A model poses in front of a car produced by Shanghai GM at an auto show in Shanghai. Am Xin / China Daily
The number of car models in China’s showrooms quadrupled in the past six years, forcing companies to fight for attention by unveiling vehicles at the Imperial Ancestral Temple in Beijing and the Great Wall outside the capital – and by paying Olympic gold medalist Michael Phelps millions of dollars.
“It is clear that brands are still in the forming process,” said Joerg Mull, chief financial officer for Volkswagen AG’s China unit. “One of the keys for success in China in the long run is brand building and brand establishment.”
About 83 percent of Chinese buyers last year purchased their first vehicle, said the State Information Center, a research arm of the government’s National Development and Reform Commission.
At stake for China’s more than 130 carmakers is winning loyal customers in world’s largest automobile market.
Sales in the country surged 46 percent to 13.6 million last year, according to the China Association of Automobile Manufacturers. In the US, sales slumped 21 percent to 10.4 million, the fewest since 1982, according to Autodata Corp.
This year, sales in China may rise more than 10 percent to about 15 million vehicles, Chang Xiaocun, head of the Ministry of Commerce’s market construction department, said. Customers choose from 221 models, more than double the total of 2008 and more than quadruple that of 2004, the manufacturers association said.
“You’ve got to create the right image, you’ve got to market it aggressively,” General Motors’ China President Kevin Wale said after the company and Chinese partner SAIC Motor Corp launched their Buick Excelle XT in Shanghai.
Car buyers in China tend to be younger than those in the US, Wale said, so the Internet is a key part of an automaker’s marketing strategy. The average Buick customer in China is 28, married and a college graduate. His US counterpart is 66 and doesn’t have a degree, General Motors China said.
A row of Carrefour shopping trolleys at the entrance to a Beijing outlet of the French retailer. (XU YIN / CHINA FOTO PRESS)
Retailer embarks on strategic expansion on the back of high sales
The night time craze was symbolic of the retail giant’s strong performance in China. Claudio Gouveia, vice-president of Carrefour China and also general manager of the North Territory of Carrefour China, said the country has become one of the most significant and also fastest-growing markets for the retailer.
Carrefour last year pulled out of Russia and southern Italy amid the economic meltdown following decisions to quit Japanese, South Korean and Mexican markets in 2005 and 2006, because of “unsmooth operations”. It sold its stores to local enterprises.
However, the retailer maintained steady expansion in China. Gouveia said that Carrefour opened 22 new stores in 2009, boosting the total number of outlets to 157 across the country. It plans to open 20 to 25 new outlets this year.
He added that the company was satisfied and very optimistic about its business in China because the country’s household consumption rates have been high.
In the past year, Carrefour benefited a lot from the stimulus measures, introduced by the Chinese government. For example, the authorities subsidized energy-saving household appliances in an effort to encourage their purchase.
Gouveia said Carrefour had a very clear strategic plan for the Chinese market and would be focusing on constructing hypermarkets with an average size from 6,000 sq m to 11,000 sq m.
The company was making great efforts to balance its presence in big cities and also second and third tier cities. It has been operating its retail business in 45 cities across China.
“Currently, Carrefour has a good presence in big cities while more new stores will be in second and third tier cities,” said Gouveia.
The French company will be the first international retailer to enter the Inner Mongolia autonomous region, where it plans to build a new outlet in 2011.
The retailer plans to develop its China-based outlets alongside the construction of local infrastructure and arrival of new businesses. “For instance, there will be a new airport in the Daxing district of Beijing’s southern suburb and there may be a new outlet nearby. I believe we have many opportunities in this area,” said Gouveia.
In response to its rival Wal-Mart, which is planning to build about 50 new stores each year, adding to its current total of 160 outlets, Gouveia said the focus of Carrefour was to keep a good balance between the rhythm of expansion and the quality of the stores.
Hong Kong clothing retailers threaten to quit Taiwan over tax issue: Taipei – Four Hong Kong clothing retailers are threatening to quit Taiwan over a tax dispute with Taiwan authorities, a press report said Monday. The four Hong Kong retailers – Hang Ten, Giordano, Bossini and BaLeNo – made the threat in a petition to President Ma Ying-jeou, demanding that their names be cleared, or they might withdraw from Taiwan, the United Daily News quoted Lai Shih-pao as saying. (Via China News.)
