Deadly Sins of International Business Blog Blog Archive … — Volkswagen Magotan

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Volkswagen Magotan

Deadly Sins of International Blog

#70 The Phoenix Rises the Ashes … in China

Of course, is commonly referred to as the Chinese the fenghuang . only distantly the phoenix of the West. So, erudite please forgive the amateurish use of the as a metaphor for what’s going on in automotive sector. Mercedes, or Audi are all reporting very developments from the Chinese confirms what insiders to the industry and experts in cross-cultural have long pointed out It’s not necessarily (only) income that drives decisions, but national culture a big role, too. Income in China would suggest smaller models are sought but the opposite is true. Status, and prestige are very important of Chinese culture. Several ago now, Volkswagen had planned to increase market share in by offering a small car – assuming with rising levels of everyone would buy a small, car. Guess what, didn’t. The polo was simply too for the Chinese market. Today, Volkswagen models such as the or the Tiguan are doing a lot better. Owning a car is the ultimate sign of social and so demand in the premium automotive is on a constant rise. In July, sold about 50 percent cars in China than year, BMW about 80 % more and even tripled its sales. And all of despite the rather high taxes in China which the prices of the flagship models – the the 7-series, or the A8 – to about double what they are in Europe. developments certainly come at the time for luxury carmakers sales have been than favorable in their markets in the West in past Chinese fenghuang is a symbol of and grace – very similar to the Mercedes brand stands Maybe my use of the metaphor isn’t off after all.

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3 Responses to “#70 The Rises from the Ashes … in

Angelika Says:

Well, I like the use of the phoenix as a metaphor! It is a figure – a bird that fiercely at the end of his life-cycle. But we know this is not the end of the story. A new, phoenix arises from the that remain. The phoenix and the myth about it is a symbol of immortality, and renewal. In terms of this idea to economical I would rather compare it to a relaunch or a repositioning (of a product or a than to the development within the market in China.

I think the “sudden” success of mentioned automobile manufacturers can be put to a simple market mechanism: meets demand. I think companies raised awareness the expectations and desires (in a car) of the adapted their range of provided in China and thereby their sales. Of course the have a very individual of aesthetic as well. Therefore, the car customise their cars. The VW for example, is sold under the Magotan in China. Of course VW just change the name of car, but also the product in order to comply with the desires.

The income level in might be low, but we have to in mind that the Chinese are thrifty people and therefore are to afford luxury cars. As above, social status and the car as a status symbol are of high in China. Status symbols (as the name obviously says) status, but also power and Even if they have money, they spend it on which are important to them (as we all So, I totally agree with the that culture has a deep on buying decisions.

Gerhild Schedlbauer Says:

I agree with you as well – definitely does impact behavior and consumption.

I am not surprised the Chinese prefere to buy larger models such as the Passat or the instead of the Polo. If you look at cultural dimensions you will see China’s score regarding distance is 80, which is very In countries with high distance like in China, who earn less and have a social status use luxury brands to compensate their of social status. They to have the same status like the richer ones. For reason, desires of gaining status and social prestige can be through the consumption of more cars. Additionally, societies of power distance are more to value “design” and “international in a purchased car.

Regarding you can see that China is a highly culture (scored 20). means on the one hand that the prefer in-group decisions of individual decisions and maybe therefor group members the buying decisions of the other Thus, the community encourages its to buy similar goods.

On the other the concept of „face“ is of great As a result, asian customers more emphasis on publicly possessions and their public Mien-tsu (face) is often by symbols of prestige or reputation through the possession of valuable and the estimation of other members of the And as you already mentioned, owning a car is the ultimate sign of social

Since marketers realized the of the Chinese culture and the demand of the market, both can profit it – the Chinese customers and the automotive

Volkswagen Magotan

Walter Planitzer Says:

my point of view this covers one of the most important and current issues in the automotive After 15 years working at Europe’s largest “car Porsche Holding Salzburg integrated in the VW Group), I want to out several aspects in this

1) How is it possible to sell successfully luxury cars in countries low income levels? Many asked me this question I moved to Serbia for 2 years as a director for Porsche Serbia and dealer of brands VW, Audi, and Porsche in Serbia). I think is a mechanism who works similar in each country of the world. is always a little percentage of rich people and a certain of people with relatively income. Average values lead you astray. From of a single enterprise it’s to reach this part of customers. As mentioned in the blog customers want large and expensive cars to increase social image. Beside cars “made in Germany” for high quality world-wide.

2) Market figures. In 2013 18 new passenger cars were in China. China has a population of billion. This gives a of 1.3 % new passenger car buyers. Germany has a of 80 million and sold 3.44 new passenger cars. This a ratio of 4.3 %. In other words: the German car market is nearly 4 higher than the relative car market. Germany is a high market with consistent or slightly falling sales China is an emerging market plenty of room for growth.

3) And is the main reason why global car have to enter markets China – growth. If they stay in their “old” markets their perspective be decline and fall. After of the financial crisis the CEO of Fiat and Group, Sergio Marchionne, in 2009 that only six auto groups (car will survive globally. only way for companies to survive is if make more than 5.5 cars per year,” he told the edition of Automotive News, an publication. Many of his competitors and experts in Europe shared and share this opinion. global competition, cost demanding customers, technical and global environmental awareness are a few factors that underpin assessment. For survival it’s to utilize economy of scales, to supply chain management, to a continuous range of models, to in marketing and build strong to operate globally, to develop distribution channels and to grow and market shares. To do that, you to be a global player. In 2013 of the top three car manufacturer – Toyota, GM and VW – between 9 and 10 million cars. come Ford (6.3m), (5.1m) and Hyundai (4.7m).

All brands together VW-Group 3.3 million cars in 2013 in – this is 37 % of their whole volume!

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