Hierarchy of Consumer Demand and Industrial Development in China and India: A Comparison of Automobile Consumption in Shandong and Tamil Nadu

Moriki Ohara and Ashraf Pulikkamath

No 923, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

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 (search for similar items in EconPapers)
JEL-codes: D91 O57 R22 (search for similar items in EconPapers)
Date: 2024-02
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Published in IDE Discussion Paper = IDE Discussion Paper, No.923. 2024-02

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