From BBC News May 23, 2012

Infiniti targets Chinese market with new Hong Kong base

BBC News – Nissan’s upscale car brand Infiniti has established its global headquarters in Hong Kong as it looks to increase car sales in China.

Nissan boss Carlos Ghosn said the move to the southern Chinese city would help Infiniti boost its share of the luxury car market to 10% from 3% currently.

Last year, it sold just under 20,000 units in China, which is now the world’s largest car market.

It expects Infiniti sales in China to increase by 50% in 2012.

Nissan is embarking on an ambitious expansion of its Infiniti brand and said the marquee would soon be available in 70 countries, up from 45 currently.

Global company

It is an unusual move for a Japanese car brand to locate itself outside Japan and Hong Kong is not a big centre for the automotive industry.

Mr Ghosn said that he wanted to make the Infiniti brand distinct from the rest of Tokyo-based Nissan and locate it near to one of its most promising markets.

“We are a global company, especially with Infiniti,” Mr Ghosn said. “Its main markets are going to be in the US and China.”

He said that Nissan had also considered Singapore as a location for Infiniti’s headquarters but Hong Kong emerged as the top choice because of the importance of the Chinese market.

Currency risks

Nissan has set a sales target of 500,000 luxury cars per year by 2016, and expects China to account for around a fifth of this goal.

Nissan has said it will begin manufacture of two new Infiniti models in China in 2014 and Mr Ghosn said more Infiniti cars would be made outside Japan.

“You can’t build a brand which becomes a prisoner of one particular currency, particularly when the currency is not moving in your favour,” he said.

“As much as possible, we need to localise production so we don’t take any exchange rate risk.”

Japanese carmakers, who rely heavily on overseas markets for growth, are having to deal with a strong yen which makes their good more expensive abroad.

Manufacturing in China will also allow Nissan to avoid China’s high import tariffs on luxury goods and cater to the tastes of Chinese motorists.

Nissan opened a design studio in Beijing last year and is introducing an Infiniti model with a longer wheel base specifically for the Chinese market.

Many buyers of luxury cars in China prefer a larger back seat because they employ drivers.

As Infiniti opens its new global headquarters in Hong Kong, CEO Carlos Ghosn discusses reasons for the relocation and the outlook for the China auto market.