Zhang, 1996). Thus, we focus on the effects of
these two important factors, 1) geographic markets
and 2) product categories, to examine the
brand choices of Chinese consumers, including
both foreign and domestic brands. Furthermore,
since it is difficult to access longitudinal data
of brand purchases in China, these two factors
can serve as important “proxy” variables to explore
the changes in market development and
the social milieu concerning the consumption of
brands in an emerging market. That is especially
relevant to transitional economies like China,
which was opened to foreign investors in a gradual
process, region by region and industry by
industry, over the course of twenty years (Cui &
Liu, 2000). Thus, cross-sectional analyses using
these two variables lend a unique opportunity
to indirectly examine the changing patterns of
brand consumption in China over time.
First, there are tremendous regional disparities
in economic development and consumer purchasing
power in China. The coastal areas and
major urban centers began the reforms and introduction
of foreign products much earlier than the
inland areas. After China’s opening, many foreign
companies went to establish a foothold in
China’s coastal andmajor cities, which had more
well-off consumers (Cui & Liu, 2000). Overall,
the first-tier cities like Beijing and Shanghai
are more developed than the inland areas. Consumers
in these markets have a longer exposure
to foreign brands andmore brand knowledge and
are generally more brand-conscious than their
inland counterparts. Thus, residents in the firsttier
markets nowadays tend to rely less on the
image of the country of origin (COO) in their
purchase decisions. As local firms have gradually
closed the quality gap with foreign brands,
and as consumers in the first-tier markets become
more mature and informed, they may exhibit
a weaker propensity to purchase foreign
brands. These consumers have become more sophisticated
and appreciate the value of domestic
brands (Cui & Liu, 2001). The second or thirdtier
markets, on the other hand, are at least five
years behind. In the less developed areas, local
residents for a long time could not afford foreign
brands and have relatively less brand knowledge.
As their income rises over time, consumers in
the less developed markets would demonstrate a