Shanghai View: A day at the Races

Posted: December 1, 2010 in Whose World Order?
Tags: , , , , ,

A new post over at Whose World Order?, the new blog I contribute to for my new organization, the European Council on Foreign Relations. As I have mentioned before, this is going to be a relatively regular feature, so any ideas for it would be warmly welcomed. Thanks, as ever, to Sue Anne for pics.

Shanghai View: A day at the Races

Date: 29th November 2010  |  Author: Raffaello Pantucci

Categories: China
Tags: ChinaGermanyShanghai

This weekend, German street car racing came to Shanghai. It was not the first time that it had taken place, but it was a surreal experience to see a chunk of Shanghai transformed, at least in part, into a racetrack screaming branding in German daubed with large yellow posters advertising Deutsche Post.

The race was the culmination of the DTM year of racing, and was the 1st race of the season outside Europe and in Asia. When asked why they did these races here, the common consensus amongst the organisers spoken to was that they saw this as a huge potential market and that anything to raise their profile in it was a good thing. But the market is still in its infancy here. To give a sense of numbers, some 5,000 showed up for the final days race, while an average European race attracts 80,000. However, as the vast Chinese consumer market grows it is likely that the market for those seeking high-end cars and the fine tuning equipment and parts to turn them into racers is also likely to grow and both Audi and Mercedes Benz (and the army of smaller parts companies) want to guarantee they have a share of that.

The event itself was apparently organized in part by Ye Jingzi, the daughter of Marshal Ye Jianying, a veteran of the Long March and founder of the PLA, who was recently featured in the FT as a rising “princeling”. She was running around the racecourse and at the end was amongst those doling out the prizes. Also present was a Vice Mayor, who provided a stamp of officialdom to the event, though frankly did not seem that impressed by the whole thing.

Prior to the race, some of the team organizers were complaining about the track and its difficulties. Since the course ran through the middle of new Shanghai, during the evenings prior to the race the roads had been left open to the public bringing dirt onto the roads that made it harder for the drivers to get good grip.

But this aside, it was clear that this was an important race. The teams had all brought out their main sponsors to the course, partly doubtless because this was the final of the season, but also since this was China and everything Chinese is of course elevated to a different level. For German manufacturers like those selling car parts getting in early and with good contacts into the Chinese markets is essential. Cars remain an industry that foreigners can only invest in if they establish a joint venture with a Chinese firm; something that alarms people concerned with the tech transfer issues involved. It also puts competitors like General Motors and Volkswagen (VW) in the odd position of both having joint ventures with the Shanghai Automotive Industry Corporation (SAIC). So they are working with a partner who is also helping their competition, as well as producing separate SAIC cars for the same market. None of this, it should be added, has detracted from making VW a fortune in the Chinese market. Audi, a VW firm, is the car most frequently used by Chinese officials and according to figures released in late October for the year prior, the company’s profits from two joint ventures in China was a whopping €513 million, more than double the €231 million made the year before. According to the WSJ, in 2009, VW sold 1.4 million units, up from 1.02 million the year before, placing it atop the scoreboard of vehicle sales in China.

In the end it was a British driver who won the race, and a Scottish driver who won the overall competition. Chinese driver Congfu Cheng, while playing with home-field advantage, was only able to place 15th. Still, I was led to understand that this is not the last time a race will take place in China and I am sure in the future, Chinese drivers will also become a growing presence on the DTM scoreboard.

Pictures courtesy of Sue Anne Tay, who has some more on her blog

 

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