Motoring along

Flying off the forecourts in Fujian

Tang Qili still remembers wearing a tatty T-shirt and jeans to work 10 years ago. But these days looking smart has become part of his job. Tang is the head of the major car dealer Sparkle Roll Group, a company that distributes luxury vehicles like Bentley and Lamborghini in Beijing.

Tang’s career path is an unlikely one. The company he previously founded was called Jade Dynasty, one of the largest comic publishers in Hong Kong.

So how did a comic publisher become a luxury-car dealer? Back in 2003, Tang realised that comic sales in Hong Kong were on the wane. Around the same time, Qi Jianhong, the distribution agent for luxury brands like Burberry and Davidoff, was looking for an investor. The two quickly hit it off. As China’s luxury sales continue to soar, Tang has transformed himself from a comic book proprietor to the chief executive of a fully-fledged retail group that now distributes everything from high-end cars to vintage Bordeaux wines.

According to CBN Weekly, the majority of Sparkle Roll’s business comes from its auto dealership business. To win the distribution rights for Bentley in 2003, Qi had to convince Tang to invest big: hiring a sales team and building a large after-sales operation. That seemed a gamble when the carmaker – based in Crewe, England – was predicting sales of only six vehicles in China a year.

But the bet soon paid off. Qi said the company sold 30 Bentley cars in its first year of operation, far exceeding their target. Next it won exclusive dealership rights for Rolls-Royce and Lamborghini in the country’s capital.

Tang soon learned that the dealership business in China has its idiosyncrasies. Luxury car buyers are often newly rich entrepreneurs, speculators in property, the children of coalmine owners, or high-ranking government officials. They are usually demanding but generally inexperienced purchasers. They also care more about the presentational impact of their cars than the performance specs, says Tang.

To market his products, Tang doesn’t pay for advertising. Instead, his 30-person sales team attends banquets and hangs out at golf clubs to “drink and sweet talk” the rich, he admits. The goal is to keep his staff “always immersed in the circle of riches.”

It also helps to name-drop. Tang tells his sales people to talk about the recent purchases of China’s famous rich, which is more effective than celebrity endorsement.

“China’s wealthy people are a close-knit circle and they talk about luxury goods amongst themselves so once you establish a good rapport with them, it is not very difficult to sell them anything,” says Zhang Sijian, managing director of private equity firm Sequoia Capital, which made an investment in Sparkle Roll in 2009.

Another lure for Tang: a nation of new drivers known for its accidents. Some 80% of car sales are to first-time buyers. So Tang’s repair centres in Hebei and Tianjin are kept busy with scrapes and prangs. In 2009, service sales jumped five times compared with the year before, Tang told Bloomberg.

Sparkle Roll has since diversified into other luxury segments, including deluxe Swiss brand watches like Richard Mille, DeWitt and Parmigiani, as well as top-tier jewellery such as Boucheron.

One challenge that Tang faces is that some of the leading firms are wondering whether to continue paying the middleman – or to withdraw their distribution rights and enter the market on their own. Just last Friday, Burberry Group said it would buy out its Chinese franchises in a £70 million deal that will see it take direct control of its 50 stores on the mainland.

Tang thinks that more luxury goods makers will follow suit. But he’s still confident of finding new opportunities. Sparkle Roll has recently won the distribution rights for the French wine group, Duclot. It owns one of the world’s most expensive wine brands, Petrus, and accounts for 20% of the global sales volumes of the top 100 Bordeaux winemakers.

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