RE: Caterham Heads To China
Discussion
I did my thesis on the impact of culture on consumer behaviour in the mainland Chinese market in 2007/8 and even as recently as that Caterham would have had no chance of success. That first stream of newly affluent car buyers were totally motivated by the concept of 'face' (basically showing off, without getting too technical) and also less so about safety, leading to sales of small cars being very marginal. However, as the children of the 80's and 90's are now starting to earn good money and cheap small cars become more available, buyer motivations are becoming more to do with 'freedom' and escapism.
If Caterham's new partner is taking knocked down kits and assembling in China to cut the tax/duty burden to keep costs low then they may appeal to this new market, but I think the deep rooted concern for protection and safety will be hard to overcome. Anyone who regularly drives a Caterham with the doors off will tell you warm, cosseted and safe are not the main things you are feeling at the time!
Also the size of the Chinese market is probably the most overestimated thing in the world. Yes there are 1.3bn people, but only around 250m are considered middle class and thus having access to disposable income. Of those 250m, I would be surprised if more than a third had the means for a new car purchase and only a fraction of those for a second/third car.
However, with sales targets of 30-50 p.a and most of Shanghai run by expats, they will probably sell them all to Brits!
If Caterham's new partner is taking knocked down kits and assembling in China to cut the tax/duty burden to keep costs low then they may appeal to this new market, but I think the deep rooted concern for protection and safety will be hard to overcome. Anyone who regularly drives a Caterham with the doors off will tell you warm, cosseted and safe are not the main things you are feeling at the time!
Also the size of the Chinese market is probably the most overestimated thing in the world. Yes there are 1.3bn people, but only around 250m are considered middle class and thus having access to disposable income. Of those 250m, I would be surprised if more than a third had the means for a new car purchase and only a fraction of those for a second/third car.
However, with sales targets of 30-50 p.a and most of Shanghai run by expats, they will probably sell them all to Brits!
davepoth said:
DonkeyApple said:
The does lie in recognising that the Chinese will pay hefty premiums for classic British brands. The risk here is that of they are built in China then this may weaken the situation.
Hasn't caused a problem for any of the brands that have set up there already (Mercedes spring to mind).Mercedes does have an advantage over other car brands at it has always been the vehicle of choice for tin pot dictators, third world leaders and the more equal in Communist states. As such, when normal people suddenly get their hands on money it is a brand they head towards.
Caterhams risk is that the actual product is relatively simple and certainly transparent, so with no 'hidden voodoo' to impress the natives they need to ensure that they get the message across about just what these cars are, the history of the brand in the West and how it is infinitely more dificult to get all those simple bits of metal and plastic to work together and deliver a superior product.
DonkeyApple said:
davepoth said:
DonkeyApple said:
The does lie in recognising that the Chinese will pay hefty premiums for classic British brands. The risk here is that of they are built in China then this may weaken the situation.
Hasn't caused a problem for any of the brands that have set up there already (Mercedes spring to mind).Mercedes does have an advantage over other car brands at it has always been the vehicle of choice for tin pot dictators, third world leaders and the more equal in Communist states. As such, when normal people suddenly get their hands on money it is a brand they head towards.
Caterhams risk is that the actual product is relatively simple and certainly transparent, so with no 'hidden voodoo' to impress the natives they need to ensure that they get the message across about just what these cars are, the history of the brand in the West and how it is infinitely more dificult to get all those simple bits of metal and plastic to work together and deliver a superior product.
We are talking about selling Caterham in China, not build them. And one more thing, China is a capitalist state which just happens to be contraled by one party and in a lot of way that so-called 'CCP' is more capitalist than most European political parties.
loveice said:
Beside Mercedes, in terms of premium brands BMW, Audi and Volvo also build several different models in China for Chinese Market. Plus companies like VW, Ford, GM, PSA, Toyota, Fiat (Pop's choice maybe, not any communist states' choice I'd think) Nissan, Kia... Just about every single car brands all build cars in China (for Chinese market and some countries around China). And all of them are doing pretty well (better than most of the European and Noth American companies, anyway).
We are talking about selling Caterham in China, not build them. And one more thing, China is a capitalist state which just happens to be contraled by one party and in a lot of way that so-called 'CCP' is more capitalist than most European political parties.
I'm sure they will have to build them in China. Most manufacturers are building there to avoid the massive import tariffs that would make them uncompetitive.We are talking about selling Caterham in China, not build them. And one more thing, China is a capitalist state which just happens to be contraled by one party and in a lot of way that so-called 'CCP' is more capitalist than most European political parties.
I thought that for the time being the kits would go in but be assembled there to make use of cheap labour and swerve the tariffs?
DonkeyApple said:
I'm sure they will have to build them in China. Most manufacturers are building there to avoid the massive import tariffs that would make them uncompetitive.
I thought that for the time being the kits would go in but be assembled there to make use of cheap labour and swerve the tariffs?
No, they are exporting turn-key 7s from the UK to China just like any Ferraris or Lambos. True, import tariffs/taxes on automobiles in China and most countries in Asia are very high. But those local made foreign cars in China are NOT that much cheaper than the same real imports. They are only slightly cheaper due to the 'cheap labour costs' (even that is getting more in line with the west level at least in auto industry in China). A Chinese made 320i SE with similar spec still costs more to buy than in the west, specially compare to the US. I thought that for the time being the kits would go in but be assembled there to make use of cheap labour and swerve the tariffs?
Chinese (at least the real Chinese who live and work in China, not those overseas Chinese) care about branding and where or by whom those products like Caterhams are made more than people in the west. They (people who know anything about Caterham and be able/willing to buy cars like a 7 in China) rather spend the full amount on something has nothing to do with China or Asia. For us cars like Caterham 7 is pure driving machine. For buyers in China 7s are so much more than just a weekend/track car... That's why you see real X5 and 'fake' one on the same road in China. And BMW still sells more X5s in China than any other country (beside US). That's also why personally I don't think Westfield will success if they decide to export their 7 styled cars to China. The fact is in China most 'fake/copy/stolen' things don't steel any sales from the real things. Because, they have totally different consumer groups. Only about a month ago there's teenager in China sold his kidney in order to get enough cash to buy an real iPad 2...
China is a huge country same size as the whole of Europe (without Greenland) with nearly 10x the population of the US. IMO, Caterham will sell or those 50 cars next year and get back any investment for setting up those dealerships very quickly. But, will this business venture be a huge success? Nope, coz it isn't even a hugely successful company in the UK, is it?
Is the counterfeiting situation in China really that bad?
http://blogs.wsj.com/chinarealtime/2011/07/21/chin...
http://blogs.wsj.com/chinarealtime/2011/07/21/chin...
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