Many consumers may have never heard of Jebsen, but a lot of the brands it markets and distributes in the Greater China region are household names. From Porsche and Raymond Weil to Dyson and Blue Girl Beer, it has a long history of introducing products to Hong Kong, Taiwan and the mainland. Jebsen's roots go back to 1895, when it was founded as a shipping company. It introduced Mercedes-Benz to the Chinese market in the 1930s and brought the first Porsche and Volkswagen vehicles to Hong Kong in the 1950s. Besides cars, its portfolio spans a wide range of businesses including luxury products, beverages, electronics and industrial equipment. After unveiling a new Porsche centre in Shanghai, the largest in Asia, group managing director Helmuth Hennig sat down for an interview with the South China Morning Post . He talked about why mainland consumers like to buy Porsches but not necessarily drive them, how Jebsen's businesses are evolving to capture online sales, and dispelled myths about doing business in China. What prompted Jebsen to develop this new Porsche centre? Our belief is that the demand and product will continue to grow. On one hand that has to do with Porsche - bringing model ranges, an expansion of what we physically have to show - but at the same time, it's the requirement from customers nowadays to be presented in an environment they find suitable to their own expectations. The car is the focal point of it but it's all about the buying experience itself, how you're being addressed, how the product is being explained, what you're told about the options and the availability. All these things are shown in a different way if you have space and are not stuck in a cramped area. This one is No1 [in size] but I don't think it'll stay No1 for very long because I think there are additional plans [from other companies] to open centres of this size simply because the market demands it. What's your customer repeat rate for Porsche? It's still quite low because the brand is quite new. We've been in Shanghai for just over a decade. We have a customer repeat rate of about 50 per cent. But at the end of the day, the Chinese customer is being inundated with new brands and so forth. Brand loyalty is something we've tried to build up, not only for Porsche but generally for things that they buy from us. At the end of the day, the easiest conquest is the one you've already done once. It's much harder to go and find new customers time and time again. At the same time, most customers are unwilling or have been unwilling to say, "This is my brand, I'm sticking to it. This is all I want." Why is there a preference for sedans over sport cars on the mainland? Once you've reached that sort of wealth level, the expectation is that you want to be driven rather than drive yourself. That's why they've also expanded the wheel-base on the Panamera to make it longer so it's a more executive-type vehicle, giving the back passenger more space. I think they are intrigued by brands and vehicles but not necessarily for the driving experience themselves. Porsche is historically, as a brand, oriented to self-driven cars. Besides the offerings of Cayenne and Panamera, we are coming up with a new car called Macan, which is at least potentially a more driver-driven vehicle. How much has the crackdown on gift-giving affected the car industry? The very, very top end of the car market has been affected, from what I understand. We're not in that space. They are the very luxurious ones, the Rolls-Royces and the Bentleys, they have seen some impact. We are certainly not cheap but we are not right at the top so we've not seen a significant impact. Car demand continues to grow. I don't think there's going to be any real slowdown in the marketplace. Last year we did about 7,200 cars and we're expecting to do at least the same this year. [Until China joined the WTO] we had virtually no consumer business [there] HELMUTH HENNIG, JEBSEN How are you adapting to online commerce? Our sales are virtually all offline at this point in time. China seems to leapfrog technologies. They went from the phone to the mobile phone and e-commerce is something that's growing very rapidly. We have a couple of initiatives running. We're going to open a virtual store where we're gathering together the best product ranges of Jebsen and making them available online for Hong Kong and in China. The idea is to bring innovative products and understand the distributor behind the product themselves. Usually we would try to promote the brands but in this case we want to build our own brand as well. We have got an e-commerce concept for our industrial products which will be launched at the end of this year. We will be presenting a wine e-commerce platform as well. The whole point here is that e-commerce plays an important role in information flow on the one hand. We trade in physical product so they have to be presented somewhere at the end of the day but our intention is to build the brand and offer an alternative way of purchasing rather than replacing one or the other. Do you think cars could eventually become a common online purchase? Some brands, such as General Motors, have started to do that in the United States. At one point in time, people said you could never sell luxury items online but luxury handbags and apparel are doing very well online now. I think you've seen a couple of car manufacturers contemplating selling particular models online but I think given the fact, at least in our case, you're talking about an investment starting at about HK$1 million, or in China 800,000 yuan, you need a leap of faith