Auto Industry

Stark results

How BMW conquered China

Stark results

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BMW’s famed circular logo is a reminder of its early days as an aircraft-maker. The blue and white quadrants are supposed to convey the idea of fast-moving propellers. But in China the brand is associated with a more ancient means of transport: the horse.

BMW’s Chinese name is ‘Bao Ma’, which means ‘treasured horse’. It’s a very appealing name for Chinese consumers: it conjures associations with an illustrious breed of horse from Inner Mongolia famed for its speed and endurance.

Perhaps some of that translates into BMW’s soaring sales numbers. Last year, the German manufacturer sold 168,998 vehicles, an increase of 87% over its 2009 performance. The Financial Times Chinese website even claimed a few days ago that over the past five years as many as two in three high net worth individuals in China had bought a BMW. Some netizens later disputed this statistic as an overestimate – the true number of high net worth people requires a lot of guesswork – but the general drift of the FT stat is not in dispute: BMW is a big hit with China’s rich.

It wasn’t always so. BMW entered China in 1994 and initially had problems managing its joint venture. As recently as 2003 it sold only about a tenth of its current sales volume, with the Chinese market a tiny fraction of global sales.

But the carmaker moved up through the gears after recruiting Christoph Stark in 2004 to run its operations in China, Hong Kong and Taiwan. German-born but Mandarin-speaking, Stark had studied at Peking University and later worked in Taiwan with B. Braun Melsungen. He joined BMW from Mercedes-Benz. “His understanding of China’s auto market as well as Chinese culture is rare among foreigners,” reckons the Economic Observer.

The newspaper says that Stark made two key decisions that led to double-digit growth in the years ahead. In 2005 he reduced prices and in late 2006 he launched a specially-modified version of the 5 Series for the China market – with an extended wheelbase to make it longer (more suitable for a market in which many of those who can afford a BMW are also likely to be chauffeured and thus require more backseat leg room).

Within five years of Stark’s arrival, sales surged to 90,000 and last year the Munich firm outsold Mercedes-Benz, its archrival from Stuttgart, by 20,000 cars. Time Weekly calculates that China now accounts for four in every 10 BMW 7 Series sold worldwide.

Much of the success comes down to the local cachet of owning a BMW, although the company is increasingly cautious about being seen as too elitist. Hence Stark must have had mixed feelings when a female contestant on hit TV dating show If You Are the One gave BMW some free publicity last year by dismissing a male suitor as too poor, saying “I’d rather be crying inside a BMW, than smiling on the back of your bike” (see WiC68). The cutting phrase – which implied she’d rather be the unhappy mistress of a rich man than love a poor guy – went on to become an internet hit.

The timing was not ideal for Stark. He was launching a new marketing campaign to reposition the BMW brand, reports Economic Observer, in a conscious attempt to distance his cars from being synomous with the “heartless rich”. The new ‘Joy’ campaign has sought to tap elements of Chinese culture (such as Peking Opera), and focus on lifestyle themes. Stark also wanted to move the message away from engineering towards a more humanised brand.

The goal: to reach out to the increasingly affluent young professionals who are a core demographic for BMW in Europe and the US.

Repositioning a brand is always a tricky thing – especially when the previous approach had delivered such obvious success. But perhaps Stark had picked up on government anxiety about the increasing rich-poor divide and didn’t want to become one of the more visible symbols of China’s growing income inequality. Or maybe Stark just realised the need to broaden the brand’s appeal to new potential customers. After all, next year BMW’s Chinese JV (with Brilliance Auto) will open a new factory which will make an extra 100,000 vehicles a year.

That’s a lot more cars to sell…

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