CHAPTER I

INTRODUCTION

1.1 Introduction

In this era, everyone definitely needs food to fulfill their daily needs.

Everyone need to survive in any way and one of them is eating for energy,

almost everyone knows and has eaten . is long thin dough that

has been rolled, dried, and cooked in boiling water. Nowadays there are noodles

that are made instantaneously, usually called . As we know,

instant noodle products have very many choices from various kinds of local and

foreign brands.

Instant noodles are very easy to find, they always available at any

retailer. almost all retailers must provide or sell these instant noodles. retail

business is a business that involves selling goods or services to consumers in

units or retail (Untung, 2015). Consumers who buy products or services at retail

are intended to consume or use them personally and not to resell them.

Indonesia's retail sales growth was reported at -12.3% in July 2020. This record

increased compared to the previous one, namely -17.1% for June 2020.

Indonesia's Retail Sales Growth Data is updated monthly, with an average of

8.7% from 2011 January to July 2020, with 115 observations. This data reached

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the highest figure of 28.2% in December 2013 and a record low of -20.6% in

2020 in May. Indonesia's Retail Sales Growth Data remains active status in

CEIC and is reported by CEIC Data. As we can see in the graphic 1.1 that

Indonesia's retail growth in 2020 has decreased significantly, it was concluded that due to this pandemic which has occurred throughout the world, the economy has become hampered. Likewise, Indonesia’s economy aslo hampered in various sectors, especially in the retail sector. (Manggala, 2020)

Graphic 1.1 Indonesia Retail Sales Growth

Source: (CEICDATA, 2020)

In Indonesia, there are several companies that produce instant noodles and there are many kinds of instant noodle products that we can choose from.

Examples are “” from PT Indofood, “Mie Sedap” from Wings

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company, “ABC noodles” from ABC company, etc. The market leader in instant noodle with its famous brands such as Indomie, Pop Mie, Supermie and others is Indofood with a percertage of 72% of market share, after that the wings company followed with a percentage of 14.9% of market share, and the rest by other instant noodle companies (Suhendra, 2016).

In Indonesia, there are various imported instant noodle brands from several country like Korea, , Japan, etc. There are also many types of

Korean instant noodle products such as ottogi cheese , ottogi yeul ramen,

Nongshim Black, Samyang, , etc. Among all types of Korean instant noodle products, there are several variants in each type of

Korean instant noodle product. This Korean instant noodle product is popular too with existing local brands. Many people like the taste of these Korean instant noodle products. In addition to the good taste, it is also easy to find in supermarkets.

The graphic 1.2 below shows Indonesia's import data on , whether or not cooked or otherwise prepared, such as spaghetti, macaroni, noodles, lasagne, gnocchi, ravioli, and etc.

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Graphic 1.2 Indonesia’s import data (pasta, noodle, etc)

Source: Trend Economy (2020)

Top trading partners (import of Pasta, whether or not cooked or otherwise prepared, such as spaghetti, macaroni, noodles, lasagne, ravioli, and etc are listed as follow

(Comtrade.com, 2020):

• Korea with a share of 53% equal to 24 million US$

• China with a share of 26% equal to 11.9 million US$

• Australia with a share of 4.25% equal to 1.91 million US$

• Italy with a share of 3.65% equal to1.64 million US$

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• Thailand with a share of 3.3% equal to 1.48 million US$

• Japan with a share of 2.98% equal to 1.34 million US$

• Malaysia with a share of 1.59% equal to 719 thousand US$

• Other Asia, nes with a share of 1.29% equal to 583 thousand US$

• Turkey with a share of 1.03% equal to 464 thousand US$

• Vietnam - 207 thousand US$

The data shows that one of the countries that imports the most of (Pasta, whether or not cooked or otherwise prepared, such as spaghetti, macaroni, noodles, lasagne, gnocchi, ravioli, and etc) is Korea with 53% share (equal to about 24

Million US$) (Comtrade.com, 2020)

This research is interesting to discuss because it involves consumer behavior, towards foreign instant noodle products, their halalness of these products, and worldmindedness and is moderated by domestic product judgement towards willingness to buy foreign products: Korean noodle. People are smarter in choosing products, for example, like there is a new product from Korea.(Jin & Yoon, 2017)

The Korean Hallyu Waves started in a several TV dramas that very popular in

Indonesia include Asia, and the local cultural industries have developed several cultural forms, including popular K-pop music, Digital games, and animation, which have gradually penetrated global markets. Digital media of Korean and the

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interest of Korean culture has triggered the growth of several point, such as tourism,

Korean foods, and Korean language, etc. Due to the increasing role of the Korean

Hallyu Wave for the economy and culture, the Korean government has changed its cultural policy, to make use of the as a means of power to improbe the national image. In some previous studies have found that the effect of country origin can play an important role in brand image of a product, and indirectly impact on consumers purchase intention (Yang, Ramsaran, and Wibowo, 2016).

