Bmw in China: from Entry to Dominance
BMW in China: From Entry to Dominance
Introduction
"In the next five to 10 years, China will be the biggest market for all brands and become a big area of competition," said Christoph Stark, president and CEO of BMW Group Region China to the China Daily reporter. "The most important thing is to be highly flexible and take chances, but also be prepared for some possible downturns in the market," Stark said. "For us the most treasured thing is the brand," he concluded.
Hours later, while sitting in his study, overlooking the Shanghai skyline at night, Stark thought back to his comments earlier. As head of the China operations, it was up to him to ensure that the company preserves its market dominance. However, he realized that the challenges the company now faces are inherently different than those of the past.
While in the past they needed to identify their consumer base, localize their brand to meet the Chinese consumers’ needs and build their production and service network, they now had to maintain all these, but also deal with legislation limiting the number of new cars, as a means to deal traffic congestion; legislative proposals to raise tax on cars with large engines – from the 660 Yuan maximum tax to 3600-5400 Yuan per year, to reduce greenhouse emissions; increased competition from local brands that are gaining fast the know-how and expertise needed and are steering themselves into the luxury car market as they build their brands; international competitors biting into their market share; the development, production and perfection of more fuel efficient engines, due to rising gas prices; etc.
The fact that China has become BMW’s third largest market world-wide after Germany and the U.S., meant they had to work that much harder to maintain their dominance, as in this cut-throat market there are no guarantees. Stark fully understood that the Chinese market was imperative to sustain the company’s profitability and that it already has become the most
Introduction
"In the next five to 10 years, China will be the biggest market for all brands and become a big area of competition," said Christoph Stark, president and CEO of BMW Group Region China to the China Daily reporter. "The most important thing is to be highly flexible and take chances, but also be prepared for some possible downturns in the market," Stark said. "For us the most treasured thing is the brand," he concluded.
Hours later, while sitting in his study, overlooking the Shanghai skyline at night, Stark thought back to his comments earlier. As head of the China operations, it was up to him to ensure that the company preserves its market dominance. However, he realized that the challenges the company now faces are inherently different than those of the past.
While in the past they needed to identify their consumer base, localize their brand to meet the Chinese consumers’ needs and build their production and service network, they now had to maintain all these, but also deal with legislation limiting the number of new cars, as a means to deal traffic congestion; legislative proposals to raise tax on cars with large engines – from the 660 Yuan maximum tax to 3600-5400 Yuan per year, to reduce greenhouse emissions; increased competition from local brands that are gaining fast the know-how and expertise needed and are steering themselves into the luxury car market as they build their brands; international competitors biting into their market share; the development, production and perfection of more fuel efficient engines, due to rising gas prices; etc.
The fact that China has become BMW’s third largest market world-wide after Germany and the U.S., meant they had to work that much harder to maintain their dominance, as in this cut-throat market there are no guarantees. Stark fully understood that the Chinese market was imperative to sustain the company’s profitability and that it already has become the most