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BMW has ambitious China plans

Being present at the Shanghai Auto Show is a must for German premium-segment carmakers, but the Chinese market is changing. BMW China chief Karsten Engel spoke to DW at the Show about his company's strategy.

DW: How important is the China business for BMW?

Karsten Engel: Our China business has steadily gained in importance for many years and has turned into an unbelievable success story for BMW. One just has to  remember that in under 20 years - from 1994 until now - we've increased our sales from a few hundred units to 300,000 BMWs and Minis. That's meant enormous growth year in year out, coupled with strong production facilities on the ground and a big development center for the models we produce in China itself. We have a workforce of 20,000 in our own company and our trading firms. Hence China is currently BMW's market with the biggest strategic importance.

But isn't the end of this growth story in sight yet?

If you look at the cars-per-inhabitants ratio, you'll see there still a long road ahead of us. But in big cities such as Beijing and Shanghai we'll certainly see the beginning of market saturation in the years ahead. But at present there are still over 100 cities in China with more than one million inhabitants where there are no premium-segment car suppliers at all. There's a huge potential yet to be tapped. And we're working on this and installing car dealers there.

How important are local production facilities?

They're incredibly important. We want the locals to perceive us as a company that's part of their society. And we want to learn from them. We have to show respect for the values and culture on the ground. If we don't do that, we'll end up on the sidelines. In other words, without local production facilities you cannot really be successful. We'll shortly mark the 10th anniversary of our joint venture with Brilliance on the Chinese market. We've seen that our cars are accepted to an ever greater extent. We'll invest more in China and will also grow further as a result.

Whoever wants to make brisk business in China needs a strong local partner. You've just mentioned your own joint venture here. But don't you repeatedly face cultural problems while cooperating?

Karsten Engel, head of BMW China Photo: Frank Leonhardt/dpa

Karsten Engel says the Chinese market is BMW's most important

Of course. It's like in a relationship between spouses with equal rights. They'll have an argument once in a while. And so we have to discuss the problems, in order to work together to achieve our common objectives. It's our aim to grow further in China. We've jointly built up something out of the ordinary. Our relationship with our business partner is excellent, and we're certain it'll remain that way in the future.

What's your take on plagiarism, meaning the copying of your cars, with the copies almost looking identical to genuine BMW vehicles?

Well, of course that's something we can't tolerate. Trademark protection regulations apply to China as well, no question about it. And if violations become known, you have to take legal action against them. On the other hand, the Chinese only tend to copy things they consider brilliant - but which they can't really afford. A Chinese person who can afford a BMW would never want to have a copy.

What are your medium-term objectives in the Chinese market?

With our BMW and Mini brands we logged 40-percent growth a year over the last few years. That's an incredible achievement. This year we reckon with far less, but it'll be a double-digit growth rate. And although we want to increase our market share, I'd be glad if growth rates are not so high in the years ahead. If you open 40 to 60 new showrooms every year, it's difficult to focus enough on quality. We want to invest more in business segments which haven't been explored so much so far, like after-sales, used cars, fleet sales and financial services, and get our dealers involved in these fields. A lot of training will be involved for 239,000 people in China this year alone, accounting for about a half of our workforce globally. We're investing more to ensure quality and thus to achieve the customer satisfaction that we need.

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