Implications For Second- And Third-Tier Cities, Consumers Immense As High Speed Rail Set To Increase Connectivity
Bombardier's ZEFIRO technology features maximum operating speeds of 380 kph (Image courtesy Bombardier)
China’s already extensive, but in some places aging, rail system has benefitted greatly from the government’s massive stimulus spending over the last twelve months. Earlier this year, the New York Times noted that the Chinese stimulus plan — which targeted, among other infrastructure projects, highways and railroads — could likely be a key part of the development of China’s interior cities, many of which have yet to reap the same benefits of the country’s economic growth as their much larger, east-coast counterparts like Shanghai:
The [Chinese] stimulus plan, one of the world’s largest, promises to carry the modernity of China’s coasts deep into the hinterlands, buying the kind of great leap forward it took the United States decades — and a world war — to build, and priming China for a new level of global competition.
China will spend $88 billion constructing intercity rail lines, the highest priority in the plan. It spent $44 billion last year and just $12 billion as recently as 2004, said John Scales, the transport coordinator for China at the World Bank.
As 2009 nears its end, China’s investment in rail infrastructure has not slowed, and in fact remains relatively sustained, due to the size both of the stimulus package and the country itself. Recently, Bombardier Sifang — Bombardier’s Chinese joint venture — nabbed an enviable contract to sell 80 “super high speed” trains to China, a contract worth an estimated US$4 billion (27.4 billion yuan). From China Daily:
CSR Bombardier Sifang (Qingdao) Transportation Ltd, a joint venture of Canadian train maker Bombardier and CSR Sifang Locomotive and Rolling Stock Ltd, signed a 27.4 billion yuan contract with the Shanghai Railway Bureau, under which the company will build 80 high-speed trains.
Posted in Automobile, Business, China, Investment, Luxury
Tagged beijing, bombardier, China, chinese, city, efficiency, green, new york times, rail, railroad, second-tier, shanghai, third tier, transportation, travel
Japanese Luxury Automaker Plans To Open Beijing Showroom By Q1 2010
The Mitsuoka Orochi will retail for around 800,000 RMB (US $117,177) in China when it arrives next year
The growing Chinese luxury market is a prime target for many Asian companies that have found demand in their home countries — mainly South Korea and Japan — either growing at a snail’s pace or simply remaining stagnant. As formerly luxury-mad consumers in traditional markets like Japan cut back on their spending, high-end Japanese companies have started to look abroad for more opportunities, with China remaining the natural choice as a result of its proximity and massive population.
Recently, Japan’s Mitsuoka Motor Co., one of the country’s major luxury automakers, announced their plans to enter the Chinese market next year, starting with a showroom in Beijing that is slated to open in April. To lead their China efforts, the company will display their Orochi model at next year’s Beijing Auto Show and follow up their Beijing strategy with new dealerships in other top-tier cities:
The Orochi will spearhead Mitsuoka’s debut into China. The company plans to display the car at next year’s Beijing Auto Show, and to open dealerships in Beijing, Shanghai and Guangzhou.
Posted in Automobile, Business, China, Investment, Luxury
Tagged auto, Automobile, beijing, car, China, Economics, guangzhou, japan, japanese, Luxury, mitsuoka, mitsuoka orochi, orochi, shanghai, vehicle
Country Should Overtake Japan As Second Largest Diamond Market By Sales Volume Within The Year
Diamonds are a "must have" for China's growing luxury consumer class
Falling demand for luxury products of all shades has vaulted China to the top of many lists this year, as demand in developed markets has fallen for everything from luxury cars to five-star hotels. With China’s massive population and growing middle class, even gradual growth in demand can mean a great deal for luxury brands, so diamond producers can continue to be optimistic about the potential for their products in China — soon to be the world’s second largest diamond market by sales, if the projections of Freddy Hanard, chief executive officer of the Antwerp World Diamond Centre, are correct.
As the Financial Times writes today, Hanard predicts that diamond sales in China should continue the double-digit growth they saw in the first half of the year to continue throughout the second, and says that sales could possibly double in 2010. As the thirst for luxury products continues to spread in China’s second- and third-tier cities, and wealthier Chinese maintain their desire to diversify luxury and high-value holdings — something that we have seen in recent years as they’ve increasingly purchased luxury cars, gold, rare watches and jewelry, fine wine, contemporary art from China and elsewhere, and real estate — diamonds will probably remain strongly in demand according to all indications.
“China is the world’s fastest growing diamond market. And it can go very fast. It is still discovering diamonds,” said Mr Hanard.
