Current CEO at Ferrari, China
Giuseppe is the Current CEO at Ferrari, China and has over 25 years experience working in China. From 2004-9, he was CEO of Pirelli’s China Division before being promoted to CEO of APAC in 2009. Giuseppe then joined Ferrari as President and CEO of Far East Asia in 2013 before rejoining Pirelli as CEO of APAC for another three years in September 2014. Giuseppe has recently rejoined Ferrari in 2020 with full P&L responsibility of the China business. Read moreView Profile Page
Can we start by describing the difference in the Chinese versus the Western consumer, in purchasing luxury vehicles?
It’s a huge difference, actually. The difference is not really between the Chinese and the West. It’s more about developing countries and developed countries. I think China is, to a certain extent, partly a developing country, so there is still not full recognition of certain iconic brands; at least what the Western world considers iconic brands. Their approach to the brand is a bit less emphatic. They take the brand, they use it. Sometimes it looks good and they keep it, tick the box. Done; what’s next? There is multi-experiencing of different brands. There is no historical heritage. There is no loyalty. At least, there was no loyalty or heritage. Now it is changing somewhat.
In practical terms, what does it mean? It means that I know that to accomplish my success, I need to have a Ferrari in the garage. I buy the Ferrari, I put it in the garage and I forget about it. Maybe next time, I will buy a McLaren and the time after, I will buy a Rolls Royce, if I can afford it. There is no real loyalty. The first round of purchasing was done absolutely in that way. Now, the ripple chasing is the rule of the game. When you sold your luxury item, for the first time – and it could be true for a car, a watch, a yacht or something else – an item that is a historical brand and is very iconic in the Western world that some people wanted to have it, then they bought it. After that, there is the repurchase process.
The repurchase process is not automatic because people tend to have the world range of iconic brands, before they go back and fall in love with one brand. This is, I think, the real challenge. This challenge is the challenge everywhere in the world but in China, particularly, it is to get the loyalty of the client. Get him or her to repurchase your product. Once they become a repeater, in that moment, you start to establish loyalty and you can leverage the worldwide tools to retain the clients. The real key issue is the repurchase.
How do you approach driving repurchasing by customers?
Customer satisfaction with the first purchase is very important. The product you are selling should be consistent with the iconic heritage of the brand. This is very important and it’s true for everyone. If your brand, if your product, at the end of the day, is not consistent and is not up to the standard that the people expect, the risk is that they will not repurchase. It’s absolutely necessary not to underestimate the quality that the Chinese market want to receive and the ability to perceive quality from this new client. In certain cases, it’s even easier to sell to well-known and continual repeater clients because they are more accepting of certain imperfections. But when you sell to a very demanding, first-time client, you need to sell to a level of perfection – a perceived one, but also an actual one – that must really be up to the reputation of your brand. In that case, you will have a high percentage that will come back. This is so important; do not underestimate the ability to evaluate quality, by Chinese consumers.
How is the expectation of the product and service different in China, versus the West?
One difference is that, it being the first purchase, there is no background. Having no background means you have to regain your reputation, in a way. You are a brand, they know you, you are famous worldwide, but this is their first purchase. At the first purchase, you must be able to give it all. This is a little different because in other countries, especially Western developed countries and places such as Japan, which is a very well-developed country, they know what they are buying. To a certain extent it’s easier to satisfy them because they know that they are buying a set of values, behind the brands. The moment they buy the brands, they are much buying much more than the product; they are buying a status, as well. In China, they are buying a status, but the consistency and the quality of the product must be up to standard. Sorry if I am underlining this but, for us, this is a big challenge. We do this regularly because we are selling excellent products, excellent cars. But at the end of the day, sometimes, there is a scratch on the bumpers that happened during the transportation and nobody actually noticed or a small problem in sewing. Maybe a very few, small defects that, if you had them in Milan, they would go back and say, come on, I have these problems and they will say, sorry, I will repair it now. In China, this will damage your reputation in a much larger way. The net effect of a small defect is amplified in China, because it’s the first purchase and they are looking for perfection.
Sometimes perfection is not possible. You must be perfect when you approach a new market. You must be really perfect and this is a challenge, for every brand.
You mentioned how Japan is a well-developed country and, obviously, Europe and the US. Is that because of the culture and the heritage and the values of Ferrari are well-known, but also because the consumer knows and watches F1 where China is a younger demographic there? What is the reason?
