Ferrari’s success in China: a double edged sword?

HONG KONG – Ferrari’s runaway success in China is starting to cause some road-rage.

The iconic Italian automaker, which is celebrating its 20th anniversary in China, has enjoyed booming sales on the mainland, but recently suffered an embarrassing series of PR snafus that reveal the perils of being one of the most potent—and controversial—symbols of China’s elite. Last week, the company announced that 56 of its supercars in China will be recalled due to a problem with the crankshaft.

In Singapore, locals were enraged this month when a 31-year-old mainland Chinese driver ran a stoplight in his $1.4 million Ferrari and crashed into a taxi, killing himself and two others. The man had reportedly bought the Ferrari for himself as a birthday present. Chinese netizens speculated that the driver was the son of a well-connected family in Sichuan, and soon after the driver’s name and the word “Ferrari” were censored on social media.

Earlier this month, Ferrari was compelled to apologize when one of its supercars was filmed burning rubber on the surface of a 600-year-old Ming Dynasty wall before a publicity event in the eastern city of Nanjing. Video of the Ferrari 458 Italia leaving black track marks on the ramparts circulated widely on microblogs, where users called it a “rude” and “shameful” display.

And in April, the explosive 4 a.m. crash of a Ferrari in Beijing was hushed up quickly in online reports, fueling suspicions that the driver of the vehicle—who was killed—was the scion of a politically powerful family.

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These dust-ups reveal the extent to which these muscle cars strike a raw nerve: the perception that China’s rulers make vast amounts of money from their connections, and live above the law. Ferrari accidents have become a regular flashpoint for tensions in China over social inequality. Bo Guauga, the son of deposed party boss Bo Xilai, was criticized for allegedly driving a red Ferrari, though he has denied the claim.

In a widely circulated recent essay by Li Chengpeng, a writer who has five million followers on China’s twitter, he argued that he could not be blamed for becoming skeptical of the government when, “unlike much of the Chinese elite my child doesn’t drive a Ferrari.” A poll from March of last year by Renmin University found that only 5.3 percent of those polled believed that China’s rich had earned their wealth legally.

Rising income disparity is not lost on ordinary Chinese, who are frustrated by the sight of officials who are supposedly living off of modest government salaries driving Audis, Bentleys, and Ferraris. While the average income in China is $4,300, the cost of a Ferrari FF in China is over $800,000. And although the Chinese government refuses to publish the country’s Gini coefficient—a standard measure of the income gap—in March of this year, Bo Xilai revealed that it had passed 0.46, a level associated with social unrest. (Bo was later stripped of his party positions for unrelated offenses.)

But none of this resentment has stopped the Ferrari from becoming the marque of choice for China’s rich. In March, a coal baron in Shanxi gave six Ferraris for his daughter’s dowry in a lavish, $14 million ceremony. Last year, greater China became the second largest market for Ferrari cars, with 777 vehicles sold. More so than in the West, many Chinese buyers are women, according to Chris Grohl, managing partner at China Brand Consulting. This along with the fact that “many Chinese drivers are new drivers,” suggest that it's all about status, not sports-car performance, says Grohl.

Thus all the envy of Ferraris in China could, perhaps, increase their appeal. “The tiny group of people who can actually buy these things, do they care about [resentment]?" asks Stan Abrams, a law instructor at Beijing’s Central University of Finance and Economics. "Or is the bad boy image appealing to some of them anyway?"

Ferrari is trying to build on its success with a limited-edition vehicle built specifically for the Chinese market. The Year of the Dragon 458 model features a “Marco Polo Red” paint job, a golden dragon on the hood, a start button inscribed with ancient Chinese characters.

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