Posted in Art, Automobile, Business, China, Chinese Art, Culture, Economy, Investment, Luxury
Tagged Art, auction, beijing, China, chinese contemporary art, contemporary art, diamond, diamonds, diversification, gold, guangdong, Investment, Luxury, shanghai, shaun rein, sotheby's, watch, wealth, wine
High-End Buyers Unfazed By Government’s Tax Increase, Pushing Luxury Brand To Higher Sales Figures
Porsche debuted its new Panamera at the Shanghai Auto Show this year, indicating its commitment to the Chinese auto market
If Porsche’s top executives were concerned last year when the Chinese government imposed a higher tax on high-end imported European vehicles, they can now breathe a sigh of relief, as sales figures indicate that the tax hike did nothing to slow Porsche’s growth in the mainland — and actually may have had the opposite effect. Among China’s business elite and/or nouveau riche circles, conspicuous consumption has become a way of life, and as such owning a car for which you had to pay upwards of $35,000 in import taxes alone is a good way to flaunt your cash.
As the Globe and Mail points out today, China’s import tax seems to benefit all parties involved — from the car companies who are recording record profits in China, to the government offices collecting mountains of tax revenue, to the conspicuous consumers cruising around Beijing or Shanghai in their pricey sports cars:
Shortly after the Beijing Olympic games last summer, the Chinese government slapped a hefty luxury tax on imported European cars with high-horsepower engines. Klaus Berning, the Porsche executive vice-president of sales and marketing who attended the Frankfurt Auto Show, said the tax added $35,000 (U.S.) or more to the price of a Porsche.
Posted in Automobile, Business, China, Luxury
Tagged canada, China, chinese, germany, globe and mail, import, import tax, porsche, tax, treasury
Will Bentley Follow The Success Of Rolls-Royce In The Chinese Market? Or Will More Chinese Luxury Buyers Opt For Rival Brands?
The Bentley Mulsanne includes many features popular in the Chinese market, such as a spacious interior and chauffeur-ready driver's seat
As we’ve pointed out time and time again, with the global doldrums cutting into the vehicle budgets of many luxury consumers in developed markets like North America, Japan and Europe, high-end car companies like Rolls-Royce have increasingly looked to emerging markets like China to get them through the economic crisis and create a new, loyal buyer’s market. As Chinese luxury models become more prevalent (and popular) over time and truly begin to rival the dominant luxury models by BMW, Mercedes-Benz and Porsche, automakers at the highest end are already starting to plan ahead for a strong China strategy to ensure their brands remain at the top of the heap for years to come.
Following the lead of the 2010 Porsche Panamera, which was unveiled at this year’s Shanghai Auto Show, Bentley has taken the lid off of its 2011 Mulsanne, with what is sure to be an eye towards the Chinese market — where the country’s ultra-rich still have no domestic alternative that can match Bentley quality. After making its initial debut in August, the Mulsanne has become the talk of the high-end luxury scene, not least because it is the first all-new Bentley model to roll off the production line since the 1930s. As Motor Authority writes, though this car is most certainly beyond the budgets of most lustful car enthusiasts, it is a sight to behold and has an engine to match:
Posted in Automobile, Business, China, Luxury
Tagged Audi, auto, automotive, bentley, bentley mulsanne, bmw, car, China, chinese, ferrari, mercedes, mulsanne, porsche, rolls-royce, sports, vehicle
Breakneck Development Of Luxury And Cultural Sectors In Last 20 Years Indicates That Chinese Luxury Consumers Will Be A Huge Global Force For Foreseeable Future
By 2020, China will be a global financial powerhouse -- but what will luxury consumers be buying by then, once they've made their first "big" purchases?
Over the last few weeks, as the ongoing global economic woes further put China, and its relative insulation from the worldwide crisis, in the spotlight as a luxury and business “success story” we have seen a much stronger focus on the Chinese consumer. Observers look to Chinese consumption as one of the keys to a faster global recovery, and luxury watchers see news like store openings in China, auction results, and even stories of wealthy Chinese tossing their wealth around freely as signs that the Chinese upper-middle and upper class are spending again. Today, an article in Wealth Bulletin hints that luxury executives who are worried that the Chinese market is not solid enough to invest their full faith into that consumer class can breathe a tentative sigh, as they cite the Julius Baer Luxury Brands Fund’s 27% rise in Euro terms, versus a 17% rise in the MSCI World:
Julius Baer said in a report today it predicts profit margins will remain in double digit territory for many luxury companies, despite the global economic slowdown.
These bullish findings indicate that the global wealthy are still buying luxury goods, which is, in some ways, unsurprising — but this has to be qualified by looking into how these numbers have risen. Although the Julius Baer index notes a rise, it does not break down the demographics of who is buying high-priced luxury goods. Based on other data, it seems that the influence of emerging wealthy consumers from places like China and, to a lesser extent, the Middle East and India, who are bolstering the luxury market.
Posted in Art, auction, Automobile, Business, China, Chinese Art, Culture, Economy, Investment, Luxury
Tagged Art, art collection, auction, China, crisis, financial crisis, gold, guardian, Investment, Luxury, poly