Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold Is the Winner of the U.S. Presidential Election - 31st Oct 20
Gold and Silver Prepare For Another Price Advance - 31st Oct 20
Gold Is Likely to Win This Election - 31st Oct 20
Why Trump Can Still Win 2020 Election - Establishment Mainstream Media Wrong Again? - 31st Oct 20
Why Budgies Need their Own Feeders - Parakeets Feeding UK - 31st Oct 20
Can Trump Still Win? US Presidential Election Forecast Matrix 2020 - 30th Oct 20
Why a Biden Win will Keep Metals Prices Rocking - 30th Oct 20
Is Silver the Next Bitcoin? - 30th Oct 20
A New World Monetary Order Is Coming - 30th Oct 20
Do These Explanations Make Sense for This Intraday Stock Market Turn - 30th Oct 20
US Presidential Election Forecast Matrix, Stock Market Uncertainty - 29th Oct 20
Stock Market Turning? Look For These Support Levels - 29th Oct 20
Silver: A Conceivable Dead-Cat-Bounce on the Cards - 29th Oct 20
Stocks are Strong but be Aware of this Continuing Pattern - 29th Oct 20
The Most Profitable Way To Play The Gold Boom - 29th Oct 20
Why You Should Hire An Accountant To Complete Your Tax Return - 29th Oct 20
Global Banking: Some Sectors Look as "Precarious as Ever" - 28th Oct 20
Silver Price Minor Dip Possible Before 2nd Major Upleg Starts - 28th Oct 20
�� How to Carve a Simple and Scary Pumpkin Face for Covid Halloween 2020 �� - 28th Oct 20
Gold Price One Last Dip Likely Then Major Upleg to New Highs - 28th Oct 20
Smart Money Is Going All-In On This New Gold Frontier - 28th Oct 20
Gold Stocks Still Correcting - 27th Oct 20
Gold and Crypto: Is This How Charts Look Before A Monetary Collapse? - 27th Oct 20
Silver's Coming Double Trigger Shotgun Price Explosion - 27th Oct 20
The $126 Billion Gold Opportunity in Australia - 27th Oct 20
Tips to Breeze through Your Spanish Classes Online - 27th Oct 20
Try The “Compounding Capital Gains” Strategy Today - 26th Oct 20
UK Coronavirus Broken Test and Trace System, 5 Days for Covid-19 Results! - 26th Oct 20
How the Coronavirus is Exacerbating Global Inequality, Hunger - 26th Oct 20
The Top Gold Stock for 2021 - 26th Oct 20
Corporate Earnings Season: Here's What Stock Investors Need to Know - 25th Oct 20
�� Halloween 2020 TESCO Supermarkes Shoppers Covid Panic Buying! �� - 25th Oct 20
Three Unstoppable Forces Set to Drive Silver Prices - 25th Oct 20
Car Insurance And Insurance Claims and Options - 25th Oct 20
Best Pressure Washer Review - Karcher K7 Full Control Unboxing - 25th Oct 20
Further Gold Price Pressure as the USDX Is About to Rally - 23rd Oct 20
Nasdaq Retests 11,735 Support - 23rd Oct 20
America’s Political and Financial Institutions Are Broken - 23rd Oct 20
Sayonara U.S.A. - 23rd Oct 20
Economic Contractions Overshadow ASEAN-6 Recovery - 23rd Oct 20
Doji Clusters Show Clear Support Ranges for Stock Market S&P500 Index - 23rd Oct 20
Silver Market - 22nd Oct 20
Goldman Sachs Likes Silver; Trump Wants Even More Stimulus - 22nd Oct 20
Hacking Wall Street to Close the Wealth Gap - 22nd Oct 20
