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October 29, 2004

'A quarter century ago, there wasn't a single millionaire in China'

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"Today, there are 236,000."

Jack Smith, in his story in Wednesday's New York Times on the explosion of the Chinese car market.

Today Audi has over 100 Chinese dealerships.

Lexus announced this past spring its plans to open 14 dealerships.

Both Mercedes and BMW build in Chinese factories the cars they then sell there.

Ford is opening Aston-Martin and Jaguar dealerships.

Ferrari, Maserati and Lamborghini will be opening showrooms in Beijing and Shanghai.

Do you get the sense that this country is truly now alive and pulsing with wealth, energy, power, and the knowledge that it will rule the planet within two decades?

I do.

China_4

Here's the Times story.
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To Say Luxury in Chinese, Start by Sitting in the Back

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Race on Sunday, sell on Monday.

For a half century, that is how Porsche has been selling cars around the world.

In China, though, the cars are sold differently, said Peter Vogel, the Porsche business development manager in China, leading the way along a thoroughfare here thronged with pedestrians, bicycles and rickshaws.

"First, very few Chinese follow racing," Mr. Vogel said.

"Formula 1 and Grand Prix are unknown to them."

Second, he continued, you cannot really drive a Porsche in China the way you might drive it in Germany.

"Their roads aren't like the autobahn," he said.

Third, Porsche is not associated with sports cars in China.

Rather, it is best known for making really snazzy trucks.

"Our Cayenne S.U.V. is the best-known Porsche in China," Mr. Vogel said, heading into a Porsche showroom tucked on the edge of a park on Hua Hai Road.

"It represents 70% of our sales in this country."

As for the teardrop-silhouetted Porsche sitting in a corner of the showroom - the classic 911 coupe - it has yet to register on the local radar.

"The Chinese don't understand the concept of a sports car," Mr. Vogel said.

"Luxury means the owner rides in the back seat.

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You can't do that in a 911."

But while Porsche's high-performance heritage might be lost on Chinese style setters, everybody gets it as a fashion statement, Mr. Vogel said.

Though wealthy Chinese typically consider suntans the mark of the working class, Porsche sells far more 911 convertibles than coupes.

"This is the opposite of Germany and the States," he said.

"But in a convertible, people can see you. It's all image."

Or, as Joe Namath said, "If you've got it, flaunt it."

A quarter century ago, there wasn't a single millionaire in China; today there are some 236,000 fueling a luxury boom in everything from wine to watches and - most of all - wheels.

As a result, virtually every upscale marque has opened showrooms in China, some courting rich car buyers with locally built vehicles.

Audi has been building cars in its Changchun factory since 1989 and today has more than 100 dealerships in China.

BMW manufactures a Chinese version of its 5 Series in Shenyang, and Mercedes-Benz

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signed a deal in August to produce its C and E Class cars in Beijing.

The made-in-America Cadillacs set to arrive in Chinese showrooms this year will soon give way to Caddies made in Shanghai.

Lexus announced this spring its plans to open 14 dealerships in China; Ford will follow suit with Aston Martins and Jaguars.

Exotics will not be far behind, with Ferraris, Maseratis and Lamborghinis arriving in showrooms in Beijing and Shanghai.

One brand that has enjoyed singular success in China is Buick, which began manufacturing in Shanghai in 1999.

Buicks are considered so prestigious, said Dale Sullivan, the Chevrolet and Buick brand manager for China, that owners sometimes drop by the dealership to hang out.

"They'll have a coffee, bring a laptop or invite a friend."

The Buick's top-of-the-line Chinese model, the Regal, is not to be confused with its dowdy American counterpart.

"It's more likely to be chauffeured than driven by its owner," Mr. Sullivan said.

Buick loads the Chinese Regal's back seat with wood trim, radio, air-conditioning and controls that enable the lucky passengers in back to slide the front seat forward for greater leg room.

The advertising, too, is conceived to promote the notion that the Regal is a gentlemen's club on wheels.

The Chinese esteem for Buick predates General Motors' promotional efforts by about 80 years.

As every schoolchild learns, Sun Yat-sen, the father of the Chinese Revolution, drove a Buick, as did the last Emperor of China.

"Really?" said Stuart Pierce, the Cadillac brand manager for China.

"But that was a long time ago."

Nonetheless, the Chinese have not forgotten such car trivia. In the mid-90's, when G.M. began negotiating to manufacture in Shanghai, the company planned to build Cadillacs.

No deal, the Chinese said, unless the Americans built the marque of legend, Buick.

Meanwhile, in the rarefied orbit of Rolls-Royces, the Chinese market represents a return to that carmaker's roots, when instructions on changing a tire began with, "Instruct your man...."

"In the rest of the world, Rolls-Royces are mostly owner-driven," said Robert Mosher, director of sales and marketing for Rolls-Royce.

"But in Asia, they're all chauffeur-driven."

Though Rolls-Royce is now owned by BMW, a German company, its marketing strategy is to stress its British heritage.

"Our buyers want to signal their success, but they don't really know how to do that," Mr. Mosher said.

This is where Rolls-Royce comes in, with a quarterly magazine called Pinnacle.

A typical issue, in Mandarin and English, contains articles not only on the new Rolls-Royce Phantom but also on private rail travel, Bali and the history of Champagne.

"It's not the sort of thing we'd do for Rolls owners in the rest of the world," Mr. Mosher said.

"We certainly aren't going to teach anyone in the U.K. about the history and tradition of Rolls-Royce. But in China it makes all the sense in the world. We're talking to them at a developmental - I didn't say impressionable - stage."

Another Rolls-Royce marketing approach involves inviting current and prospective owners to golf tournaments and resort and luxury real estate developments.

"In England, owning a Rolls-Royce is very clubby," Mr. Mosher said.

"But is it in China? We don't know if our owners want to socialize with their fellow owners. But we'll find out."

It is probably a coincidence that Pinnacle is also the name of the three-ton Bentley limousine that went on sale in 2002 in China, but the price was hardly a matter of chance.

When the first Pinnacle arrived at the showroom in Beijing and the price was revealed, 8,888,000 yuan, orders quickly arrived for five of them.

The reason was simple: in Chinese culture the No. 8 stands for good luck.

If the price had been shown in dollars - $1,137,664 - the car might still be sitting there.

October 29, 2004 at 01:01 PM | Permalink


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Comments

I was in China last year, the traffic there is crazy, so I could have been riding in luxury like above, that would have been nice.

-Brendan

Posted by: Brendan | Jul 11, 2006 1:18:08 PM

Hi Joe, I'm Rita, a PR practitioner in a local Chinese PR agency. I can not agree more with you on your perception about China's luxury auto market. I happened to be in a pitch process for a great auto client. You enlightened me! Thanx!

Posted by: Rita | Aug 16, 2005 10:45:30 PM

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