to buy that online. The other side of the equation is how are you going to pay for it? I'm not sure a credit card or debit card can satisfy that need either. But I think what we will see is a significant increase of information flow. Your whole experience of purchasing can start online. We've got things like car configurators where you can put your dream car together from specs to interiors so that when you actually go look at the car physically you can then have a much more informed discussion about what you want in the end. PwC released a study last month that said Chinese consumers expect to pay less for the same products online than in physical stores. How do you deal with that belief? That's the general perception and, as a general rule that would probably be correct, but the bricks and mortar guys have to fight back and not get overwhelmed by this tsunami of e-commerce. They have their own programmes running and if you talk to the large department stores, whether it's Lane Crawford or others, they have very strong VIP programmes running where they maintain this customer contact and they try to build customer loyalty to their store as well. You may not get the lowest, lowest price available in the marketplace but you're guaranteed a different kind of customer service which I think that, as the market matures, people will appreciate as well. Maybe things like vacuum cleaners aren't a good example of that but when people buy clothing or other products, they still want a certain amount of information and support. I do believe the bricks and mortar guys will be able to offer that. The question is then what products do you push on each platform? For us, it's same model, same price but you may not get all the same models online. In reality, the physical distribution at this point in time means that customers must be presented with the best and latest models because it is that look and feel that convinces them. Over time, the strategy will then be fine, maybe the models that are six or 12 months old are going to be pushed on the online side. What have been the biggest challenges for Jebsen, then and now? Pace of change, certainly for the period that I've been working here. I don't think anybody could anticipate how both China and, as a consequence, Hong Kong would change. Up until the WTO entrance of China, we had virtually no consumer business in China. We were doing predominantly industrial products. That industry had expanded tremendously since the opening of China in the late 70s. But with the WTO signing, suddenly the markets opened and they became available for people selling products for the consumer rather than just the industrial side of the equation. In this growing consumer market, people were interested in anything and everything. There was a very low awareness of brands and as a consequence, very low brand loyalty as well. They were confronted with a whole world of stuff that had been in the outside world for some time. That was then coupled with China's opening up of the tourist business, where they allowed people to travel and the internet suddenly became a tool. Information exploded and people's expectations and desires grew exponentially so we've seen a significant shift in our business. We still have a very large industrial business but our fastest-growing business has really been on the consumer products. This pace has not let up at all. It keeps on changing - consumers evolving, government regulations evolving and tourism having a significant impact. It's a bit of a moving target actually. The mainland has been opened up for a few decades now. Do foreign companies still feel that they need a third party involved or that they can go in directly? It's not an easy environment to operate in. Although top-line numbers are great, it's a very fragmented market with many different regulations. If you want to go in directly, you have to make a large commitment to make this work. You could say, "I can either do brand building myself or work with a distribution partner or can give the whole thing - brand building and distribution - to a third-party." There are a variety of models that are available. My sense is that a lot of brands, even large brands, look at China and say, "OK, maybe it's not one size fits all for everything. We are willing to segment the market. We do part of the channels ourselves," or alternatively do it by regions. I think it's becoming a more sophisticated model of trying to address these different markets. What is a popular myth about doing business on the mainland? A popular myth is the numbers. It's look at the big numbers and if we can achieve XYZ market share, we can do really well. The difficulty of China is, as mentioned before, the fragmentation of the marketplace and the difficulty of achieving that. Even before consumer products came into China, China was self-sufficient for consumer products. They don't need anything other than what they want, so how is it that you address that desire? To have the dream that people are waiting for your product, whatever that product may be, is a popular myth. Even something like Dyson [vacuum cleaners], which is a very established brand that is strong in many markets, you have to convince the consumer that the product offers something to them that is different. You simply need to do the work on the ground. It's not going to happen by placing a few ads in the newspaper and expecting people to flock. They still need to be able to see it, touch, get something explained, and buy which will ultimately cost them more than 99 per cent of the rest of the ranges out there.