This study aims to build a theory of the green country image effect in the context of the changing international business environment. The study employed grounded theory to analyze in-depth interview data from consumers of the M・Z generation in China using NVivo 14. Coding the interview data yielded 330 concepts, 42 subcategories, 21 categories, and 6 paradigm categories. Specifically, the causal conditions included ‘global business environment change and sustainable development’. The primary phenomenon involved ‘changes in the country image value’. The contextual conditions included ‘contextual changes to the formation of green country image’. The intervening conditions included ‘factors of the formation of green country image’. The interaction strategy included ‘interaction strategy for forming a green country image’. The consequence included ‘consequences from the formation of green country image’. Based on the paradigm model of green country image, the study suggested the key factors that can explain the green country image: 1) eco-friendliness, 2) sustainable development value, 3) stable state governance system, 4) advanced green technology, and 5) economic growth and living quality. The study also found that the five factors of the green country image further enhance the sustainable development values among Chinese M・Z generation consumers and influence their purchasing behavior regarding foreign green products, international travel, short-term residence, and immigration. The study results provide a theoretical framework for understanding the effect of green country image which has been previously under explored in international marketing field.