Automotive: Why (almost) everybody in this business is getting poor
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- Created on Friday, November 09 2012 16:52
Wondered why these days it is so cheap to buy a new or used car? Ever wondered on whose account this goes? Who is winning and who losing?
Yes, besides us, consumers (who no longer care that much anyway), quite everybody in the automotive industry and car business is on the losing side. Long before 2008 and Lehman Brothers, the European automotive industry started losing its revs.
How comes?
Until the outbreak of the first petrol crises, times were simply too good to be true. Just consider how little was invested in each new model in the sixties and earn money just with a slight upgrading of the previous design and no much technical progress demonstrated. In Europe, European makers had the filets entirely in their hands.
The seventies were marked not only by the two petrol crises, but also by the horrendously strengthening Japanese competition, forcing the European car makers to invest much more in R&D from then on. Still, most of the brands survived and continued to invest, not only in R&D, but also in production capacities, most of them having disproportionate ambitions about their market shares.
Emerging cost-killing practices, pioneered by a certain Jose Lopez of GM (later VW), were extremely efficient at the beginning, but their downside soon became apparent: suppliers restructured, power became concentrated in a handful of strong ones who suddenly became a much stronger stakeholder in car business. Suddenly it was not a carmaker who dictated the development, but suppliers. Ever wondered why, since a decade or two, we cannot speak of many brand specific features, but see each technical innovation so quickly becoming common?
At the break of the centuries, discrepancies between available production (and trading) capacities and the demand became evident. Production costs kept at about 50% of the customer price, the rest invested in sales network support and marketing, mostly discounts of any kind. Sales volumes were top priority; no price was too high to keep production sites turning. Management was judged by the achieved market share as the only success criteria.
In the sales sector, Mario Monti's block exemption regulations and the corresponding industry's reaction made life of your average dealer much more difficult and his profitability went down, but made the handful of survivors stronger towards manufacturer, if not much richer.
And then the customer. Car as status symbol has been significantly degraded during the last twenty years. Today, your cars' performance and design are as much a piece of interest as your new hoover.
Demand became dependent on discount and financial services. As long as the used cars could massively flow east- and southwards, the new car market went reasonably fine. Once even these markets were saturated, used car prices decreased rapidly and, in most cases, used car became a viable alternative for a an average new car buyer.
There comes the 2009 earthquake, where our story begins. Stay with us next Friday.
Bothered about too much marketing these days?
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- Created on Friday, November 02 2012 08:31
Couple of weeks ago, a friend of mine mentioned an ad campaign one of the multinationals was suppoosed to launch over here.
She considered this one to be rose-tinting beyond all tastes and not too far from misleading. At that momentb she seemed to be quite upset by the tweaked reality imposed by ads in general.
Well, big deal, What else is an ad supposed to be there for?
Now, if I forget my years in B2C and just take the shoes of a neutral observer, and look at the “need creation” phenomenon.
In our time anybody can bring basically anything on the market hoping somebody will spend his money on that stuff. Here, the customer is completely free to choose, and, yes, his purchasing decisions might be influenced by the producer, we cannot deny that, as the latter has somehow to survive as well.
If I don't like this, I can go somewhere for a state-planned economy where I'll be told by somebody else what I really need, and, as far as my needs are more or less accurately guessed, all will be fine. In fect, both systems should work quite well. Except that one of them has survived very well in North Korea and the other one quite everywhere else.
OK, is my freedom to choose being somehow limited by suppliers’ aggressive marketing activities, as some insist? I admittedly sometimes follow current consumer trends just from fearing to suffer some negative impact on my image if I don't. Do I somehow feel forced to spend money and to consume beyond my needs?
I definitely do, as I all to often ignore the added value of the good itself and take the purchasing decision based on the perceived impact of purchase on my image. Now, what I do to keep things simple is to take this social aspect as part of the total added value of a good in a degree that I consider to be appropriate.
I agree that free market and all marketing tools sometimes make me behave in a way I should think twice about., but, unklike you prefer a handful of rice a day and a pair of rubber boots a year, show me a better way.