Natural Gas/UNG Stepping GAP Patterns Suggest Pending Upside Breakout - 22nd Oct 20 -
NVIDIA CANCELS RTX 3070 16b RTX 3080 20gb GPU's Due to GDDR6X Memory Supply Issues - 22nd Oct 20
Zafira B Leaking Water Under Car - 22nd Oct 20
The Copper/Gold Ratio Would Change the Macro - 21st Oct 20
Are We Entering Stagflation That Will Boost Gold Price - 21st Oct 20
Crude Oil Price Stalls In Resistance Zone - 21st Oct 20
High-Profile Billionaire Gives Urgent Message to Stock Investors - 21st Oct 20
What's it Like to be a Budgie - Unique in a Cage 4K VR 360 - 21st Oct 20
Auto Trading: A Beginner Guide to Automation in Forex - 21st Oct 20
Gold Price Trend Forecast into 2021, Is Intel Dying?, Can Trump Win 2020? - 20th Oct 20
Gold Asks Where Is The Inflation - 20th Oct 20
Last Chance for this FREE Online Trading Course Worth $129 value - 20th Oct 20
More Short-term Stock Market Weakness Ahead - 20th Oct 20
Dell S3220DGF 32 Inch Curved Gaming Monitor Unboxing and Stand Assembly and Range of Movement - 20th Oct 20
Best Retail POS Software In Australia - 20th Oct 20
From Recession to an Ever-Deeper One - 19th Oct 20
Wales Closes Border With England, Stranded Motorists on Severn Bridge? Covid-19 Police Road Blocks - 19th Oct 20
Commodity Bull Market Cycle Starts with Euro and Dollar Trend Changes - 19th Oct 20
Stock Market Melt-Up Triggered a Short Squeeze In The NASDAQ and a Utilities Breakout - 19th Oct 20
Silver is Like Gold on Steroids - 19th Oct 20
Countdown to Election Mediocrity: Why Gold and Silver Can Protect Your Wealth - 19th Oct 20
“Hypergrowth” Is Spilling Into the Stock Market Like Never Before - 19th Oct 20
Is Oculus Quest 2 Good Upgrade for Samsung Gear VR Users? - 19th Oct 20
Low US Dollar Risky for Gold - 17th Oct 20
US 2020 Election: Are American's ready for Trump 2nd Term Twilight Zone Presidency? - 17th Oct 20
Custom Ryzen 5950x, 5900x, 5800x , RTX 3080, 3070 64gb DDR4 Gaming PC System Build Specs - 17th Oct 20
Gold Jumps above $1,900 Again - 16th Oct 20
US Economic Recovery Is in Need of Some Rescue - 16th Oct 20
Why You Should Focus on Growth Stocks Today - 16th Oct 20
Why Now is BEST Time to Upgrade Your PC System for Years - Ryzen 5000 CPUs, Nvidia RTX 3000 GPU's - 16th Oct 20
Beware of Trump’s October (November?) Election Surprise - 15th Oct 20
Stock Market SPY Retesting Critical Resistance From Fibonacci Price Amplitude Arc - 15th Oct 20
Fed Chairman Begs Congress to Stimulate Beleaguered US Economy - 15th Oct 20
Is Gold Market Going Back Into the 1970s? - 15th Oct 20
Things you Should know before Trade Cryptos - 15th Oct 20
Gold and Silver Price Ready For Another Rally Attempt - 14th Oct 20
Do Low Interest Rates Mean Higher Stocks? Not so Fast… - 14th Oct 20
US Debt Is Going Up but Leaving GDP Behind - 14th Oct 20
Dell S3220DGF 31.5 Inch VA Gaming Monitor Amazon Prime Day Bargain Price! But WIll it Get Delivered? - 14th Oct 20
Karcher K7 Pressure Washer Amazon Prime Day Bargain 51% Discount! - 14th Oct 20
Top Strategies Day Traders Adopt - 14th Oct 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