The reason is, simply, the exposure of your product to the market. China opened up in 1979 and we entered China in the late 80s, early 90s. We have less than 30 years of experience in China. While in Japan, we entered with the first model, 60 years ago. It’s mainly a matter of time and a matter of exposure of the Chinese consumer to all the Western values and iconic brands. Of course, it’s not because of ethnicity. The Chinese living in Europe or living in the US will have the same approach to the brand as an Italian or an American. It’s the matter of the people living in this country that, for a few decades, have been isolated from the rest of the world. The experience of the brand and the experience of the background behind the brand is limited.
Do you see any major differences in the vehicles they prefer? The type of vehicle or the willingness to customize or personalize the vehicles more than the West?
Again, I’ll go back to the difference between well-developed and developing countries. When you are in a developing country – and this is true for other markets, not only China, but South East Asia, India and other areas, such as Russia – when you buy a Ferrari, you want the typical, iconic Ferrari. So it must be a sports car, mostly red and, I would say, highly recognizable as a Ferrari. This is particularly true in these countries and, in other countries, there is a lot of sophistication. We have quite a broad range, with five or six different models; even more, sometimes. It depends on the special series. But, at the end of the day, we have a sports car, an extreme sports car.
The main difference is that, although we do have a very sophisticated client in China, broadly speaking, as a perception of the overall market, the Ferrari is red and it is a very typical sports car. To a certain extent, they are less sophisticated in choosing the model and they have less requests for segmentation. From a producer and selling point of view, it’s more difficult to explain the segmentation of the different cars. They tend to perceive the Ferrari as a typical Ferrari. When I propose a GT that is, maybe, more drivable, less flashy, with a different color, mostly they tend to say, yes, okay, but this is not really a Ferrari. It is. The only difference is that it’s not the typical Ferrari that you see on movies. So it’s a slightly different approach, in terms of segmentation.
Let’s talk about the customer experience for the first purchase that you mentioned is so crucial. It has to be consistent; it has to be very high quality. How do you think about curating the buying experience, from start to finish? Can you walk me through how that works? If I want to buy a Ferrari, in China, what do I do? Do I go direct to Ferrari? Do I go to a dealership? How do you curate that experience?
The experience is a journey because, first of all, you identify the car. We have good coverage. All the main cities have a dealership. The workshops and aftersales have a much broader coverage but we have a strategy focused only on the flagship stores, in flagship cities. We bring the client within the Ferrari family. As soon as they come into the dealership, they have to feel an experience. They have to feel the corporate identity. When they enter the dealership, they are already inside the Ferrari world and the CI, the corporate identity of the shops, the way we decorate the shop, the color the choose, all the touchpoints inside the showroom, are the same all over the world. The experience when you first enter should be similar to any other showroom in the world.
Once inside, you have to feel the luxury but also the exclusivity. Our products should be considered very exclusive because worldwide, we sell, all in all, 10,000 cars. When you sell 10,000 cars, there are very few cars around. Even if you consider that a Ferrari never actually dies and we never deregister a car. This is a unique situation for our brand. Somebody buys a Ferrari and they keep it forever. Or they will sell it to someone who will keep it forever. Or, this one, we sell to someone else and they will keep it forever. At the end of the day, no one actually deregisters and smash a car. It’s never a piece of metal, a Ferrari. It’s always a nice car to drive.
We have certain requirements for our dealerships and you have to display the whole range, in production, at that time. When you enter the showroom, you have the full range available and the person will show you around the showroom, to explain the different cars and to explain all the different types of performance and personalization that you can have in the car. We have an area of the showroom dedicated to personalization, with a nice sofa and all the samples that you can choose from, such as color. It’s quite an experience, actually. I would say that, if you come in with a precise idea of which car you want, it’s easy. You come in, you say, look, I’m very well-prepared – maybe a repeater – I know what I want. But the best solution is when you don’t know what you want, and we take you through the overall experience and we develop your awareness of the brand and we develop your demand.
To be honest, I think this is quite common in luxury business, overall, whether you’re talking about cars or watches. You need to accompany your clients during their journey and everyone has their own journey. The process and the model is the same but then everyone has their own journey and you take them through the different aspects.
Let’s assume you decide on the model and you want to personalize. We have different grades of personalization. You can go from, simply choosing the color of the car or the color of the interior, to decide and build up your own color. We have hundreds of colors, but you can decide which color you want, even if it’s outside our enormous choice of colors that we have. You can go up, up, up to what we call one-off, where you build up your own car. There are a very few limitations, mostly linked to the chassis. But once you have the chassis, then you can build up your own car. This is not very common, to be honest, because you need to be quite affluent to do that. But it is an experience. So you can personalize your car, from simply choosing a color, to go up and up, to the maximum level of personalization, which is the one-off car. This is the choosing the product part.