Curepipe 2
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- Created on Thursday, October 25 2012 15:26
Last Friday we had a peek at an island of which inhabitants seem to be quite happy using (generic) English for their official communication, while at the same time speaking their native language among themselves.
Now, how can we compare this situation with what we have over here - our zillion of languages, most of them representing a »key element of national identity«?
No way to compare, frankly. For one thing, that island has been artificially populated since not so far ago. »Artificially« meaning by European colonial masters importing whatever workforce available at the time (after having successfully replaced the entire populations of ebony trees and dodo birds by rats), where today's official language is result of the colonial master who happened to be the last on turn to rule the island. This is probably why such a pragmatic solution could be applied there; the roots of none of there present languages are very deep.
In Europe, we have national states with their languages (not necessarily covering) deeply rooted for many centuries if not millenia. For most of the European nations, language is being one of the key elements of national identity.
In practice this means that anything (meant to be) told to the entire European population (e.g. from somewhere inside the Berleymont Palace), needs to be translated into all those languages - at least to the 23 EU-official, and possibly to the 6 semi-official and 42 minority languagues, to be precise.
Even if/when the Union evolves in its form – let's share JM Barroso's latest vision and call it »United States of Europe«, these rules won’t change. Plus, don’t forget that ten other states are waiting in line for EU-membership, with all their languages (and writings).
As it is, hundreds of thousands of translator jobs are thus demanded. Logically, everybody is paying for this feature and hardly anybody of hundreds of millions of Europeans opposes to that or bothers that 6% of the Commission’s expenditure goes for translation. After all, as a citizen of an EU-country, I certainly expect any relevant information to be provided to me in my own language.
Do we have to fear, however, that one day some compromise will have to be done just for the sake of efficiency?
What appears as the most obvious question is the right of our elected MPs, Governments’ ministers and public institutions to communicate with Brussels in each one's native language the same way I am entitled to do. How important is it that my Minister or Head of a public institution receives all the letters from Brussels translated? Am I as taxpayer ready to pay that? Or, may I expect these guys to be able to communicate in English with each other? In the private sector, people working for subsidiaries rarely communicate with their HQ in their own language after all.
I don't mind a new balance to be found one day. There is a line demarking the language being the »key element of cultural identity« and its function as instrument of communication.
With all our history behind us, we can hardly envisage to use the Mauritian linguistic pragmatism here in Europe, or even less expect the EU to get as unified as, for that matter, the USA.
So yes, in spite of that demarking line lowered one day, the translator's job remains essential for Europe for a while.
Curepipe
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- Created on Thursday, October 18 2012 20:38
Speaking of marketing messages using generic English (see my previous blogs), I was just leaving the Jan Palach bus station the other day and was welcomed by billboards telling me »Newness Brings Freshness», »La différence est dans la choix des goûts« and »Steer your business with solutions tailor-made for your success«.
You might say this must have been seen in one or another ex-Soviet bloc country, no? Wrong. It could hardly be further from the truth, literally!
Whatever led the good people of Curepipe, Mautitius, to name their central station after the young student who had greeted the Prague’68 events by burning himself remains secret to me.
So does the rather uninspiring creativity of Mauritian advertisers proved by their billboard slogans – you rarely meet more business-oriented people anywhere else!
But it’s something else that strikes one’s mind even more. To come to that, let’s first have a quick background overview.
Mauritian population of 1.2 million is a mix of several ethnical groups – Creoles of African origin, Indians (Hindu, Muslim and Tamil among many others), Chinese, as well as the French and English speaking population of European origin.
Centuries ago, this originally non-populated island was first visited by the Portuguese, then by the Dutch. The French won it over in the second half of the 18th century, imported tens of thousands of African slaves and started growing sugarcane. Then, rather exactly 200 years ago, they lost it against the Brits. These latter have, strangely enough, neither enforced their language nor the legislation very consequently. A huge wave of immigration from India and China followed.
The Mauritian legislation is still following the Code Napoleon these days and people are speaking a language that, frankly, I haven’t been able to decode so far. It’s the French-based Creole, even further away from French we know than Afrikaans is from Dutch.
