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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 154

China Business Intelligence No. 154

Samsung Economic Research Institute Beijing Office

Apr. 14, 2010

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Highlights:

I. Economy

In March 2010, a proposal for a second round of housing reforms was submitted to the 11 th session of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC). The first housing reform in 1998 allowed the private ownership of public housing, but neglected the construction of welfare housing. The second housing reform is mainly aimed at increasing the supply of welfare housing, but it is projected to have a limited impact on resolving the housing shortage. To consistently pursue the second housing reform, the Chinese government needs to set up an independent body exclusively in charge of carrying out the reforms.

II. Industry

Toyota's massive recall, which began at the end of 2009 due to an accelerator pedal defect, spread throughout China. Due to a short history and low awareness of the Toyota brand in China, Chinese consumers were easily affected by the negative information about Toyota. Toyota's massive recall received different responses from the Chinese and US markets:" quality crisis" for the US market and" brand crisis" for the Chinese market. The Toyota recall should be understood in the context that there is a deep-rooted difference between China and Japan in their historical and political issues. Also, with China being the world's largest but" emerging" automobile market while the US market is" mature," consumers of both countries are showing very different attitudes. In the US, Toyota requires a strategy targeting" existing clients," while the strategy should be based on both" existing clients" and" potential clients" in China.

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