Historical Memory and Brand Preference

Abstract

We study how historical memories of war affect current brand preference in the context of the Chinese automotive market. Our research design exploits two natural experiments: (i) the Imperial Japanese army's Continental Cross-Through Operation in China in 1944 that created local variations in historical memories, and (ii) the China-Japan conflict over the sovereignty disputes in 2012 that activated the memories. We find that, after the 2012 conflict, sales of Japanese cars dropped 8.5% more in invaded counties than in neighboring non-invaded counties, despite their having similar pre-trends. The effect persisted for more than 24 months. Consumers in invaded counties substituted domestic for Japanese cars. We find that the effect of invasion is higher in counties where more people experienced Japanese invasion, supporting the intergenerational transmission of memories. Finally, we find local protest partially mediates the effect.

Keywords: Brand, Economic History, Political Economy, China

JEL Classification: D73, P16, H70, L62