Richard Branson (Virgin) to save Honda together with Adrian Reynard?

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Originally Posted by ioan

You can't buy new BMW's with monthly paychecks between 100 and 200 Euros.
And I doubt that the salary will go up to almost 2000Euro in just 5 years!

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ioan. I bow down to your superior knowledge.

Just one thing. Can you provide a link to where it says that the top 0.01% of the population of China earn €1-200?

I wonder what the really poor people in China earn :?:

To get you started, I dug up this.

http://www.ibtimes.com/articles/2007...e-increase.htm

Average urban earnings $250 showing year on year growth of 19%

Therefore, average annual earnings if using this model will be $10,140 by 2014

NOW that is average annual earnings.

As I said, I was using the top 0.01% for China as opposed to the 0.1% of Americans who purchased a new BMW last year.

Link Please

:D

(Just joking)

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Originally Posted by Knock-on

ioan. I bow down to your superior knowledge.

Just one thing. Can you provide a link to where it says that the top 0.01% of the population of China earn €1-200?

I wonder what the really poor people in China earn :?:

To get you started, I dug up this.

http://www.ibtimes.com/articles/2007...e-increase.htm

Average urban earnings $250 showing year on year growth of 19%

Therefore, average annual earnings if using this model will be $10,140 by 2014

NOW that is average annual earnings.

As I said, I was using the top 0.01% for China as opposed to the 0.1% of Americans who purchased a new BMW last year.

Link Please

:D

(Just joking)

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What is the urban to rural ratio of Chinese population? I confess I don't know but I suppose the former ones are in the minority.

Also they can't have 19% earnings growth every year, not when the yearly economical growth seams to be already under 10%.

I come from a land where there was 9% growth last year, and many wages went up with some 25% every year in the last 4 years, still among those that are not children, disabled, jobless or retired 80% are living with wages of max 400 Euros, another 19% get close to 1000 and 1% earn more than 1000 Euros.

Even with 1000 Euros/ month you can hardly dream about buying a car that costs some 30000.

The ones who buy one are those that earn in excess of 2000 and even they will need to take up a 5-10 years credit to do so.

IMO China and India are for now the greatest markets for psuh pedal bikes and small bikes, and maybe for the new Tata mobile (can't call that a car).

They will need at least another 10-20 years of sustained economic growth to be able to claim that they can buy more BMW's than in the US.

;) :)

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Originally Posted by ioan

IMO China and India are for now the greatest markets for psuh pedal bikes and small bikes, and maybe for the new Tata mobile (can't call that a car).

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You're right, China isn't the largest car market in the world, its the second, and only the third largest car maker in the world just ahead of Germany but behind Japan and the USA.

Given the slump in car sales in America, it might already be the worlds largest:

http://www.ft.com/cms/s/0/fe07ae0c-f...nclick_check=1

What is exciting companies like BMW about China is that 50% of all car sales are to private individuals, people who can be influenced strongly by brands.

Even if BMW has a tiny share of the market, the market itself is so large that it would make a big difference for them. They better get in quick though, the Japanese and VW have been there establishing market share for years.

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Originally Posted by Knock-on

25? you're joking right.

5 Max! They are the fastest growing economies and set to explode.

As Markability says, follow the money. The US and Europe are leaking investment to the far East and Subcontinent.

How many people in America are buying New Beemers? About 0.1% of the population.

Then consider that Mercedes and BMW are seen as huge statements of wealth in China and you will understand that a very small shift in the wealth of the top 0.01% of the population there and you see why they are so important.

This and the cheap labor probably explains why they have stuck a few factories in China and India.

Sorry for going off topic again. Anything going on with Honda yet ;)

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China may be the second largest car market in the world. but the products being sold there are mostly chines made vehicles and knockoffs of the BMW's and Audi's so much so that the German chancellor had to get involved and express dismay at the blatant copying of German cars.

It will be a long time before Chinese people will be buying BMW's at the rate that the US does. They are simply not at the point in their economy where purchasing a luxury car is seen as affordable to their "middle class"

Also their protectionism laws especially with regard to foreign cars makes it difficult to compete in that market. Only the really wealthy are able to afford a BMW, Mercedes, or Audi in that country.

China's economy has grown in a staggering amount, but the average consumer purchasing power has not matched that growth. The vast majority of their economic power is embedded in state industry, large conglomerates with heavy state influence and their ability to produce goods with a vast amount of "cheap labor". This in turn means the average Chinese is lagging far behind their economy in wealth growth as their mantra over there is sacrifice and hard work for the good of the nation.

