BMW in China: From Entry to Dominance

Introduction
"In the next five to 10 years, China will be the biggest market for all brands and become a big area of competition," said Christoph Stark, president and CEO of BMW Group Region China to the China Daily reporter. "The most important thing is to be highly flexible and take chances, but also be prepared for some possible downturns in the market," Stark said. "For us the most treasured thing is the brand," he concluded.
Hours later, while sitting in his study, overlooking the Shanghai skyline at night, Stark thought back to his comments earlier. As head of the China operations, it was up to him to ensure that the company preserves its market dominance. However, he realized that the
For more information on the auto industry, the effects of the financial crisis and the future challenges – see APPENDIX 1.

Entry to the Chinese Market – a New Strategic Initiative
Why did BMW enter the Chinese market? 1. China has the biggest population in the world, which meant a huge potential market for BMW. 2. The Chinese economy developed dramatically. From 1978 to the year 2006 - the average annual growth of Chinese GDP is 9.67%, far above the world average of 3.3% at the same time – see APPENDIX 2: graph 1. 3. The Per capita income for urban residents increased very quickly. The affluent segment, which BMW targets, is growing rapidly - see APPENDIX 2: graph 2. 4. The car industry in China was under-developed, so the demand couldn’t be met by local producers alone. Therefore, there was a huge market for foreign producers as well. 5. China’s urbanization offers vast long-term opportunities to the automotive industry, as does the country’s huge investment in infrastructure (both in the cities, and in connective routes). 6. With a growing disposable income, Chinese consumers became increasingly interested in purchasing high-quality luxury goods, which also served as a symbol of their success and internationalization. As the Chinese automotive industry was yet underdeveloped and lacked the necessary expertise and know-how to manufacture high-quality world-class automobiles, entry to the Chinese market by existing