BMW in China

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Excerpts

Unilever’s presence in India dates back to the late 1800s. In 1888, Sunlight soap, manufactured by the Lever Brothers, was imported to India. In 1895, Lifebuoy soap was introduced in the Indian market. This was followed by the launch of other popular global brands like Pears in 1902, Lux in 1905, and Vim in 1913. The Lever Brothers launched several other products like Vinolia soap, Rinso soap powder, and Gibbs dental preparation.

According to McKinsey’s Report on China’s premium car market, China was the second largest luxury car market next to the US. During 2012, the Chinese purchased 1.25 million premium cars with the average price of the each car being US$ 32,144. The report also found that the Chinese with an average annual income of US$ 16,074 were keen on purchasing a basic luxury car. Based on the growth statistics, McKinsey expected China’s luxury automobile market to reach 2.25 million units by 2016 and 3 million units by 2020. It also reported that China might surpass the US as the world’s largest consumer of luxury cars by 2016.....

In keeping with the demand of the market, BMW launched several of its vehicles in China. It also launched localized versions of the Series 5 and Series 3 vehicles. For the Chinese market, BMW built a new 5 Series sedan. The vehicle with a long wheelbase, offered comfort and luxury to the passengers seated on the rear seats. The car, built in the Shenyang plant, had high comfort rear seats, catering to Chinese luxury automobile customers who were usually driven around by chauffeurs. The car had automatic air conditioning, adjustable sun blinds, foldable tables attached to the backrest of the front passenger seats, etc., and was launched in 2010....

According to Dr. Daniel Kirchert, Senior Vice President, Sales and Marketing, BMW Brilliance, China had a population of 1.3 billion and it was spread across 9.6 million square km as against Western Europe’s population of 0.5 billion and area of 4.3 million square km. This, along with a booming economy and increasing purchasing power,, provided a fresh untapped market and ample opportunity for the BMW Group in China. Along with the opportunity, the huge area of the country proved to be a challenge for BMW to set up distribution channels.....

Some of the popular global campaigns were localized and released in China. One such was the ‘Joy of BMW’ Campaign. In 2009, the Joy campaign was launched in Europe and America to enhance the brand reputation and create an emotional connect with its customers. It was launched in China in April 2010. In the localized version of the campaign, the word ‘Joy’ was translated into the Chinese word ‘Yue’. While expressing the feeling of joy, it also focused on the action of giving joy. BMW, in China, floated the concept of making emotional factors as important as rational factors. In one of the Joy advertisements, BMW used Chinese culture, calligraphy, painting, and opera masks to customize the brand for the local market......

In order to access China’s automotive market, the foreign companies needed to meet a number of requirements. For establishment of the automotive facility, the minimum registered capital for automobile financing and engine production was RMB 500 million (separately) and RMB 10 million for a research and development (R & D) center. The import tariff for whole vehicles and automotive components was 25 per cent and 10 per cent respectively. Foreign set-ups of passenger vehicles could not establish wholly foreign-owned enterprises, and had to partner with local Chinese firms in a joint venture with the foreign partner’s stake limited to 50 per cent. .....

Positioned at the 11th spot on the list of BMW’s top markets in 2004, China jumped to the 5th position in 2008 and to the 3rd in 2011 . It was expected to surpass the US as the top market by the end of 2013. In 2012, China was the most important market for the BMW 7 Series, BMW X6, and BMW 5 Series. .....

Exhibit I: Chinese Economy and the Automobile Market
Exhibit II: Product Overview
Exhibit III: BMW China – Locally produced and Imported vehicles
Exhibit IV: BMW China Price List
Exhibit V: Sales Split of BMW Dealers Worldwide and China (2010)
Exhibit VI: BMW Brilliance Corporate Social Responsibility
Exhibit VII: Urbanization Ratio - China

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