The world’s largest automakers are hugely dependent on China. More than a quarter of GM’s and Volkswagen’s global sales are coming from China. With Europe’s market predicted to be flat or negative, and with only modest growth expected for the U.S., automakers are looking to the BRIC countries for long-term growth. Currently, the growth in China has more or less stopped. Are automakers betting on the wrong horse?
At the same time, the marketing of cars in China is badly understood, sometimes even in the companies themselves. If you are interested in these matters (and you might not be), then we recommend this rather lengthy interview with Nigel Harris, Ford’s VP of China Distribution Operations.
Once you get through the requisite verbiage of how well Ford trains its dealers and mechanics, you will find interesting insights. The use of traditional media, of the internet, of social networks and even product placement is discussed. In the end, you might feel that us and China are closer than we think – at least when it comes to selling cars.
China has the combined population of the United States, Europe and Brazil – with room to spare. As the giant slowly wakes up, whatever it decides to do is going to have long lasting and profound effects on the rest of the world, especially over the planet’s resources.
While Western companies are battling each other for market share in China (with the requisite transfer of technologies, naturally), nobody seems to be asking the long term question: what impact is the modernization of 1.3 BILLION people going to do to poor mother Earth?
On paper, it appears that a billion ravenous consumers in China is a good thing for capitalism and for a peaceful world. I hope that we are not simply exchanging one set of troubles for another.
Is Ford asking itself the question: am I stimulating a growing market, or am I actually training my future competitors, not just for the auto market around the world, but for material resources?
It would have been nice if China had somehow reduced its population to a manageable 600 MILLION before everyone decided they wanted a car and refrigerator……
Nobody dares ask that question … it’s answer would stand in the way of short-term profits.
Even if one did ask the question and wanted to not produce in China, that OEM might not survive over the mid-term (due to lack of benefit from global scale effects, e.g. lower supplier prices for global business) if their primary competitor, or more continued to produce in China.
Since you’re so concerned about increased materialism in China, what do you have to say about materialism in the Western world? North America, Western Europe and Japan consume far more resources per capita than China. If you want China to cut its population by more than half, do you advocate that the West and other parts of the world cut their populations by the same proportion?
VA, I think you are misinterpreting their comments as a knock on China, they are not. The comments are a knock on “materialism”. It is because they see the effect of “materialism” in the western world on the globe that the addition of 1.3 billion people to that lifestyle is alarming.
Also worth noting is that much of Europe and Japan has zero or negative population growth. My guess is that if immigration from the mix, even the United States would approach zero-popultation growth. At least China is making strides towards controlling population growth. I expect that India may actually prove to be the “Canary in the coal mine” when it comes to the effects of unrestrained population growth meets rapid industrialization.
Sigh. This tired counter-argument gets dragged out during every single debate over China. Makes me wonder if people think this is actually a real point, or if they are just being paid by the Chinese propaganda machine to muddy the waters…
First off, I’m a Canadian. There are fewer ‘Canadians’ in Canada (with 20% of the population now Chinese and rising, the same questions could be raised here!) as new citizens are born in China every year. Per capita be damned: every Canadian could drive to the corner store and back 50 times a day in a Hummer and not produce the same TOTAL amount of pollutants or consume the same amount of fossil fuels as the Chinese do.
So let’s just lay this ‘per capita’ delusion to rest. Mother Earth doesn’t care if North America has a higher ‘per capita’ then China, only how much is being sucked out of her!
Let me put it another way so the non-Chinese 5th columnists can understand it: while we capitalists are tripping over each other to equip China with the tools to overwhelm us, we are merely pushing the danger off to our great grandchildren, who will not thank us when the time comes for them to face off in East Africa or South America over the last remaining deposits of whatever minerals industry desperately needs.
Carbiz is using a patina of environmentalism to cover for xenophobia. Highly hypocritical to downplay the effect of polluting SUVs in one (not insignificant) part of the world, then raise alarms about the inevitable environmental destruction in a more populated area. It takes a lot of dissonance to overlook all the cars in certain areas, then focus on the potential threat in another one. Then he/she pre-emptively accuses others of being fifth columnists, and then makes a distinction between “Canadians” and others. Stormfront meets the recycling. Who would have thought of it?
I wonder if Carbiz realizes how the Canadian (and other neoliberal) municipal governments are controlled by the real estate industry and are built for car-dependency? But then, it’s just easy to blame the out-group.
‘neo-liberal?’ ‘Xenophobia?’ Wow, you’ve managed to catch most of the good terms in one paragraph! Congratulations!
{PSST – I work in the condominium industry in Toronto and am only waaaay too well aware of the paradigm shift underway in this city. At 3 huge projects I worked at, 80% of the units were sold to ‘Asians.’) It’s the social liberals (hate the white man and everything he has done in the past 500 years) and the economic conservatives (gotta keep those labor rates down and real estate prices up!) that make strange bedfellows.
So, which are you, Atlas – obtusely ignorant, or a 5th columnist? Read a book or two: “Who Gets In,” by Daniel Stoffman would be a good start. Or even ‘America Alone,’ by Mark Steyn (although Mark seems more concerned about Arabia than Asia.)
If you’re not concerned about 1.3 billion people all getting refrigerators and cars, then I want what you are smoking.
Nigel has his hands full, it is not an easy position to be in.
In China “relationships” are very important. There are two types of relationships in China. The one side includes great service, friendship, and long lunches. The other side is “what can you do for me” under the table thinking. (Feast from the Emperor’s grain)
With that said it is quite a task to manage the bloggers, reviewers, dealers, and other related sales business and deal with corruption. Most multi-natational companies deal with this side of the business by not having ownership of that aspect of the business. That is why you would have a Chinese dealer network, sales agents, and the like.
It’s almost to the level of extortion.
I could only imagine what you would need to do to keep a car reviewer happy! If you didn’t, your cross town Chinese company sure will.
I could only imagine what you would need to do to keep a car reviewer happy!
Compared to the U.S. or Europe?
In China, the media is generally treated like a pack of dogs, they get press releases thrown as bones. The average “social media influencer” would be appalled by the working conditions of the Chinese media.
Don’t know any “Chinese media” who have it rough. I ate lunch with a China Central TV channel 4 news anchor last year. She picked up my girlfriend and I in her Peugeot 508.
The future middle class of India and China will be double the entire US population. Other countries previously considered “lesser developed” have a rapidly expanding middle class (i.e, Brazil). It’s a world market game with national nuance.
Growth in China more or less stopped in 2011 because the government tax incentive on small cars expired in Dec 2010. GDP growth of 9ish percent is going to mean light vehicle growth of roughly the same amount. Temporary bump in the road
Since people need to win a lottery to be allowed to purchase a car, then things like tax incentives, or personal revenue growth is mostly irrelevant.
Who cares if you got enough money to buy a car, if government said ‘No’
Beijing only. Beijing is as much China as Manhattan is America.
COme to Brazil then. Some analysts say Brazil will grow from 3.5 to 5 million cars a year in 5 yrs.
Last year growth was of 3%. Somehow the math doesn’t add up. Of course, there’s talk of an incentive program. If that happens you could see a bump. It has to be very good incentives, though. If the prices of cars fell 10% the consumption would explode. As is, real transacation prices fell a hair over 1% last year.