Global automobile sales in China
Auto sales in China have been increasing steadily over the recent years causing the country to record the highest sales in the world, a position that had been dominated by the United States. Several factors have contributed to the current situation. There have been government policies that have encouraged car consumption among the consumers.
The government reduced car purchase tax by 50% and the road toll was cancelled. There were incentives such as old for new service of cars and automobiles in the countryside had their prices reduced. The lower prices caused the consumers caused the country to rank first in global auto sales for two years consecutively. The government incentives proved to greatly uplift the automobile industry since in the recent years it has been experiencing lower sales globally due to the financial crisis, intensified domestic competition and stagnant markets.
This year however, the automobile companies will face tougher times. The Chinese government removed the tax incentives that it had implemented to boost expenditure in the past. In fact, Beijing has put in place restrictions that have contracted the car sales. This will prove to be quite a challenge since the multinationals had increased their presence in the country due to the crisis in the Euro zone. The government is likely to implement measures to assist the domestic companies and discourage the quantity or volumes of car imports. Without the government stimulus measures, the slowing economy and high fuel prices will cause the sales to decrease (Cho, 2012).There will be a higher focus on the electric, hybrid and other fuel efficient cars due to the decreased real personal income. Global automobile companies will have to be innovative and strategic to record sales in 2012.
Successful branding in China
There have been companies that have excelled in the Asian markets. The KFC Yum brand in China has boasted great success for years. It has been able to command loyalty and acceptance from the people. Initially when KFC entered in China in 1973, it did not have a business model that suited the local location. It had to shut down the next year. When it re-entered the market in 1987, it was a great success due to several factors.
The company focused on customization instead of standardization in terms of restaurant structure and food. It has a localised menu with such features such as congee which is porridge in Chinese style and Spicey diced chicken which the people appreciate due to its resemblance to a Sichuan-style dish (Cho, 2012). The structure of the restaurant is also more Chinese friendly in that the set-up is more casual and upscale than the usual restaurant set-up in the United States. In terms of market entry, the company also chose to work with local partners who had great government connections which turned out to be quite beneficial. The effort to get in touch with the local people has paid off.
Another company that has a successful brand in China is the Omega brand of watches owned by the Swatch Group Company. This is a luxury, an expensive watch that accounts for a quarter of the sales figures of the Swatch Company in the country. The company sells three other types of watches in the country. It is a brand that has been proving to be quite a competitor for the Rolex watches. The company did well introducing the luxury watch and targeting a certain market since there is a significant portion of the population interested in luxury products. The Omega was a sponsor for the 2008 Beijing Olympics, an event that accelerated the sale of the watch in the country. The exposure lifted the image of the brand.
Resources:
Cho, K.(2012). KFC China Recipe for Success. Retrieved from: http://www.europeanbusinessreview.com/?p=1327
Cho, Y. (2012). China Says Car Sales Growth Forecast Will Be Difficult To Meet This Year.
Retrieved from: http://www.bloomberg.com/news/2012-03-08/china-says-car-sales-growth-forecast-will-be-difficult-to-meet-this-year.html