African slaves first created this dialect during the 19th century. Unable to adopt the French language as it was, they rather chose to modify (simplify) it and add some juicy details from their own languages. Later, this dialect has become a real language and has been adopted and further developed by each of the ethnical groups following. Today, quite everybody speaks Creole in Mauritius, Indians and Chines included. Surprisingly and despite some recent attempts to set rules, this language barely exists in written.
So when you mingle through the crowds these days, you barely notice that English is in fact their official language. When they need to (and only then), people speak English they had learned at school - which largely explains those strange ads in the Curepipe central station.
On the other hand: the French language, just like one we know here, is dominant in their media, but only educated people are able to understand and communicate in it.
As result, it is never the same language used within the family, at school, in the office or to follow the media. Something perceived normal over here in Europe is completely absent on this island.
Do the Mauritians bother if their maternal language is different from what they speak at school, at work, in the street, read in newspapers or hear on the radio?
Definitely not. Nobody insists on having tons of official speech or else translated into Creole or any other language. While speaking Creole among themselves, English is their instrument of communication and nobody bothers.
That is not to say that status of the overall used Creole is stuck somewhere in the third range. In the contrary, it is quickly evolving and attempts to set rules for the written Creole have recently been made, if somehow shy and clumsy. Anyway, Creole remains far from being the key element of cultural identity, as we tend to perceive our languages in Europe.
Speaking of Europe, it might deserve to be reminded that it is us, Europeans, responsible for more or less everything over there in the first place, including, among other, the extermination of the entire dodo bird population (efficiently replaced by rats) and making disappear all the ebony trees but one.
Let’s get back: How is this situation perceived by an ordinary individual Mauritian citizen? As said, he/she doesn’t seem to bother at all. Needless to say that “interethnic conflicts” are a term unknown in Mauritius and have been so throughout the entire (rather short) history of the island. I’d even dare to say people feel having more serious problems to look after.
Can we draw any common lines at all with how we act in Europe these days, converging in one sense, but with all that variety getting under one roof?
From historical reasons (described at some later stage), the two situations can in no way be compared. But the question remains if, here in Europe, we can at least at some point draw inspiration from other edges of the World. How can we manage our whole linguistic plethora efficiently without some of us somehow feeling ripped off a part of the cultural identity?
See what translators and linguistic experts can say about linguistic management of the future Europe in my next blog. Don’t miss it.
Why the World still needs translators II
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- Created on Friday, October 12 2012 10:22
How about using English globally? It makes life easier, you just turn on your translating machine (or even not if English is your language) and start conquering the World.
Now, yes, English has turned to be a fantastic instrument of international communication. Why not French or German? Because English is, put it that way, user-oriented, while the other two are rather complex languages for the sake of (not always needed) precision.
So, just like in the cuisine, English has become a kind of universal fast-food solution for linguistic bridging. Master it sufficiently and you need no translator to pay.
Does it hit the point? Yes, to a certain extent.
Compare it to your local restaurant and imagine the only meal being served there from tomorrow on is the Big Mac. It'll do to a certain degree, but sometimes you just look for a tad more.
As said last week, there are great differences within Europe in how we formulate things. Mentalities are different from one corner of the old continent to the other. Tastes are different. Value sets are different.
If you write »Listen, I have a business that can really help you earn millions instantly«, it looks quite plausible in the USA, less so in the UK – but try to translate this directly into German and mail it to some prominent Bavarian businesses. You'll be instantly erased from the market.
On the other hand, how does »We strive for satisfaction of our clients« sound to you in English? A sound reaction to this lovely piece of Slovene marketing would be »Of course you do, what else on Earth are you there for? «. Get lost if you’ve got nothing else to tell.
Both marketing claims above are genuine, by the way.
Your cross-European communication will always turn better when you hire a translator who knows how things turn right there where you want to hit your target. It will help if you find one who, in addition to mastering your target’s language, has some knowledge on your particular field of activity, your target market's local culture and preferences.
Having just returned from one of the World's most amazing place to observe this, I’ll report more about next week, plus what Jan Palach has to do with it.
Take care and read you next Friday!
