Chinese mothers don’t admonish their one-and-only child to “eat up, there are children starving back in America.” But we’re getting there. Case in point: This weekend, another Rolls-Royce showroom opened in Shenzen, Gasgoo reports. It’s the seventh Rolls Royce retail location in China. Another one, located in China’s industrial center Ningbo, will open its doors in a few months. Rollers are on a roll in China. I counted two Phantoms alone in the underground garage of my Beijing building. At the Shenzen opening, Rolls presented their new Rolls-Royce Phantom Coupé to the Chinese public. It’s their entry model. “Nearly two-thirds of Coupé customers worldwide have not owned a Rolls-Royce before,” said Jenny Zheng, Rolls-Royce Motor Cars’ General Manager for Greater China. BMW are thanking their lucky stars…
While Rolls-Royce’s parent BMW saw its global sales slide by 15 percent in September, Rolls flipped their Emily at the flagging economy, and increased sales by seven percent in the same month. Year-to-date, Rolls-Royce sales rose a record 43 percent year-on-year. Granted, that total was only 827 cars. But in this economy, every car counts. Especially as each example retails at $415k base – and no true Roller proprietor will get caught in a riff-raff reeking base model. “There’s been an 80 per cent increase in the number of vehicles sold this year with some form of bespoke element,” says the British Autocarmagazine with the appropriate nasal accent. Not surprisingly, sales in the United Arab Emirates are up by around 70 per cent. China? Fifty percent rise.
You think it’s a fluke? Further in the same vein(ity), New Delhi’s Financial Express reports “that Mercedes Benz India has registered an impressive 47% growth in car sales for the first 10 months of the current calendar year.” Sales of C-class Benzes more than doubled. Holy cow! And by the way, Time Magazine already said two years ago that Chinese children are getting fat.
I lived in China for years as a student in FuDan University. I learned Mandarin Chinese and got immersed in the culture there before moving to Japan.
The way I see it,
#1 China’s wealth is alot like Americas (say it aint so). You’ve got super rich and then you’ve got a lot of middle class and then people in poverty.
The Super rich are those with incomes over $100,000 annualy.
The Rich are those with annual incomes between $50,000 – $100,000
Their middle class lives on wages lower than $20,000 per year and their poor live on less than $1 a day – many of them still live in caves in fact…you’ll see them on TV when there is a massive mudslide.
Rolls Royce Phantoms and other $100,000+ cars are pleasures less than .009% of China’s population of 1.4 Billion will EVER experience. In fact, most of them would never buy vehicles that gawdy.
The upper class in China is more likely to be spotted in a Buick or a popular American car like an Escalade. American things in china are highly prized. In fact, I saw CEO’s there driving around in old Cadillacs.
The majority of cars in China are either Chinese made or volkswagon.
Sorry, was duped.
@Flashpoint.
Things change veeeery rapidly in the Middle Kingdom , and it must have been a while (weeks? months?) since you went to school here.
1.) China is actually still lacking the middle class backbone. There are very rich people and a lot of very poor ones. This is changing now, slowly.
2.)Your definitions of “Super Rich” and “Rich” need a drastic upwards revision. Or an introduction of “Filthy Rich.”
3.) No self-respecting CEO would get caught dead in an old Cadillac. This ain’t Cuba. For a discrete demonstration of wealth, it’s a VW Phaeton. (“Hey, I’m driving a Volkswagen!”). For pomp and circumstance, it’s a Benz or a Beemer.
4.) In the big cities, there are (see #1) more and more professionals who make $3000 a month. Wouldn’t call them “rich.” They drive a domestically made Toyota or Passat.
5.) Gawd is sadly very much en vogue here. My wife is a Japanese designer, and just to get away from the gawdyness, we need to go to Tokyo every other month or so.
6.) Approximately 1 million Volkswagens are Made in China. There is no or.
7.) American brand cachet is fading fast here.
I have been traveling again to China in the past 4 years. I did my first trip there as a teenager in 1983. Almost no car at that time. But now the prevalent luxury vehicle seems to be the Audi A6. I also notice some Bentley.
I think the chinese are just getting the worse of both system work pressure of capitalism and the absence of freedom of a communist system.
Unless like here you make it big and therefore are above the law.
Interestingly, Bugatti has yet to sell a Veyron in China (or India), though the marketing director recently told me they have Veyrons in Kazahkstan, the Ukraine, Hungary and South Korea (two, in fact).
