‘Discuss the Decision of Porsche to enter the Chinese Market’
The Austrian engineer Ferdinand Porsche founded the German automobile company Porsche in 1931. Porsche has become known as a innovative reputable brand thought out the world, being known for high quality of workmanship and cars produced. Porsche offer a limited range of model of cars from the probably best known 911 Supercar , Boxster, Cayman and Panamera and the 4x4 cayenne. All different models can attract different needs for the different need to appeal to a wider customer base. Yet they are cars that attract more middle to upper class as Porsche charge a premium for their models for the well-known brand and workmanship.
As the economy around the world has been hit hard over recent years Porsche still seem to be expand g and increasing revenue and sales its ‘revenues in the year which ended on July 31 2011 totalled €7.79 billion’ (Sapa, 2010) so they may wish to look further afield to introduce their brand into countries and regions that have not yet been able to access their brand of cars easily as their ever growing company showed in 2011 as ‘The sports car manufacturer delivered a total of 60,659 new vehicles in the first half of the year, 36.8% more than from January to June the year before’ (Byrant, 2011).
It is known that China has a growing middle class and it is evident that there is a lot of wealth in china which is very beneficial to Porsche. ‘China's booming economy is currently creating scores of new millionaires each year and is home to the world's biggest auto market’ (Reporter, 2011) this proving further it was a good market to choose to enter. Sales of ultra-luxury vehicles in China have increased by 30% in the past six months vehicle in China is on the increase and seen as a must have accessory for many people to indicate to figure of wealth which can be common within in Asia. It seems to be a good decision by Porsche to enter this market with the forecast that are shown as the number of cars in China increased twentyfold to an estimated 270m cars and motorbikes. ‘In the next twenty years, this is forecast to more than double again, which means there will be more cars in China in 2030 than there were in the entire world in 2000’ (News 2011)
China is the world's largest auto market after overtaking the US in 2009 (Times 2012) those proving the relevance for Porsche to enter the Chinese market also many Chinese people like to opt for the luxury brands and ‘designer’ names. “Chinese consumers are becoming increasingly brand savvy and Porsche is a very potent brand,” said Tim Urquhart, a senior analyst at industry consultant IHS Automotive (News 2011). Another beneficial factor for entering the Chinese market Porsche may have is that Chinese people have been buying cars on their looks and not looking at the price tag in many cases. In which can benefit Porsche as there designer have design unique eye catching cars that would fit this ideally. This can maybe be key factor in the future to sustain their stance in that market as the designer no that the look is very important within this market.
For a foreign business to be successful in China many have had to make it a joint venture with another company already in China. However as Porsche had already part merged with VW they already had a door of entrance into the market in which they could use.
However before Porsche entered this market there would have many considerations that they will have had to consider before entering the luxury car market. The Chinese government dislike super cars and do not want to promote them as they have an economy friendly focus. Also many people may not be able to have a can as there is nowhere to store the vehicle as the limited space in built up city’s in China which could affect who could even buy one, also Beijing has’ sharply restricted issuance of new vehicle registrations, handed out rebates to millions of buyers of fuel-efficient cars and is doubling the