Analysis: F1 Sees China as a 'New Klondike'

Next weekend's inaugural Chinese Grand Prix could be the most significant race in the history of Formula One.

That may sound over the top, particularly with both constructors' and drivers' titles won already by Ferrari and seven-times Champion Michael Schumacher, but it is what Mercedes motorsport boss Norbert Haug believes.

"In my view this is a very important race, probably the most important race in the history of motorsport," declared the German.

Shanghai, with a breathtaking circuit and a sellout crowd of at least 150,000, is one of two debut grands prix this year - the other was Bahrain's first race in the Middle East - that allow Formula One to boast of being a truly global Championship.

"It is a new era and I think we will have more spectators worldwide for television than for any race before...especially in America I think there will be a lot mentioned about the race," said Haug.

Mercedes are part owners of McLaren and, like other carmakers in Formula One, they are licking their lips at the prospect of putting on a show in the world's most populous nation and fastest-growing market.

Even if the average Chinese, with an annual salary of $1,000, can only dream of owning a car, the market is potentially massive although there are fears of a margin-sapping glut emerging as new plants come on stream.

'Follow the money' has long been a mantra for the costly glamour sport and comparisons have even been made between Formula One's efforts to win over China and the 19th century Canadian gold rush.

"China is the Klondike, it's the new frontier," BAR boss David Richards, whose team are partnered by Japanese auto giant Honda, told Reuters.

Car Sales

"The new regions, especially China with 1.3 billion people who for the first time are coming into contact with Formula One, that's the future," said BMW motorsport head Mario Theissen.

"I will be very cautious about it being the most important," said Ferrari boss Jean Todt. "But I've been in Shanghai for the opening of the circuit because we were opening our showroom as well and it's unbelievable what they have done, just unique.

"This year we will sell about 50 cars in China, hoping that we will sell 100 cars next year. It will take a long time before we will be able to compare China to the United States, which is over 30 percent of our market, but countries like China, India and Russia definitely have a huge potential."

Theissen said China was already BMW's fastest growing market in the luxury bracket, with more sales there of the top-of-the-range 760Li V12 than in any other country.

The Munich carmaker's sales in mainland China, Hong Kong and Taiwan grew to 16,620 cars in the first eight months of this year - an increase of 23.9 percent over the same period in 2003 - with almost half of them built in China.

"In terms of market power, I think nothing so far compares with this race," said Theissen, whose company have a local joint venture - BMW Brilliance Automotive Ltd. - which has been making 3 and 5 series models for the last year.

"I think it is unique and we are really looking forward to it," he added.

Honda and the world's second largest carmaker Toyota are well established there while Renault - which owns 44 percent of Nissan - have forged a joint venture with Dongfeng Motor Corp.

Jaguar, whose owners Ford are pulling out of Formula One at the end of the season and selling the team, began marketing in China this year with the first 20 buyers promised that they would have their names put on the Grand Prix car.

Marketing Opportunities

But selling cars is only a part of what China offers to Formula One.

The other side is the commercial attraction for sponsors, with existing backers eager to increase brand awareness and teams hoping that new partners will be encouraged in.

"Everybody commercially is looking at the Far East, looking at China, the growth in China, the potential markets out there. It certainly broadens our horizons as a sport," said Richards, whose team is owned by tobacco giant BAT. China, with cigarette branding allowed at the race, is a key market for them.

"It's more about when you talk to companies, they are all looking to expand their markets and China is obviously on everybody's agenda," added Richards. "When you say that you have a race in China that certainly raises people's interest levels.

"I personally think it's more likely to attract sponsors in the West looking to get awareness and a foothold in China. I think it's rare to see Chinese companies who yet understand the potential of Formula One for promoting themselves on a global basis but I'm sure that will follow."

Jordan, among the tail-enders on the track, have set the pace there with two Chinese sponsors already - property developer Shoulu-Huayuan and B&Q China.