Hainan to curb ‘whopping housing price’: As of the phenomena that the ‘whopping prices’ for living in hotels in Hainan Province ‘bluff off’ the tourists during the Spring Festival, the government would takes efforts to regulate the market, Wu Kunxiong, deputy director general of the tourism department of Hainan Province said Saturday. The government will strictly crack down on the house speculators and formulate tourism standards to cope with the high prices, according to Wu. (Via Business – People’s Daily Online.)
Revenue From Beijing’s Five-star Hotels Beijing Down 16.9% In 2009: According to data provided by Bureau of Statistics of Beijing, the revenue of star-grade hotels in the city decreased by 9.7% year-on-year in 2009. During the entire year of 2009, star hotels in Beijing made total revenues of CNY21.94 billion, including CNY9.98 billion from guest rooms. (Via ChinaRetailNews.com.)
APEC seeking pathways to Asia-Pacific free trade area: Senior officials from Pacific Rim economies accelerated their efforts Monday to seek ”possible pathways” to a region-wide free trade zone, but fell short of reaching any consensus except to continue necessary work. After a meeting in Hiroshima, where Japan formally took up its chairmanship of the Asia-Pacific Economic Cooperation forum for 2010, a Japanese official said, ”We already have very sensible analytical studies but also have lots of issues that require further discussions.” (Via Kyodo News (Business).)
Asia leads global march away from easy credit: (HONG KONG) The US Federal Reserve has just kick- started its cautious exit from unprecedented emergency lending measures – but the process has been going on for months in the Asia-Pacific region, underscoring the two-speed path of the global recovery. (Via Business Times Online – All The Headlines.)
Coach To Open First Mainland Flagship Store In Shanghai: The American luxury accessories designer and maker Coach has announced plans to open its first Chinese mainland flagship store in Shanghai in April 2010. Located at the junction of Shanghai’s Huaihaizhong road and Songshan road, this new flagship store covers an area of 650 square meters and was designed by Coach’s construction and design team. (Via ChinaRetailNews.com.)
7 For All Mankind To Open Four New Locations In China: 7FAM will open four new stores in China this year, in Beijing, Shanghai and two other as yet undetermined cities. Denim is big business in China, and has been since the early 1980s when the first waves of post-Mao fashions swept through Chinese cities. In more recent times, premium denim makers from around the world have seen demand soar in top- (and now second-) tier cities, and brands like Miss Sixty (Italy), ONLY (Denmark), Diesel (Italy) and G-Star (Holland) have opened retail outlets and in-store boutiques throughout the country. In 2007, American premium denim maker 7 For All Mankind entered the mainland market, and since then has established locations in Beijing, Shanghai, Wuhan, Dalian, Hangzhou and Chengdu. This week, in an interview with China Daily, Vice President of VF Asia (the Asian office of American apparel monolith VF Corp, which owns 7 For All Mankind) Raffaele Germano said the company plans to open four new retail locations in China over the course of 2010, with one store each slated for Beijing and Shanghai, with the other two locations to be determined. (Via Jing Daily.)
Sony to shadow Apple store strategy in Japan: Sony this week outlined a plan to fight back against Apple by opening its own flagship retail stores. Starting with Sony Store Nagoya, the stores will imitate the multi-floor design of Apple flagships like Ginza and use large, spacious display areas divided by category. The first floor of the Nagoya store will focus on portable devices like Cyber-shot and Handycam cameras, the PSP, Sony-Ericsson phones, Walkman players and VAIO PCs; a second floor will focus on home theater equipment such as Blu-ray players and TVs. (electronista.com) (Via News On Japan.)
Toyota to suspends sales, production of 8 models with accelerator issues: In what was described as the largest such move ever by an automaker in the United States, Toyota said Tuesday that it had halted sales of eight models of its cars and trucks that account for more than half its U.S. sales until it could find a fix for sticking accelerator pedals under a safety recall. The move, which will cut production starting Monday for at least a week at seven Toyota plants in North America, comes six days after the Japanese automaker announced the recall of 2.3 million vehicles due to the accelerator problem that it first encountered in 2007. (mercurynews.com) (Via News On Japan.)
Proposal to ban dog, cat eating sparks debate over China’s culture: Researchers of a Chinese government think-tank have defended their proposals to ban the eating of dogs and cats in the face of criticism that it would destroy local traditions. A proposed anti-animal abuse regulation suggests a prohibition on cooking dogs and cats with the risk of a 5,000-yuan (732 U.S. dollars) fine or even imprisonment. (Via China – People’s Daily Online.)
The four door Aston Martin Rapide.
