Index of Paper Presentations for the Parallel Sessions - Academy of ...

(India and China to spur luxury growth, 2011). Moreover, the Chinese luxury has reached US $ 10.7billion (Xinhua, 2011) and is expected to rise further to US $ 27 billion by 2015 (Atsmon et al., 2011).The differences between luxury consumption in India and China may be assigned to several externalfactors, namely, economic, social and cultural factors. They shape consumers‘ perceptions of luxury goodsin India and China.Economic Development and Growth:The economic development of the country has a direct impact on luxury consumption (Eng and Bogaert,2010). A rising economy has increased money in circulation, and more credit is available to consumers toincrease the discretionary purchases as it increases the consumption of luxury products. Conversely, incase of a recessionary economy, luxury consumption may decrease as consumer delay their purchasesunder adverse economic conditions (Browning and Crossley, 2000). The imposition of taxes in the form oftariffs and trade duties may also increase the cost of purchasing luxury items. Moreover, countries alsodiffer in their policies of these taxes on luxury products.The Indian economy was liberalized in 1991. It led to loosening of regulations, making the country a hotspot for all kinds of businesses. In 21 st century, there is increasing flow of credit in India due to its surgingeconomy (Sengupta, 2007). This has resulted in a large number of wealthy individuals in the country,particularly the High Net worth Individuals (HNIs). HNIs are those individuals whose net worth is greaterthan US $1 million (Stanley, 1988). The number of HNIs in India was estimated at about 126,000 in 2010(Banerjee, 2010). These individuals form one of the main segments for luxury consumption in India.Along with HNIs, the disposable income of the middle class has also increased and it has started spendingon luxury. The Indian middle class has been estimated to increase from 5% to 41 % of the totalpopulation from the year 2008 to 2025. The total income will increase to about $1.16 trillion within thistime period. This will form 58% of the entire nation‘s income (Farrell and Beinhocker, 2007). Thephenomenal growth of the middle class makes it one of the main segments for the consumption of massluxury items. With the rising stock market and India‘s economic performance in the last decade, there is acollective atmosphere of self-belief and confidence. It has led to the increasing fulfillment of consumerismand materialism in the luxury sector. This can be seen in case of the luxury automobile market. In India,this market consists of high end models such as BMW 7 series and Audi Q7 that comprise 35% of thetotal passenger car market. This figure is expected to grow by 5% to 7% in the coming years (Singh andZachariah, 2010). Although there are such encouraging figures reported by some sectors, luxury in Indiastill has a long way to go (see Figure 3). High tariffs are imposed on imported luxury goods and even thecustom duties are very high, often about 100% of the total value of the products (―India, Brazil on Hold,Luxury Targets West Asia‖, 2010). These taxes keep changing over time and thus it makes India a lessluxury-friendly country (―India‘s One Billion Euro Luxury Market can double in the Next 3 Years‖,2011).Proposition 4: Custom duty and tariffs create differences in the perception of luxury between India andChina