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Discussion Papers
No.923 Hierarchy of Consumer Demand and Industrial Development in China and India: A Comparison of Automobile Consumption in Shandong and Tamil Nadu
by Moriki Ohara and Ashraf Pulikkamath
February 2024
ABSTRACT
This study draws on status consumption and the hierarchical nature of consumer markets to examine the impact of consumer aspiration on moving up the social hierarchy in the choice between foreign and local brands in the auto industries in both countries. In China, small and medium cities and affluent rural areas are the primary locations where people engage in “new consumption suitable for their future status,” opting for German automobiles. Individuals with weaker upward aspirations or those accepting the status quo tend to choose local Chinese brands. In India, this trend is primarily observable in the largest cities, but not in other markets. Many individuals in India consume products “commensurate with their status,” and their upward aspiration selects local brands such as Maruti Suzuki. This implies that the difference in upward mobility-driven consumption has differentiated the process of industrial development in the two countries’ automobile sectors.
Keywords: Market Hierarchy, Status Consumption, Social Mobility, Brand Choice
JEL classification: R22, D91, O57
PDF available at http://hdl.handle.net/2344/0002000866
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