So, sixty years after Marxists took over, it appears
China hasn’t quite gotten yet to “the classless, stateless and moneyless communist society.” But the transition stage, the dictatorship of the proletariat, is in full swing, right?
I’ve been living here for 4 years now, and I love it. I lived, worked, and had businesses in Europe and the USA before, and call me a heathen, I love it here the best. I never voted where I lived in Europe. I was never allowed to vote in the USA (which was more than compensated for not having to do jury duty) so I don’t miss that at all. Given the current choices, I’d call it a blessing.
4 years ago, there were a lot of cars in the city, and an hour out, there were only trucks. Now it’s cars everywhere. The highways look oddly like German Autobahns, but there are speed limits. And brownie points. They learn fast.
Forget all communist propaganda. I’ve never seen rawer capitalism than here.
As far as freedom goes, the worst limits on the freedom of the Chinese are imposed by other countries. Try being Chinese and getting a visa to Europe or – forgetaboutit – the US. The way the average Chinese visa applicant is treated in most Western Embassies should be declared a violation of the Geneva convention. I’m talking visitor visa, not immigration. Western friends of mine have married Chinese and been waiting for two years to bring their bride home.
The countries that demand more freedom for the Chinese people should at the very least afford them the freedom to come, visit, and spend a little money.
As opposed to Europe, where everybody runs around grumpy, Chinese people are full of optimism. Hard working, hard partying, and full of humor.
@50merc:
No on both counts.
“I was never allowed to vote in the USA”
I guess that was because you weren’t a citizen. Did you meant to suggest that China allows you to vote?
I will agree that China’s evolution is amazing. (Is a stock market consistent with Communism?) It’s like seeing a picture of Sao Paulo skyscrapers and saying, “I thought everybody in Brazil spent all their time picking coffee beans.” A couple of Canadian friends spent a year teaching English at a Chinese university. They sent back great stories about living there.
I can sympathize with those having difficulty getting a visa. Our policy is to make it easy to get into (or stay in) America illegally but hard to enter legally.
Yeah… I don’t think anyone in China is pretending to be “Marxist” anymore. How old are you guys?
I think the whole obsession with gaudiness is part of being new money. Give them 10-15 years, they’ll tire of the Phantoms and dial it back. :)
And yes, Chinese people are really, really nice. Double nice if you’re Western. :P
I wanna go to China, dammit. >:(
Since we dumb Americans keep shipping billions of our dollars off to China every day, and since I sure as hell won’t ever be able to afford a Rolls here in the US, I’d like to just go ahead and follow the money in an effort to establish my IT career in China.
Being rich is not about income, it’s about wealth. No matter how much you make, you are not super rich until you have enough money that you don’t have to work.
If you make a million dollars a year, you may still not be super rich, or even rich.
As for the trade discrepancy, I have no problem sending them digital money while they send us goods. The second they try to change the game, their dollars become worthless. What are they going to do if we default on our debt to them, after all?
Let’s wait until this time next year before hailing the wisdom of Rolls. Shenzen is southern China, the heart of the manufacturing base, and right now there is a significant turnaround underway. My wife does a lot of business with a good number of factories in that region and she tells me that they are cutting back big time as orders fall off. Even Walmart, which buys a lot of goods from that region, is cutting back on orders. What would have been a line of trucks streaming out of the area has been reduced to a trickle in recent months. The ports are seeing the fall off as well, just look at the ship traffic coming in to Long Beach and Oakland, it’s down significantly and very abruptly.
@jeffin3545: Your wife and you are right.
Exports are way down. Containers can be had for a song. Steel down. Many factories (esp. toy, garment) closed. October and November export numbers should be interesting – or make that shocking.
Unexplainably, the Yuan is still expensive against the dollar, despite the dollar’s meteoric rise since July. The Yuan got very expensive against the Euro , due to the Euro’s drop.
Believe it or not, the Chinese goverment had put the brakes on overheating exports since last year. Now it’s braking a car that is running out of gas.
There have been predictions last week-end that Chinese real estate is due to fall 20-30 percent. An outgoing tide makes all ships go down. If people buy less at Wal-Mart, Wal-Mart buys less in China.
However, China’s government is looking at a healthy surplus, it’s a lender, not a borrower, foreign exchange reserves huge. GDP growth still a healthy 10% or thereabouts. The biggest threat to China’s economy were high oil and commodity prices. Down. After every crisis, the strong emerge stronger, the weak die. Darwin.