A classic example would be the Olympic games. Where hundreds of thousands of people worked to produce incredible venues, clear up the air in Beijing, clean up the city, and build hotels, housing and infrastructure to accommodate the games. Most did not get paid, many were bused out of the capital once the job was done, there were sever penalties for not keeping on schedule resulting in many earning pennies for their work etc, etc,etc. The end result may strengthen the nation but not the individual.

The growth of an economy is not as closely correlated to the growth of individual purchasing power as you might think. The current Chinese regime will make it difficult for any foreign car manufacturer to do well in that nation.

India, while more democratic and capitalist, still levy's heavy protectionism on their car industry, with more and more Indian made cars hitting the market. It will be a long time there as well before BMW will see fit to call either of these countries a major market to which they would invest building a car plant there to satisfy the demands.

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Originally Posted by truefan72

China's economy has grown in a staggering amount, but the average consumer purchasing power has not matched that growth. The vast majority of their economic power is embedded in state industry, large conglomerates with heavy state influence and their ability to produce goods with a vast amount of "cheap labor". This in turn means the average Chinese is lagging far behind their economy in wealth growth as their mantra over there is sacrifice and hard work for the good of the nation.

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This simply isn't true. 50% of car sales are to private individuals in China, this is a greater proportion than in the UK for example where the majority of sales are to either companies or the state. The massive rise in consumption over the past few years in China has been most marked with domestic goods, TVs, fridges etc etc. Look at the cars that are selling, most of them are passenger cars aimed at domestic users, not targeted at state industry. Again that is due to the rise of the middle class. The state is of declining importance in terms of influencing consumption.

Of course the majority of Chinese are not in a state to afford these goods let alone a car, but for China to be an important car market it only requires a small middle class.

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Originally Posted by ioan

What is the urban to rural ratio of Chinese population? I confess I don't know but I suppose the former ones are in the minority.

Also they can't have 19% earnings growth every year, not when the yearly economical growth seams to be already under 10%.

I come from a land where there was 9% growth last year, and many wages went up with some 25% every year in the last 4 years, still among those that are not children, disabled, jobless or retired 80% are living with wages of max 400 Euros, another 19% get close to 1000 and 1% earn more than 1000 Euros.

Even with 1000 Euros/ month you can hardly dream about buying a car that costs some 30000.

The ones who buy one are those that earn in excess of 2000 and even they will need to take up a 5-10 years credit to do so.

IMO China and India are for now the greatest markets for psuh pedal bikes and small bikes, and maybe for the new Tata mobile (can't call that a car).

They will need at least another 10-20 years of sustained economic growth to be able to claim that they can buy more BMW's than in the US.

;) :)

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ioan

I really wish you will re-read my posts and the link provided.

I was talking about the top 0.01% of the population of China (and India for the sake of arguement)

This represents a market of 250,000 very wealthy individuals that aren't going to go hungry if they buy a new Merc or BMW.

Now, 250,000 potential customers is a significant market but shift that percentage up by a factor of 10 to 2.5m potential customers and it is compulsive. It is a fact that China, in the example I gave, is experiencing nearly 20% earnings growth up to 2007 and although there is a global slowdown, will still experience the best worldwide growth over the next 5 years IMHO.

THAT is why BMW are/has been building factories in China and India to capitalise on this opportunity.

Anyway, lesson in economics over as this really has very little to do with F1 as has been pointed out. It doesn't matter if you accept it or not.

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Originally Posted by truefan72

It will be a long time before Chinese people will be buying BMW's at the rate that the US does. They are simply not at the point in their economy where purchasing a luxury car is seen as affordable to their "middle class"

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Exactly.
I would add that they have a very long way to go until they will have a "middles class", meaning that at least 30% of the people should be part of a social class that can live a normal life by today's standards.

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Originally Posted by Knock-on

ioan

I really wish you will re-read my posts and the link provided.

I was talking about the top 0.01% of the population of China (and India for the sake of arguement)

This represents a market of 250,000 very wealthy individuals that aren't going to go hungry if they buy a new Merc or BMW.

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I understand that, but what if those 250.000 people don't want a BMW but a Merc, a Porsche, a VW, and Audi, Peugeot, Citroen, Renault, Chrysler, Lexus or other high end model?!

You see, they need at least a few millions people in a wealthier middle class in order to sell the 300000+ BMW that were sold last year in the US as they will not buy only BMWs.

I dont know about the current % of middle class Chinese, but I saw a hell of a lot of BMW's, Merc's and Audi's on my last trip to China last year.

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Originally Posted by 555-04Q2

I dont know about the current % of middle class Chinese, but I saw a hell of a lot of BMW's, Merc's and Audi's on my last trip to China last year.

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I see plenty of them in Romania too, it doesn't mean too much though when you look to the actually sold BMW's numbers.