluntary boycott. While the government intervention did have an effect on the reduced consumption, it was not as significant as one believes. Moreover, we find that Chinese consumers’ higher level of usual animosity toward South Korea tends to lead to a stronger boycott after the political conflict.

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