However, people very concern about buying foreign product, according to

(Alsughayir, 2013) consumer ethnocentrism is the concept to represent their normative beliefs in the superiority of their own countries' products. Consumer ethnocentrism is one of the factors that can affect the consumer’s decision of whether to buy domestic or foreign products. it directly influences the consumer’s willingness to buy foreign products (Karoui & Khemakhem, 2019).

Still related to willingness to buy foreign product, worldmindedness in

buying a product, people not only see the economic aspect but also see values,

culture, brand attitudes, etc. consuming behavior is also a subject of both

economic, cultural and social capital (Topçu & Kaplan, 2015). According to

(Khalid, 2020) worldmindedness called as global view in which considers

oneself to be associated with the world network and feels awareness of other

people. This is reflected in a person'sattitude, convictions and practices.

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(Topçu & Kaplan, 2015) stated that there is an effective effect on the assessment of domestic products against the purchases of foreign products which tend to have a tendency for the values and cultural standards of each individual. According to (Guo & Zhou, 2017) product judgment is a consumer's judgment for the quality of product or an idea or comment from an individual or a group of people on a product. (Hefner, 2018;3) Indonesia, which is included in the category of the fourth most populous country in the world, has a majority Muslim population. This makes Indonesia one of the countries with the largest Muslim population. Fulfill the needs of a halal life is a basic right for every Muslim (Warto & Samsuri, 2020), Therefore it is necessary to have certification and product labeling in guaranteeing a halal product to the public, especially Muslim citizens (Warto & Samsuri, 2020). In addition, halal product purchase intention consists of Halal awareness and Halal Certificate (Sardiana,

2020).

When we would like to buy foreign product, there are several factors that affect the willingness to buy the foreign product. According to (Guo & Zhou,

2017) willingness to buy means Consumer's behavioral intention to buy something. (Topçu & Kaplan, 2015) said that in a consumer driven world, lack of interest and purchases of foreign products by consumer, relates compliances to buy and having foreign products. Researchers have found and demonstrated a vast variety of factors, such as consumers 'nationalism, ethnocentrism,

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animosity, and etc that will influence consumers' behaviors and purchase

decisions regarding local and foreign products (Cheah, Phau, Kea, and Huang,

2016).

1.2 Research Background

In 2017 there was controversial case related to several instant noodle brands

from Korea which were accused as containing non-halal ingredients. Various

reports were saying that based on the results of sampling and laboratory testing

of BPOM, 4 types of instant noodles showed positive results containing specific

pig DNA fragments. Responding to these results, BPOM has ordered importers

to withdraw products from circulation. Even though Samyang noodles are quite

popular among the public, especially millennials, it is necessary to know what

noodles have been determined to contain pork by the BPOM. In accordance

with the regulation of the Head of the POM Number 12 of 2016, it states that

processed food containing certain ingredients derived from pigs must include a

special sign in the form of writing containing and a picture of a red pig in a red

box on a white basis. From checking the label, it is known that the product

containing pork does not contain a warning about containing pork. Importers

also do not inform BPOM during registration to obtain distribution permits that

the registered products contain pork (www.idntimes.com, 2017).