China Auto Market Booms Whilst Rest of the World Stuck in Reverse

Stock-Markets / China Stocks Apr 30, 2009 - 09:40 AM GMT

By: Money_Morning

Stock-Markets

Best Financial Markets Analysis ArticleKeith Fitz-Gerald writes: BEIJING, The People's Republic of China - At a time when the rest of the global auto sales are experiencing their biggest declines in decades - and are set to drop at least 8% globally - the burgeoning China auto market may grow by 10% or more this year.


With steeply rising disposable incomes and savings rates that approach - and in some cases exceed - 35% a year, it isn't difficult to see why the China auto market is zooming along. But what may be tough for U.S. consumers to picture - especially as they deal with rising unemployment and a nagging economic malaise - is the intensity with which domestic demand is growing here in China.

Autos are more than just transportation here. They're a symbol of wealth and success - a sexy status symbol. One's social position can be determined by the type of vehicle one owns and flaunts.

This isn't the first time we've detailed the promise of the China auto market. Nor is it the first time we've talked about the "Chuppies" (Chinese Yuppies), the demographic group China will rely on as the nation attempts to decrease its reliance on exports and become more of a consumer-driven economy.

Investors, economists and other "experts" on China are finally becoming attuned to this economic transition. But what those observers don't realize is that the story doesn't stop there. China isn't just evolving into a consumer economy. As auto sales demonstrate, China is becoming a "complete" economy, in which such key ingredients as consumer spending, domestic business investment and foreign investment are each increasingly playing their required role.

Take business spending. The auto has become an important business tool: It's believed that having your customers see an impressive car conveys confidence and helps build trust with the government. That kind of thinking is very Western in focus. What's different here, however, is that cars are also believed to be a key contributor to the concept of "face," which is ever so important here.

Huang Jin, a native Beijinger and longtime friend, explained it this way: "If you drive a late-1980s-model Japanese car, people will not want to do business with you. Your car suggests how much you are worth and, by implication, whether you are worth doing business with."

He drives an Audi A8 that's jet black, with all the trimmings. [Given his objective, the A8 was apparently an excellent choice. Its U.S. marketing tagline says that "(even) motionless, it still commands respect."]

Another friend of mine, Luo Xin, puts a different spin on things. The way he sees it, the car he drives makes a statement about who he is - which is why he craves the sporty, futuristic proto-types that were all over the Shanghai exhibiting center this week as part of the Auto Shanghai 2009 auto show.

"Why not dream?" he says. "The new stuff suggests that I'm hip and gives prospective wives the image that I am successful, enjoy my life and think about the future."

Julian Hardy, who serves as general manager for Aston Martin China, recently told the China Daily newspaper that China's mega-rich may have lost 1 billion yuan (about  $146 million), but adds that they've "still got 5 billion ($730 million) left."

Aston Martin, long the preferred ride of fabled super spy James Bond, sold 50 cars here last year and sales may hit 150 within the next 12 months. It's a similar story with Lexus. The company's newest Shanghai store has already sold 20 cars since opening in mid April. And Ferrari, BMW (Bayerische Motoren Werke AG), Porsche (Porsche Automobile Holding SE), and any of a half dozen other high-end brands are finding a market among China's emerging consumer class.
China recorded 15 billionaires last year, as well as several hundred thousand millionaires, so this is not a trend that's going away anytime soon.

At the other end of the spectrum, low-end cars continue to move at record pace, too. Last year, we told readers that General Motors Corp.'s (GM) Buick line, Ford Motor Co. (F) and Volkswagen AG (OTC ADR: VLKAY) produce the lion's share of the small, sporty and fuel-efficient models sold here. At the time, I suggested that it wouldn't be long before Chinese automaker's like Geely Automobile Holdings Ltd., Red Flag (or Hong Qi, as it's known to its China customers), and BYD Co. Ltd., have come up to speed.

In fact, the MidAmerican Energy Holding Co., which is roughly 88% owned by the Berkshire Hathaway Inc. (BRK.A, BRK.B) investment vehicle run by U.S. stock-market icon Warren Buffett, announced in October that it would pay roughly $230 million for a 10% stake in BYD, which makes cars and specialized batteries.

I originally thought it might take as long as 24 months for China's domestic automakers to really get traction, but somehow I have not been surprised to see how quickly the markets have evolved to accommodate utilitarian cars that are "basic transportation" in words only. Why Detroit can't do this is beyond me; the so-called  "Big Three" would be wise to take an extended field trip over here to learn how to get back into the ballgame.

A few years ago, I suggested that China would overtake the United States as the world's largest car market. Now China's done it not once, but for the last three months in a row, with sales reaching a record 1.1 million. Incidentally, at the same time I made that prediction, I also suggested that one or more of China's automakers would enter the U.S. market. Now it's all but a foregone conclusion. So stay tuned.

When it comes to cars - or to any other product or commodity for that matter - China's newly moneyed class is not going away anytime soon. The estimated 330 million people in this country's broad middle class continue to amass economic purchasing power at a rate that will exceed the capability of their counterparts in the U.S., Japanese and Eurozone markets combined during the next 12 months.

The bottom line: Investments focused on the ambition of China's emerging consumer class may prove to be some of the best available in the coming post-financial-crash environment.

Chinese iron-ore demand creates money-making opportunity for one company… and a few lucky investors…

Reconstruction of earthquake damage in Sichuan is shooting the demand for iron ore higher than the total supply in China right now. The country is importing like never before, and using this dry bulk shipper to get the materials there. This company is super cheap by all value measurements, and is poised for a double. See how you can profit by clicking here.

Money Morning/The Money Map Report

©2009 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules