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      11-16-2011, 03:34 AM   #1
DC_Oldboy
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Post BMW Reputation in China - for the Arrogant and the Rash

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http://finance.yahoo.com/news/in-chi...ereotypes.html

In China, Car Brands Evoke an Unexpected Set of Stereotypes

Car companies are grappling with an alternate universe of brand associations in China, where Buicks are status symbols and a Mercedes-Benz is the domain of the retiree.

BEIJING — Cars in the United States tend to come fully equipped with stereotypes. Ford Crown Victoria: law enforcement professional. Toyota Prius: upscale yuppie environmentalist. Hummer: gas-guzzling egotist.

In China, where the market for imported passenger cars dates back only about three decades, an entirely alternate set of stereotypes is taking root — and the stakes have never been higher for foreign carmakers.

Take, for example, Mercedes-Benz, a brand that in much of the world suggests moneyed respectability. In China, many people think Mercedes-Benz is the domain of the retiree.

The Buick, long associated in the United States with drivers who have a soft spot for the early-bird special, is by contrast one of the hottest luxury cars in China.

But no vehicle in China has developed as ironclad a reputation as the Audi A6, the semiofficial choice of Chinese bureaucrats. From the country’s southern reaches to its northern capital, the A6’s slick frame and invariably tinted windows exude an aura of state privilege, authority and, to many ordinary citizens, a whiff of corruption.

“Audi is still the de facto car for government officials,” said Wang Zhi, a Beijing taxi driver who has been plying the capital’s gridlocked streets for 18 years. “It’s always best to yield to an Audi — you never know who you’re messing with, but chances are it’s someone self-important.”

With annual growth hovering above 30 percent in recent years, the Chinese auto market is rapidly surpassing the United States’ as the world’s most lucrative and strategically important. Last year alone, the Chinese bought an estimated 13.8 million passenger vehicles, handily topping the 11.6 million units sold in the United States. Foreign-origin brands, most of which are manufactured in China through joint ventures, accounted for 64 percent of total sales in 2010, according to the China Association of Automobile Manufacturers.

Even if Chinese brand associations can seem remote and perhaps amusing to those outside the country, Zhang Yu, managing director of Automotive Foresight, a Shanghai industry consultancy, says they will prove decisive to sales in coming decades. “China is already the largest automobile market in the world. No car company can afford to overlook its Chinese brand,” he said.

The lower rungs of the Chinese market are still dominated by domestic brands like Chery, whose name and numerous models suggest more than a passing resemblance to Chevy. The affluent, however, are flocking to an increasingly diverse array of foreign luxury offerings. The rapid market expansion has presented some foreign carmakers with a chance for brand reinvention, while posing public relations challenges to others.

“Because the market is so young, brand perceptions and a car’s face” — an idiom meaning prestige or repute — “are both critical,” said Mr. Zhang, pointing out that 80 percent of car purchases are made by first-time buyers.

Audi’s party technocrat associations are a result partly of the car’s early market entry and its longstanding place on the government’s coveted purchasing list. Audi, the German automaker, gained access to the Chinese market in 1988 when its owner, Volkswagen, struck a joint venture with Yiqi, a Chinese carmaker. By contrast, BMW’s first domestic factory opened in 2003, giving Audi 15 years to establish itself as the premier vehicle for China’s elite.

This early advantage has helped Audi to dominate China’s lucrative government-car market, with 20 percent of its China revenue in 2009 drawn directly from government sales. Each year, the Procurement Center of the Central People’s Government releases a list of the cars and models acceptable for government purchase. While the A6 has long been a mainstay on the list, which had 38 brands in 2010, BMW made the cut only in 2009.

“When people see government officials in BMWs, they automatically suspect corruption or malfeasance — but Audis are to be expected,” said Jessica Wu, a public relations professional with almost a decade of experience in the Chinese car industry. A basic model Audi A6 costs 355,000 renminbi, or $56,000, while the BMW 5 series Li costs about 428,000 renminbi, or $67,520.

Such market positioning has brought significant financial results for Audi — in 2010, the company sold 227,938 vehicles in China, more than double the number in the United States.

The Munich-based automaker BMW, on the other hand, has found itself in a contrary position. Since entering the Chinese market, BMW has acquired a reputation as a vehicle for the arrogant and the rash, making it largely off-limits to wealthy officials who prefer a low-key public image.

Part of this stereotype is rooted in a 2003 incident in which a young female driver in the northeastern city of Harbin intentionally ran over and killed an impoverished man who had accidentally dented her BMW X5. Despite the transparent nature of the case — a clear motive and numerous eyewitnesses — the case was settled out of court for $11,000. The incident was seen as driving a wedge between China’s rich and poor, damaging BMW’s nascent image.

More recently, a driver in a BMW M6 struck and killed a pedestrian in May during an illegal street race in the city of Nanjing, setting off a public outcry.

“If it hadn’t been a BMW, I don’t think it would have been as big of a deal,” said a young man who had taken part in the race and spoke on the condition of anonymity because he was awaiting trial. “Had it been all Toyotas, Mitsubishis or even Audis, I don’t think it would have provoked as dire a reaction.”

Despite such public relations travails, BMW has posted strong sales in China, selling 121,614 units in the first two quarters of 2011, or 27 percent of the company’s total sales during that period.

The American carmaker General Motors has found the Chinese market to be a life-saving opportunity for the reinvention of the Buick brand. Since 2005, when Bob Lutz, the vice chairman of G.M., famously declared Buick a “damaged brand,” America’s oldest surviving automobile make has successfully positioned itself in China as a top-tier luxury carmaker.

Largely the result of effective marketing and remodeling, China’s romance with the Buick also has historical roots. The last Chinese emperor, Pu Yi, was the proud owner of two Buicks, as was the country’s first provisional president, Dr. Sun Yat-sen. The black Buick 8 driven by a onetime premier, Zhou Enlai, is still displayed at his former residence in Shanghai, now a museum.

In 2010, Buick sold over 550,000 cars in China, more than triple its sales in the United States.

“We joke that our market revived Buick from the dead — it’s only partly a joke,” said Liu Wen, a reporter for China Auto News.

On Sina Weibo, the country’s most popular microblogging service, a recent posting tried to sum up the car clichés. “A gathering of Mercedes indicates a get-together for old folks,” the writer said. “A group of BMWs means young nouveaux riches are about to run someone over and have a party; several Audis, and you know it’s a government meeting.”
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