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For these products, the BPOM has ordered the importers concerned to withdraw the

products from circulation in the market (www.liputan.com, 2017)

The recalled instant noodle products are included:

1. Samyang, U-dong instant noodles with a distribution permit from BPOM RI

ML 231509497014, imported by PT Koin Bumi

2. , instant noodles (Shim Ramyun Black) with a distribution permit

from BPOM RI ML 231509052014, imported by PT Koin Bumi

3. Samyang, Kimchi Flavor instant noodles with a distribution permit from BPOM

RI ML 231509448014, imported by PT Koin Bumi

4. Ottogi, instant noodles (Yeul Ramen) with a distribution permit from BPOM RI

ML 231509284014, imported by PT Koin Bumi

From article written in Kompas.com (2017), due to this massive withdrawal from supermarkets and groceries, the Korean noodle product importer suffered a loss of up to 30% income per day. Not only that most retailers also withdrew these products from their stores and were reluctant to sell Korean instant noodle products, and many people did not dare to buy them because they were claimed non halal. After a while, Korean

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instant noodle products reappear at retailers and are being sold again as usual, it given information that the noodles contain pork DNA so that they can be traded and that it is registered with the Food and Drug Supervisory Agency (BPOM) in order to boost willingness to buy products:Korean noodle. (Mediabogor.id, 2017).

This research is based on a replicated journal by (Topçu & Kaplan, 2015) with the title Willingness to Buy Foreign Products Related to Ethnocentric Tendencies and world-minded Attitudes of the Consumer World. This research was conducted to find out how consumer ethnocentrism and worldmindedness change consumer attitudes, and how the assessment of domestic products moderates this relationship with the object of previous research was foreign products. The study was conducted in

Canakkale, the results state that consumer ethnocentrism is negatively related to willingness to buy foreign products, and the assessment of domestic products does not have a significant moderating effect in this relationship. Worldmindedness is not related to willingness to buy foreign products, so the assessment of domestic products has a significant moderating role in the relationship between worldmindedness and the desire to buy foreign products.

1.3 Research Questions based on the research problem above this research will examine below questions:

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1. Does Consumer ethnocentrism negatively related to willingness to buy

foreign product: Korean noodle?

2. Does Worldmindedness positively related to willingness to buy foreign

product: Korean noodle?

3. Does Domestic product judgement has moderating effect on consumer

ethnocentrism and willingness to buy foreign products: Korean noodle?

4. Does Domestic product judgement has moderating effect on

worldmindedness and willingness to buy foreign products: Korean noodle?

1.4 Research Objectives

1. To examine if Consumer Ethnocentrism negatively related to willingness to buy

foreign product: korean noodle

2. To examine if worldmindedness positively related to willingness to buy foreign

product: korean noodle.

3. To examine if domestic product judgement moderates the effect between

consumer ethnocentrism and willingness to buy a foreign product: korean

noodle.

4. To examine if domestic product judgement moderates the effect between

worldmindedness and willingness to buy a foreign product: korean noodle.

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1.5 Research Significance

From the survey, it was discovered that there is still a gap in the research. This research hopes to prove the accuracy of the previous survey. There are two key significances, theoretical and practical.

1.5.1 Theoritical Significances

Theoretically, the research is expected to help the author to get insight

on consumer ethnocentrism towards willingness to buy foreign products,

particularly on korean noodle, to understand deeper about every variable used.

The result of this study can also help the studies regarding consumer attitude

which can then be used for other researchers to conduct further study about it,

even though the variable might different.

1.5.2 Practical Sigficances

In practical, this research is expected to be used by forecasting future

sales, paying more attention to regulations regarding halal in the concept of

imports, etc. With this research, it really helps sellers in taking steps forward

on what to do then can estimate what features can be added.

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1.6. RESEARCH WRITING SYSTEMATIC

CHAPTER I: Introduction

This chapter consists of the introduction to the research area and topic, research

background (including an initial survey conducted), research questions,

research objectives, research significances (theoretically and practically), and

lastly writing systematic of the research.

CHAPTER II: Literature Review

This chapter consists of the information and explaination regarding every

independent and dependent variable, supporting theories from many relevant

previous studies, its relations and hypotheses, the research design used and

lastly a summarized table of relevant previous studies.

CHAPTER III: Methodology

This chapter consists of the analysis tools and methodological approaches used

in the study along with some supporting theories and data. Research paradigm,

research type, research involvement, study setting, measurement table, unit

analysis, sample size, data collection method and a few more will be covered.

CHAPTER IV: Results and Discussion

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This chapter shows the statistical data collected from the study, explains what each data means, discusses the correlations, whether hypotheses is accepted or rejected and summarizes the results.

CHAPTER V: Conclusion and Recommendation

Lastly, this chapter consists of the conclusion of the study, its managerial implication and author recommendations for future research.

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