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BMW China President and CEO Karsten Engel
Three German automakers—BMW, Audi and Mercedes-Benz—rule China’s affluence car market. BMW entered China in 1994, a time aback car imports weren’t absolutely acceptable unless you had a appropriate license. In its aboriginal year in China, BMW awash 800 cars. Ten years afterwards it awash 20,000. A collective adventure acceding active with Brilliance China in 2003 gave BMW the adeptness to aftermath cars locally, which contributed to its amazing acceleration in the Chinese auto market—the aggregation awash 450,000 cars aftermost year, a cardinal that is still growing.
The year 2013 apparent a cogent axis point in BMW’s China journey: China became its bigger bazaar in the world. In this interview, Karsten Engel, President and CEO of BMW Accumulation China, talks about what it takes to accomplish here, adjusting to the “new normal” and business to the Chinese consumer.
Q. As addition sitting at the captain of the aggregation and watching this bazaar change, what does it booty to bound acclimate and abound in China?A. The key of our action is that we are in China with Chinese people, for China. Knowing that [China] will become a absolute big market, we consistently had a aggregation actuality consisting of mainly accomplished Chinese people, and expats alone in those positions area we bare them, to alternation our Chinese colleagues. This has accurate to be a absolute acknowledged [strategy] as it helps us accommodate the four acknowledged companies we accept actuality in China: our acceptation company, our collective venture, our banking aggregation and our purchasing company. With this action we anticipate we are able-bodied ill-fitted for all the challenges [of] the future.Q. In some means you had a bit of a backward alpha in China in 1994, Audi was already actuality and appealing able-bodied accepted in this bazaar aback you entered. How did that appulse your access strategy?A. We saw that there will be a exceptional bazaar in China. The car bazaar had started in the mid-1980s, and there were, of course, bodies still on bicycles. The aboriginal cars were absolute simple. In 1994 we saw the actualization of the exceptional segment. So it was not a delayed start, it was absolute timing to accompany with the actualization of the exceptional market. It accepted to be absolute able as we were able to body the ability and the arrangement afore we took the big footfall of activity into the collective venture. We had a acceptable understanding, and this additionally helped us to acquisition the best acceptable accomplice for production.
Q. In some means China was additionally a chancy bet aback then: what if the exceptional bazaar did not booty off as expected?A. We saw this development in abounding countries. Aboriginal of all, alone advancement seems to be a admiration of the people—they appetite to accept a car. Once they accept a car they appetite their abutting car to be better. So there is a accustomed way upwards in the administration of the premium. The advance of the all-embracing car bazaar in China is agnate to the GDP advance of the country, but the exceptional car bazaar is consistently growing stronger, faster than the accustomed commuter agent market. So we saw absolute development over the accomplished 20 years—premium developed abundant stronger, and we additionally apprehend the exceptional articulation to advance faster than the commuter car bazaar in the abutting 5-6 years.
Q. Despite the arrest and the clampdown on affluence purchases?A. This is independent. Our barter are bodies who accept a bit added money than others. To access the exceptional segment, you should [have] added than $80,000 net domiciliary assets per year, and there are currently about 15 actor households in China in this bracket, and we apprehend this to amateur to 45 actor in the abutting 10 years. These are abeyant customers. The GDP growth, of course, helps the actualization of the average class. There is already absolutely a lot of accession of abundance in China. Of advance there are capacity like anti-corruption, anti-monopoly, which will additionally balance the political and bread-and-butter abject of this country, so it’s all in the appropriate direction.
Q. What are you accomplishing to tap abate cities and additionally the western arena in China which are acutely absolute altered from Beijing and Shanghai?A. The advance in China of the all-embracing bazaar will appear added from the western regions and from the abate cities, and we were the aboriginal to apply on architecture dealerships there. We still accept the bigger cardinal of dealers in bank 3, 4 and 5 cities and are apperception on developing added cities in the future. In a lot of cities we are the aboriginal exceptional car dealer, so this helps the brand, because we can authorize the cast afore competition, but additionally there are appropriate challenges. A BMW [dealership] in a abate burghal is one thing, but accepting the appropriate people, actuality able to do the job in the best accessible way and to a aerial akin of chump achievement [is another]. So we are active the bigger training affairs in the world—about 50% of all the training canicule we are administering common are actuality done in China; added than 250,000 man training days. Nobody has done this before. We get adolescent bodies [and] alternation them. Those bodies are almost abiding so the abrasion amount is not too aerial in the dealership, not as aerial as elsewhere. And we can body our brand. We charge new concepts for our dealerships in those cities¬—they charge be smaller, apperception on account and accouterment chump satisfaction.Q. In China you charge to bazaar in absolute avant-garde ways, and one
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