Buicks and Haagen-Dazs

Here's a little break from geo-politics, democracy or lack thereof and killer flu. In China, Buick is a prestige brand:

Consider Buick, often considered a grandpa's car in the United States. In China, ''Buick is an expensive car, and has a very big name," said Yan Lili, 30, a corporate manager in Beijing. ''I'd love to own one."

The difference in perception is partly because of market conditions. Buicks were among the first foreign cars on Chinese roads, and both the cars and their promotional campaigns impressed Chinese consumers.

Partly, that's because the bottom end of the consumer market in China extends far lower than it does in the United States. ''Compared to local cars," Bell (Edward Bell, head of planning with the advertising firm Ogilvy & Mather Beijing) said, Buicks ''are expensive; they're big; and they're foreign. And so they're as much of a status badge as an Audi."

That's allowed Buick's parent, General Motors Corp., to charge its Chinese consumers about $37,000 for a Buick Regal that retails for about $23,000 in the United States. Yet GM's Chinese buyers get only one-third of the three-year bumper-to-bumper warranty American consumers get.

But Buick is far from the only American brand that's caught the fancy of the Chinese consumer:

In Beijing, freezers selling Haagen-Dazs ice cream stand proudly in the lobbies of five-star hotels. The price for a pint of Swiss vanilla: $10, compared to around $3 in the United States.

''Part of the reason for such pricing is simply extra costs, such as transportation and duties," said Eddie Lu, marketing manager with Haagen-Dazs in Shanghai. But more significantly, in China Haagen-Dazs has sidestepped its US image of being a premium supermarket brand to position itself as the deliverer of a uniquely luxurious culinary ''experience", Lu added.

The strategy is working well because ''there's a 'reward yourself' lifestyle here," said Lu. ''People don't mind paying for prestige items, especially if they are foreign."

And here's something to consider the next time American politicians start going off on cheap Chinese goods undercutting American products - American companies are greatly overcharging their Chinese customers. Why? Well, because they can:

A recent survey of 1,800 US businesses in China by the American Chamber of Commerce in Beijing found that the profit margins for 42 percent of them were higher than their average worldwide margins.

A little-discussed reason US companies enjoy pricing freedoms in China is that the country's newly created middle-class lacks product awareness....

...With the state having a vested interest in corporate profitability, local media, which is mostly state-controlled, does hardly any consumer reporting. Since most Chinese consumers can't read US publications, both because of China's controls on access to foreign media and natural language barriers, they have no independent perceptions of brands, their image or their history, making it easy for companies to create perceptions through marketing campaigns, Bell said.

Here's the bottom line, according to Bell: "Many American brands were drowning and looking for a lifeboat -- then China came along."