Automakers are ramping up their operations in China to take advantage of record-breaking growth in vehicle sales. China replaced Japan last year as the world's second-biggest auto market, and industry experts predict the growth will continue as the country's booming economy encourages greater consumption of luxury goods. VOA's Mil Arcega reports.
For automakers, China is the new frontier: the world's fastest growing market with millions of new consumers. Even more attractive to foreign retailers is the emerging class of young successful Chinese.
"This new group, which they define as 'Tweens' - it's a combination of the words teens and in-between," says Charlotte Rylme, general manager at the Swedish Trade Council. "They have a new job, they earn a lot of money, and they live and stay at home with their parents, some of them, and they are very attracted to buy foreign brands, so they are very attractive for foreign retail companies. And they buy more than 300 billion RMB ($40 billion) annually."
They are also buying a lot of cars. More than 7 million new cars were sold in China last year. This year the number is expected to surpass 8.5 million.
Swedish carmaker Volvo expects to double its sales in China this year. Company Vice President Lex Kerssemakers says in China, having a good brand is the key to success. "You see people walking around here with all sorts of branded stuff, from sunglasses to jeans to trousers," he says. "So they are very brand focused. Volvo has a good reputation here from the past, and what we need to do is, we need to continue to build on that reputation and strengthen our premium in a market which will be very premium oriented."
Although the competition is fierce, car dealer Eddie Lai says Chinese consumers like to buy cars that show how worldly and how successful they are. "The economy is growing, the society is growing, and young people are getting more on an uptrend scale," he says, "and they are going to fit into the lifestyle as in the European countries and American country, and it's the status symbol in China. It is a status symbol for the young generation to demonstrate that they are successful, that they are intelligent, that they are up on society's expectations."
Carmakers are capitalizing on those expectations by increasing production quotas. While factories are closing in North America and Europe, new plants go up almost daily in China. Industry executives project the Chinese market could grow to 20 million vehicles per year by 2020.