Slow growth

China Daily (Latin America Weekly) - - Front Page - By BLOOMBERG

Profit growth at ma­jor Chi­nese in­dus­trial com­pa­nies de­cel­er­ated in May be­cause of slug­gish busi­ness, higher in­ven­to­ries and in­creas­ing costs.

As Transformers: Age of Extinction opens in the­aters, Gen­eral Mo­tors Co is bet­ting on­the lat­est in­stall­ment of the alien-ro­bot saga to help jump­start Chevro­let sales in China. The re­boot of the movie fran­chise, which fea­tures bat­tling ro­bots that con­vert into cars and trucks, opened in China and the United States on Fri­day and in­cludes ve­hi­cles such as the Chevro­let Ca­maro sports car and Trax small sport-util­ity ve­hi­cle. The fourth movie in the se­ries gives GM a mar­ket­ing tool as it in­tro­duces six Chevro­lets in the coun­try this year.

The goal “is to use it as a spring­board for launch­ing new prod­ucts”, Tim Mahoney, the global chief­mar­ket­ing of­fi­cer for the Chevro­let brand, said last week in an in­ter­view.

The brand could use a boost in China. Chevro­let last year failed to keep pace with the na­tion’s 16 per­cent growth for pas­sen­ger ve­hi­cles, with sales ris­ing 8.5 per­cent to 652,077. Transformers has melded the sum­mer pop­corn spec­ta­cle with US car cul­ture in a way that has res­onated in China, where its mid­dle class has been fuel­ing the world’s largest auto mar­ket.

GM’s re­la­tion­ship with Transformers goes back to the first film in 2007, which in­cluded a bright yel­low Chevro­let Ca­maro called Bum­ble­bee. Mahoney said he’s seen the ef­fect of the movie on the streets of China, where more than 70 per­cent of Ca­maro sports cars are pur­chased in the same color as the char­ac­ter. In the US, it’s just 5 per­cent.

“The yel­low is pretty well as­so­ci­ated with Chevy and I think a lot of it, I can’t prove it, but I sus­pect a lot of it has to do with the role Bum­ble­bee played,” he said.

GM, based in Detroit, plans to use Chevro­let to ex­pand into China’s smaller cities and the coun­try’s western re­gion. The brand’s slower growth last year came “from not hav­ing the fresh­est prod­uct in the high­est growth seg­ments”, said Bill Russo, pres­i­dent of Syn­er­gis­tics Ltd, a Shang­haibased con­sult­ing firm.

Cristi Vazquez, a GM spokes­woman, de­clined to say how muchGMspent to be part of the movie.

The fa­vor­able ex­po­sure in China could be a boon for GM as the au­tomaker plays de­fense in theUS over its han­dling of a re­call of 2.59 mil­lion small cars with ig­ni­tion is­sues linked to at least 13 deaths.

Ed Wel­burn, GM’s head of de­sign, said he’s no­ticed the Trans­former logo on Chevys in Shang­hai.

“You know it didn’t come through the fac­tory that way,” Wel­burn said. “People added it to their Chevro­lets, and it’s a very pos­i­tive re­la­tion­ship.”

GM is bet­ting that the lat­est film, which fea­tures a cast led by Mark Wahlberg, will have a sim­i­lar im­pact in China. The first three pic­tures in the fran­chise have gen­er­ated $2.67 bil­lion world­wide for Vi­a­com Inc’s Para­mount Pic­tures, ac­cord­ing to Box Of­ficeMojo.

The last in­stall­ment, Transformers: Dark of the Moon, was re­leased in 2011 and had the sec­ond-big­gest open­ing weekend for a US film in China, pulling in $56 mil­lion, and end­ing with to­tal sales of $165 mil­lion.

The num­ber of the­ater screens in China tripled from 2008 to 2012, reach­ing 13,118, ac­cord­ing to Bei­jing­based Ent­Group, a re­search firm. Box-of­fice re­ceipts climbed 36 per­cent from 2011 to 2012 to reach $2.7 bil­lion and surged to $3.6 bil­lion last year, data from Ren­trak show.

“Transformers 4 is go­ing to be a very im­por­tant film for the re­la­tion­ship be­tween Hol­ly­wood and China,” said Phil Con­trino, chief an­a­lyst at Box­Of­ “Para­mount has cast Chi­nese ac­tors in the film so there is a lot of out­reach to Chi­nese view­ers to make sure that it’s not just sell­ing a film into China.”

Wel­burn, the de­sign chief, worked closely with the film­mak­ers and has a cameo role in the movie. A GM plant was also used as a set, ac­cord­ing to LeeAnne Sta­bles, pres­i­dent of Para­mount con­sumer prod­ucts and ex­ec­u­tive of world­wide mar­ket­ing part­ner­ships.

The re­la­tion­ship saw GM push to get its new Trax SUV, which went on sale in China this year, in the movie along with the Sonic small car. The Trax is an im­por­tant in­tro­duc­tion for GM in China, where the brand has fallen be­hind in the small SUV seg­ment.

The au­tomaker and its joint-ven­ture part­ners re­ported over­all sales gains of 11 per­cent to 3.16 mil­lion in China last year. GM sold 809,918 Buicks in China in 2013 while its Wul­ing truck brand de­liv­ered 1.48 mil­lion ve­hi­cles do­mes­ti­cally.

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