Great deals can be had in China for people with a strong stomach. As the government takes foot off brake and back on gas (happening right now, put your belts on) the deals will only get better.
@kovachian: That is actually a great idea. Chinese are born math geniuses. Their coders are great. I worked a bit with the Microsoft Research Lab in Beijing, and they do mindblowing stuff – especially in the math-intensive graphics and video field. Trouble is, they don’t speak English. If you can bridge that gap, off to the races you go. The new computer markets in Beijing’s North put Akihabara to tears …
“As for the trade discrepancy, I have no problem sending them digital money while they send us goods. The second they try to change the game, their dollars become worthless. What are they going to do if we default on our debt to them, after all?”
@Landcrusher: As an old (supposedly) Chinese proverb said: “Be careful what you wish for, it may come true.” China still holds most of their dough in US Government bonds, and when those default, we’ll all be selling apples by the side of the road.
Worse, the Chinese goverment may read your remarks, believe them, and decide to pull the money out before the bonds go belly-up. Possibly, they might do that after adjusting the price of their Yuan to the meteoric rise of the dollar. One dollar fetches 6.83 Yuan today, more or less unchanged versus July. http://finance.yahoo.com/currency/convert?from=USD&to=CNY&amt=1&t=2y (That chart shows a tiny uptick. May be the beginning of things to come.)
From July to today, the Euro dropped from $1.60 to the Euro to $1.28 to the Euro today. Which is just peachy for the European economy. Makes their exports cheaper and strangle the U.S. economy even more. Keep your eyes on pricey European imports, they should get less pricier. There may be a bargaign for Rollers.
The strength of the greenback gives all the more reason for China to adjust their Yuan to the almighty dollar. Which it hasn’t done. Yet.
Reading what you wrote, the Chinese government could get alarmed, could put the RMB to 8 against the dollar (where it should be,) THEN pull their money out of T-Bonds, before your wish comes true. Buy a dollar for 6.80, sell if for 8, not a bad return.
Result? Chinese exports will be cheap. Bonds won’t default (they have nobody to bail them out …) America will be driving Geelys or Cherys. Or, more likely, Toyotas and Volkswagens, Made in China. With the odd Made in Shanghai Buick thrown in. After SAIC had bought the brand.
(PS: There is still the looming issue of CIC, which operates China’s Sovereign Wealth Fund, withdrawing $5.4b from the – American – Reserve Primary Fund, BEFORE that fund suspended redemptions. CIC didn’t get their money back. CIC says they received a written confirm, and got shafted. North Korea went to the nuclear brink over a measly $25m, frozen in foreign banks by the U.S.A. . The Chinese won’t detonate bombs. But their trigger finger on withdrawals is likely to be itchier after the Reserve Primary Fund episode. )
Bertel,
There are always doomsday people spinning tales of the Chinese taking advantage of our their bond positions. That is what I am referring to. If they tried to change the game in order to hurt us, they get hurt more than we do.
What all these doomsday guys don’t understand is that the obligations can change if the other guy goes nutty. There simply is no strategy where they use their position to hurt us that isn’t worse for them than it is for us.
I am not talking about us defaulting on the loans without them provoking that sort of reaction. That would actually cause worse problems for us than if they started playing games. What I am pointing out is that the value of their bonds is only so good as they keep playing reasonably fair.
Also, they can’t get anything for those dollars without either taking goods and services from us, or from someone else who will take the debt, or will take payment in goods and services. They can’t act like a bank and foreclose on the USA.
So, yea, let them have the dollar signs. They are taking a lot of risk, not us.
Despite of what some people may think, China has no interest at all in hurting America, or Europe, or – well – Japan. If these markets hurt, they won’t buy Chinese, China goes “Tong! Tong!” (Ouch.)
So China will play ball and actually help propping up flagging economies (as they did) because it’s in their best interest. Only a healthy buyer is a good buyer. China’s main theme may very well be “Make money, not war.”
However, if anyone thinks of doing funny business with them, better think again. If all goes according to predictions, there will be a democratic landslide tomorrow, and Democrats are always big on Protectionism. If that becomes reality, then things will get nasty.
@bertel, they are certainly trying to pull of a neat hat trick but as you point out, their economy is dependent on variables that are out of their control. They are sitting on a huge surplus but they also have a massive burn rate in the event the export market continues to fall off. Furthermore, they have had less success in moving up the value chain from commodity manufacturer, as evidenced by their dismal performance exporting automobiles. China is a fascinating part of the world but far from predictable.