Hierarchical refers to the terms relation to each other not the taxonomies relation to another taxonomy. Non hierarchical taxonomies are like tags they don’t have parents or children. Hierarchical taxonomies means that the terms can have parents and children.
taxonomy = category
category terms:
-
blue products (parent term)
- light blue products (child term)
- dark blue products (child term)
-
red products (parent term)
- dark red products (child term)
- light red products (child term)
Also in your code above change:
'hierarchial' => true,
To:
'hierarchical' => true,