The store, located at 66 Jinbao Street, Chaoyang District, is more than twice as big as Beijing’s other two Aston Martin stores and is the largest in Asia Pacific. The 500 sq m showroom will display seven of the luxury vehicles each costing roughly 1.3 million yuan ($190,500).
“(Beijing) is a representation of the history of China, of the life in China, and this is why we are here,” CEO of Aston Martin, Ulrich Bez told METRO yesterday.
Despite the economic recession’s impact on luxury good sales, Bez said Aston Martin continues to expand worldwide and the Asia market is one of the fastest growing.
“Whatever the situation is in the economy if you have a great product, you will be successful and if you have a bad product you will suffer,” he said.
The decision to open the new store was heavily influenced by the upcoming Spring Festival celebrations, said Matthew Bennett, regional director for Aston Martin Asia-Pacific. – read more at ChinaDaily.com…
Bottles of Corona and Carlsberg are lined in the window of a bar in Beijing. Enforcement officials recently broke up a gang selling fake liquor and warned that counterfeit beers could pose a health risk. (China Daily)
The area is home to Sanlitun – one of the most well known bar streets in the city – as well as many luxury hotels.
“These beers are produced in small workshops with no disinfection process,” said Wei Jinsheng, head of the enforcement team.
“Customers in bars usually wouldn’t check what they are drinking, which raises the chance of getting a disease.”
In a recent raid on a rented house in Wuliqiao village, officers found four men making counterfeit beer that they hoped to pass off as Budweiser, Corona and Carlsberg.
The men were filling empty foreign beer bottles with Chinese beer and resealing them using a bottle-capping machine. Officers seized more than 10 boxes of adulterated beer.
They said Chaoyang is known as a base of fake beer makers.
In 2007, an adulterated beer production workshop raided in Chaoyang contained 7,000 boxes of phony foreign beer.
According to Wei, it is easy to pass off fake beer because many brands have a similar taste.
“Some people add water to light beers, such as Corona, which is quite popular among women in bars,” he said.
Officers said fake foreign beers are sold to bars for around 7 or 8 yuan a bottle and sold on to customers for 30 to 40 yuan a bottle. …read more at ChinaDaily.com
Beijing airport getting mostly back to normal following snow: Beijing Capital International Airport reported 231 delayed and 40 canceled outbound flights as of 2 p.m. Tuesday after record heavy snow paralyzed the airport earlier in the week. Services were mostly back to normal with the three runways all open Tuesday thanks to more than 300 workers who worked for 60 hours to clear the snow and ice, said a spokesman for the airport management department. The airport authorities attributed the disruption mainly to bad weather in airports outside Beijing… (Via Business – People’s Daily Online.)
China Becomes Top Exporter: China took over the mantle of the world’s top merchandise exporter from Germany in 2009, aided by a global economic crisis that has taken a greater toll on other trading powers. (Via WSJ.com: What’s News Asia.)
Taiwan’s Xiabu Xiabu Opens 100th Restaurant On The Mainland: Xiabu Xiabu, a Taiwan-invested hotpot restaurant chain, has opened its 100th restaurant in Daxing, Beijing. Following registration in Beijing in 1998, Xiabu Xiabu opened its first restaurant in Beijing’s Xidan in March 1999. As the first bar-style small hot pot restaurant in Beijing, the company has developed steadily during the last ten years. (Via ChinaRetailNews.com.)
U.S. eclipsed by China in 2009 auto sales: New car sales in the United States plunged more than 20 percent in 2009 to a 27-year low of 10.43 million units, less than the 12.23 million units sold in China during January-November, making the country the world’s largest car market for the first time, data released by a U.S. research firm showed Tuesday. The result marked a historic turning point in the world automobile industry, which had been led by the Big Three Detroit companies since Ford Motor Co. began mass production in 1913 introducing the world’s first belt conveyor system. (Via Kyodo News (Business).)
Singapore PM: No return to pre-crisis growth: Singapore’s Prime Minister Lee Hsien Loong said that the city-state requires a long time to achieve the pre-crisis growth levels of 7 to 10 per cent as the recent economic slowdown has adversely impacted almost all key economic parameters. PM Lee, addressing a bursary award ceremony at Townsville Primary School, said that economy has been, however, showing the signs of resilience as demand in all spheres is slowly picking up due to stimulus measures taken by the government. (Via TopNews Singapore.)
