April 19, 2024

In China, Car Brands Evoke an Unexpected Set of Stereotypes

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.

Article source: http://feeds.nytimes.com/click.phdo?i=dd9636d3465254c43464ba64adf219d6

O.E.C.D. Lifts Global Growth Forecasts

PARIS — The global recovery is taking root, despite the recent earthquake in Japan, helped primarily by better conditions for companies and improving labor markets, an international economic organization said Tuesday as it bumped up its growth forecasts.

Growth in the Group of 7 industrialized economies, excluding Japan, should rise to an annualized rate of about 3 percent by the middle of this year, from about 2 percent at the end of 2010, the Organization for Economic Cooperation and Development said in an interim update to its annual economic report.

The organization said that the recovery was becoming “self-sustained,” and that corporate balance sheets — not counting banks and other financial services companies — looked “very healthy.”

Despite unemployment rates that are still high in many countries, overall developments in labor markets look better than expected a few months ago, which should have a favorable impact on private consumption, it said.

“The underlying momentum in economic growth in most countries appears stronger than in earlier projections,” the report said.

The O.E.C.D. did not provide specific annualized forecasts for the Japanese economy because of the difficulty in assessing the effects of the earthquake and tsunami. But it said that growth in Japan might have been reduced by 0.2 to 0.6 percentage points in the first quarter of this year and may slip by 0.5 to 1.4 percentage points in the second quarter.

This takes account of the impact of the disaster on production in the areas hit directly, the rationing of power, the decline to confidence and supply chain disruptions.

Reconstruction efforts are likely to begin relatively quickly, it said, and these could begin to outweigh the negative effects on G.D.P. by the third quarter.

The O.E.C.D. forecast annualized growth in the United States of 3.4 percent by the end of the second quarter; 2.2 percent for the 17-nation euro area; and just 1 percent for Britain, the weakest of the major economies surveyed.

It added that given rising prices in some O.E.C.D. countries, “monetary policy will need to deal with a risk that inflation expectations may become un-anchored.”

Public finances “remain in distress in most O.E.C.D. countries,” it said, and the priority should be “to consolidate budgets and establish credible and growth-friendly medium-term plans.”

Article source: http://www.nytimes.com/2011/04/06/business/global/06oecd.html?partner=rss&emc=rss