Development of Car Financing in China

Résumé du document

Many people around the world view China as a poor country where every single person has to work around 60 hours per week to survive and feed his family. However, this old fashioned cliché is no longer true. China has woken up and has already managed to shake the world economy. A new step towards internationalization was its decision to join the World Trade Organization (WTO). China became a part of the organization on the 11th of December 2001. The Asian country now has a GDP of 2.68 trillion dollars and competes with nations such as USA and the European countries. Furthermore, the Chinese GDP has experienced a two figures growth rate since a couple of years. This makes it the fastest growing economy of the decade. The economy is getting increasingly liberalized, and the increasing wealth has had an impact on the per capita income. The average income is around $ 1,000 but the urban population enjoys a per capita income of over $ 3,000. It is noticeable that the differences are very high but a category of the population will enjoy high entertainment consumption due to it.

Extraits

[...] The unemployment rate is around of the population (according to estimation in 2006). The urban area doesn't really face the unemployment problem. The employees which are disappointed by a work or by the way they are treated in a factory will have the possibility to change the company they work for very easily. It is an important difference with the European industry sector. But including a Human Resources Management consideration in an Asian country can be used as a tool to build up a brand image. [...]

[...] In the car industry, lobbies are very important as long as they can influence the government to take decisions in their favor. Improvement of relationships to local authorities To deal with the problem of corruption is an important task for every company, which wants to enter the Chinese market. The local authorities are known for the expectance of allowances. That is especially in China a remarkable topic because the local party officials have much power and are independent in many questions and decisions. [...]

[...] Now of the urban population has a TV set at home. Commercial on TV seems to be the best way as long as the per capita income is $ 3,000 for this part of the population. The rural population is not concerned by car purchasing for the moment so there is no need to find another way with the aim of reaching all the Chinese population. This large communication plan should explain how the profit of a loan works with simple words. [...]

[...] The Chinese car market is right now the second biggest in the world and will increase with the Chinese middle class. The underdeveloped financing sector promises a huge growth and excellent opportunities. No action could not only mean loosing any revenue in this particular sector, but also worse the situation of a company's car sales. Action is unlike doing nothing at all most of the time the better opportunity in international business. A reaction on a trend will often decrease the company's previous possible prospects on success. - References - Czinkota, Michael R., and Ronkainen, Ilkka A. Ronkainen. [...]

[...] It is very important to have good relationships to the local communities. But it is quite questionable if the governmental bureaucracy will really create fair business conditions. Due to the fact that many domestic companies are still public, there have often a competitive advantage. Also there is a theoretical equality, there are different treatments. To an improvement of this problem could for instance lead a joint venture, but this is connected with other problems and difficulties. Coalitions and Cooperation A possibility to create a good starting point in the car financing market for a foreign financial service provider could be a coalition with a domestic car manufacturer. [...]