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Shangai Volkswagen

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Submitted By doblemar
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SHANGHAI VOLKSWAGEN Prepared for: Global Marketing – Sam Guo Prepared by: Mario Marra Date: February 15th, 2012
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Shanghai Volkswagen is loosing market share. Since we arrived to Chinese market we had a continuous growth, but in 1997 the market participation started to decrease. Today, in 2004, we have a market share of 16% substantially lower of the 51% that we used to have eight years ago. We also are loosing our position of leadership in the market.
There are many causes why this is happening. First, China is growing but we are not. In the last years many of Chinese move from the lower class to the medium class. The economy in China was growing for the last 20 years and citizens are seeing their personal incomes increase. While economy in China was growing, sales in the market were growing and incomes of citizen were growing, we were not growing.
A second factor is that we build our leadership based on a strategy of simple-technology and simple-product because in that time the market bought that. But now the market changes. Consumers not longer conform to that and they expect new products based on new technologies and designs. Related with that appears another factor. There are more competitors in the market than ten years ago. Those competitors are producing and selling new products with the characteristics that consumers expect. They are offering to the market what we are not. This has resulted in our sales to decline and lose our competitiveness. Our high cost structure, caused because we must to reduce prices, is another factor why we are loosing market share.

Context
China is a country that is growing at amazing rates and the government is encouraging foreign investments. Many people are moving from the fields to the cities and also they

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