The Mercedes-Benz GLK made its world debut in Beijing
The capacity of Beijing Benz-DaimlerChrysler Automotive Co Ltd (BBDC), a joint venture between Beijing Automotive Industry Holding Co Ltd, Daimler AG and Daimler North East Asia Ltd, would be raised to 75,000 to 100,000 units per year, depending on shift patterns. As part of this the company would convert the former Chrysler hall into Mercedes spaces for C- and E-Class expansion, said Ulrich Walker, chairman and CEO of Daimler Northeast Asia.
“BBDC is performing exceptionally well and will hike production of C-Class and the locally produced long-wheel base E-Class vehicles. Looking forward, in the mid-term, Daimler and its partners would produce as many vehicles as we import,” said Walker.
Sales of the locally produced C-Class have exceeded expectations, and clocked a year-on-year growth of 189 percent during the first 11 months. The company has delivered nearly 14,500 units of these vehicles to Chinese customers.
According to Walker, BBDC has increased the localization rate of Mercedes cars to 45 to 50 percent and identified 85 new China-based suppliers and worked with them to support the local production.
Walker estimated that Daimler will sell more than 70,000 cars, vans and trucks in China this year, more than a 50 percent increase over last year, strongly boosted by the record sales of Mercedes cars. He expects Mercedes sales to surpass 65,000 units for the whole year, representing a 65 percent growth rate. – read more at ChinaDaily.com…
A Burger King outlet at Beijing International Airport
The company, which has 25 outlets in the country, officially opened its first restaurant in downtown Beijing this week in Joy City in the Xidan area.
John Chidsey, chairman and chief executive of Burger King Holdings (BKC), who was in Beijing for the opening of what was the company’s 12,000th restaurant worldwide, said the group was aiming for fast growth.
“We intend to be on a similar scale to our competitors. Certainly a heck of a lot bigger than we are today, ” he said.
Burger King was a relative late entrant to China, not opening its first store until 2005.
KFC, owned by Yum!, which first came to China in 1987, has 2,000 outlets and McDonald’s, having made its debut here in 1992, recently celebrated its 1,000th store opening.
There was speculation earlier this year that McDonald’s had slowed down its expansion in China as a result of the economic downturn.
Chidsey said because Burger King was starting from a low base it had major scope for expansion regardless of economic conditions.
“When you are ahead in the market, any downturn in sales is going to hurt you very bad. If we were offered 10 suitable sites we would take them,” he said.
BKC’s global store development program has accelerated since the company, founded in 1954, was bought by a private equity concern in 2003 and then floated on the New York Stock Exchange in 2006.
Seventeen of the company’s current 25 China stores are company-owned so as to establish a Burger King business model for China but it intends to grow in future by finding franchise partners. – read more at SINA.com…
German tourist Marian Klug-Li picks Christmas decorations at the Beijing Liangma Flora Market yesterday. (China Daily)
Hotels, including the Ritz-Carlton and the Hilton, are vying to attract foreigners with multi-course traditional Christmas dinners and family activities.
“Obviously because of the financial crisis, people are on more of a budget,” said Floria Wun, public relations director for the Ritz-Carlton Beijing. “We are trying to give people more value for their money.”
The Ritz has a set dinner on Christmas Eve and a Christmas Eve Gala featuring a buffet, drinks and door prizes.
“We are expecting 80 percent capacity,” Wun said.
The Hilton Beijing has a four-course Christmas Eve dinner and a set menu for Christmas day lunch and dinner.
“If you can’t get home for Christmas, there is no shortage of places to get a turkey dinner,” said Jim Boyce, author of bar blog beijingboyce.com.
“And you can also mix foreign traditions with local cuisine. If you can’t get turkey, have Beijing duck. If you can’t find candy canes, buy some candied hawthorn on a stick.”
Many expatriates get little, if any, time off from work, which means holiday festivities consist of a meal at a nice restaurant or a small gathering with friends who also are unable to leave.
“I don’t celebrate holidays here as I would at home,” said Barrett Parkman, an American expatriate who works as the international business development manager for a Chinese company.
“In some ways, I forget about the holidays. This year is the first year I have a Christmas tree and it feels like Christmas in my home,” he said.
Parkman said it was too expensive to return to the United States for Christmas.
“We are upper middle-class in China, but we don’t make enough money to go home more than once a year. The expenses of going back are quite prohibitive,” he said.
Meanwhile, ski resorts are another popular excursion for foreigners who cannot get out of the country for Christmas.
“We don’t have any special plans for Christmas, but we are expecting more foreign people at that time,” said Liu Na, a spokesperson at Nanshan Ski, a popular ski resort outside of Beijing.
“It will look like a small United Nations.” – read more at ChinaDaily.com
