A Foreign Businessman’s Observations from China

Geoff Broderick

What’s the first thing most first-time visitors notice when de-planing through the gates at Shanghai’s Pudong airport, or Beijing’s Capital airport? It’s the size of the place. Everything is big, even by American standards: big halls, big seating areas, big restaurants, long queues and people everywhere.

What’s the second thing a foreigner notices upon arrival? There is so much coming-and-going—with people moving in all directions (their shoes loudly clacking against the ground), groups of people gathered together engaged in shrill conversation, and the constant call of the airport’s public address announcer calling out flight update information—everything appears to be occurring in a state of perpetual pandemonium.

But once you become adjusted to the pace and din of China—inside the airport and outside during day-to-day living—the pandemonium becomes much easier to understand and digest. It is chaotic, to be sure, but it is an organized chaos, with its own unique Chinese ebbs and flows.

Of course, to help you along your way, it helps to speak some survival Chinese (see below), but this is not mandatory. Taxi cab drivers will get you where you need to go if you have written instructions to share with them. But for a first timer in China, an urban taxi ride can be quite an adventure. Aside from the numerous near misses with other cars that you will invariably experience along the way, you’ll be fascinated by the activities on the highways: stopped cars with drivers looking at maps in the middle of the lane; lane markers that are haphazardly followed; or the sight of a $300,000 Porsche being driven alongside a horse-drawn cart on a busy thoroughfare. And that’s just the beginning.

China’s Car Traffic Follows Maritime Tradition

The most important driving safety tip to pass along, however, is that in China, all cars seem to follow the maritime tradition known as the “law of gross tonnage.” Simply translated, just as the little ships are responsible for giving the larger ships the right of way in difficult-to-maneuver situations, small cars are expected to give way to larger cars. And why not? Besides the practical safety aspect involved for the smaller cars, it makes perfect sense that a smaller and more maneuverable vehicle should get the heck out of the way of a larger and more imposing car.

China’s Energy and Excitement is Contagious

In my brief three months in China, I have developed a strong appreciation and affinity for the country. The energy and excitement in China is contagious. The food, the sites, the everyday experiences are terrific. And when you adopt Chinese customs, you find that the people are quite welcoming to foreigners. The best way to adapt to life in China is deep immersion. For starters, if you live in a city, forget the taxis and take the subway. You will have to push and shove your way on and off the cars, but that is expected and completely acceptable. In America, we say that “if you do not ask you will not get.” In China, there is a similar mentality; one who hesitates will get nowhere—whether it be on a subway, in a train ticket line, or at the grocery checkout.

The Amazing Story of China’s Burgeoning Auto Industry

So what about the automotive industry in China? It’s quite an amazing story so far, and even more intriguing is that the story is still just in its beginning stages. Without question, the center of gravity of the automotive world has shifted from West to East, and to China in particular.

The emerging markets in aggregate held less than a 20% share of the world market in 2005, but in just five short years, that share doubled to more than 50% by the end of 2010. The sales baton has clearly been handed to the emerging markets and they are, led by China, a quarter lap ahead of the field and not looking back as the country continues to extend its lead.

Aside from the explosive potential in China’s automotive industry, what I find most stimulating is working with the country’s OEMs and dealers. Few business professionals born before 1969 or so will have an advanced college degree. As a result, OEM executives are quite young by western standards and also quite open to learning from others in the industry.

China Auto Sales Could Double by 2018

In the automotive arena, what is China’s potential? A lot can happen in the next few years, but by 2018, total light-vehicle sales could hit 35 million units, which would double China’s current sales volumes. How is this possible? I plan to offer more detailed thoughts in my next entry. The rapidly rising discretionary incomes—especially in Tier 2 through Tier 4 markets—in addition to very small vehicle density and penetration, and the opening of personal credit markets, will be large contributors to increasing sales volumes.

However, China is still a country of “haves” and “have nots.” The wealthy are getting wealthier at a faster pace than a middle class is developing. A vast majority of the country is still agrarian. But the Chinese have been capitalist longer than America has been a country. Money drives all decision-making, and there is a lot of money to be made in the automotive industry in China—for everyone.Geoff Broderick, vice president and general manager of Asia Pacific Operations at J.D. Power and Associates

Survival Chinese Lesson 1:

Ni hao – Hello

Xiexie – Thank you

Duibuqi – Sorry

Ziajian – Goodbye

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