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China, Not an Easy Market

When I read the article about the Chinese limousine, my memory in China revived. That’s the conflic between Danong which is famous for its dairy product and Wahaha which is originally its joint venture in China. I don’t want to describe in detail how this issue is ended or continued.

China is a very attractive market. But it is difficult for many foreign companies to enter at the same time. Especially American and western companies are reluctant to deal with Chinese customers including the goverment and its traditional atmosphere. Even some successful companies are not easy to continue its glory in China. In recent years, Carrefour has been threatened by many kinds of issues including the policy that the company should increase a worker’s payroll.

 

[ Hong Qi CA 7600J ]

And Audi may have similar difficulties in China. Audi has been one of the most favored high end sedan makers. But Chinese car manufacturer FAW Group Corp. will revive its legendary sedan, Chairman Mao Zedong’s Red Flag (called Hong qi in Chinese) after it stopped production in 2010. The related contents about this is as follows;

The sedan will be the official car for minister-level officials, according to the Communist Party’s official People’s Daily website.

The endorsement may be a blow to Audi, which accounts for an estimated 30 percent of cars used by public servants, and illustrates the state’s efforts to protect domestic producers as they struggle to compete against VW and General Motors Co. China signaled last week it will stop buying foreign brands and in January ended some incentives on external investments.

Mao’s Red Flag Returning to Drive China Leaders From Audi
(Bloomberg News, Feb 28, 2012)

This article shows China’s recent change and status about the foreign companies and other factors. China gets enough power economically (as it is widely known, China holds the largest reserve of US dollars next to the US). China prefers to invest in other emerging markets to be invested. And domestically the country tries to nourish the enviroment where domestic brands can have competitiveness and market share.

Nonetheless China is still attractive to many foreign companies. And in the case of Hyundai Motors (exactly, Beijing Hyundai Motors), it gets bigger market share in the passenger car market. The company entered the market in Beijing by providing taxi vehicles in a lower price. And the company aggressively promotes and customizes its various brands. For example, a taxi made by Hyundai has a light scanner for a driver to discern the counterfeit bill. When I saw this convenient option, that was a default option, I could know what the customization is.

It depends on Audi how to react to the government’s decision to move to the next phase for the continuing its glory as an invincible high end sedan.

 

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