11/18/2006

Chinese Math, Redux

Remember Chinese Math? "If the market is $X billion, and we get just Y%, we'll be rich!" It's happening again. In China, of all places: 24/7 Wall St. notes that Toyota, Ford, and GM have all decided that they're going to beat the competition by raising market share. They'll have to deal with an interesting government stopgap and a local idiosyncrasy if they're going to get too far: Chinese cities aren't really designed for heavy auto traffic. They're mostly built to be an order of magnitude smaller, and full of pedestrians. Rather than build new roads (expensive -- especially since the real estate they'd be built on is incredibly valuable), the government has reduced the number of cars on the road through license plate auctions. But the chance to bid on specific license numbers means that plates can reach ridiculous values -- as high as $34,000 (official exchange rate -- something like $60-70,000 at a more realistic value). If foreign auto companies are going to succeed with Chinese consumers, they'll need to deal with the regulators first.

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posted by Byrne Hobart at 12:42:00 AM

1 Comments:

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