Beijing Auto Show photo found here
WSJ story on how, up to now, the foreign car companies operating inside China have focused on the upscale end of the market while the domestic firms have focused on the lower-end market. As China's middle class emerges, a new middle-ground battlespace opens up, with both sides--foreign and domestic--increasingly bumping into one another, chasing the same customers.
This is intense competition. Just like in politics, where the first vote in college tends to stamp the voter for life in terms of Dem versus GOP, when it comes to car buying, the first choice usually leads to a lifetime of brand devotion. Good example: I've bought 9 Hondas over the last two decades. Started with a VW Fox and hated it, and then went to a Honda Civic and loved it. One Audi GT Coupe in there, provided by my mother-in-law, but once I settled on Honda, it's been Hondas ever since in terms of purchases.
Well, imagine all those first-time buyers in China.
So look for the foreign companies to move aggressively downmarket and the domestics to move aggressively upmarket, which is why a Geely buys Volvo--for example.