Following our last blog post – a sector update on the Chinese automotive industry – we spotted an interesting article in last week’s AdAgeChina entitled “Great Wall is China’s Turtle in the Race to Build Global Car Brands” by Yang Jian of Automotive News China.

Great Wall Motor Co. is a small Chinese automaker. But its recent achievements provide some food for thought for its domestic peers who may be seeking to enter new or more developed markets such as Western Europe and America.

Between 2005 and 2007, a number of own-brand Chinese passenger vehicle brands – including Chery Automobile Co. and Zhejiang Geely Holding Group Co., Hebei Zhongxing Automobile Co. and Changfeng Motor Co. – displayed their vehicles at overseas auto shows.  In addition to participating in foreign auto shows, Shengyang Brilliance Jinbei Automotive Co. sent its vehicles for crash tests in Europe in 2006 and 2008, but the ratings received were very low.

After recognising the difficulties of meeting the stringent safety and emission standards of the European and American markets, most of these Chinese companies had, by late 2008, given up on any immediate-term plans to introduce their cars into these markets.  Some have this year looked into the possibility of merger and acquisition opportunities, which would effectively be a ‘short-cut’ to enter these new markets but, to date, no meaningful progress has been made in this area.

Great Wall, however, has adopted a different approach and strategy – one which can be summarised as more low key but more persistent – hence the article’s reference to ‘the hare and the tortoise’ fable.

Great Wall sold about 125,000 vehicles in 2008, with around half being exported to other developing markets.  It has yet to send its products to exhibitions in developed countries.

Instead, the company has been focusing its efforts on building, improving and upgrading its vehicles so they will meet the standards of these developed automotive markets.

In June of this year it began exporting three vehicles to Australia after certifying them for the market there.  In September it has managed to certify four of its models for the European Union – and with it has become the first domestic Chinese auto manufacturer to clear all the regulatory hurdles necessary to launch its vehicles within this market.  Great Wall has also, this year, begun preparations to design cars in line with U.S. safety and emission standards, with the aim of certifying them for the American market.

While its vehicles may be certified for the European market, Great Wall must still focus on building a suitable distribution network and put much effort into marketing before it can sell its products there.  But few would deny that with the slow, steady and solid progress it has been making of late, the company seems to be well ahead of its contemporaries in the race to crack Western auto markets.

For more information on our research experience in the automotive industry, please visit: http://www.b2binternational.com/China/b2bsectors/automotive.php

Two news articles about the Chinese automotive industry have been circulating this past week.  First is the news that in January, China overtook the United States in monthly vehicle sales for the first time, according to figures from the China Association of Automobile Manufacturers.

If the trend continues throughout the rest of 2009, China will become the world’s largest vehicle market, having already overtaken Japan in 2006 to become the second-biggest auto market.

While car sales have slowed in China over recent months, the slowdown has been even greater in America, and car manufacturers are all looking at new ways to encourage sales - new advertising campaigns, sales promotions and pricing discounts, improved customer service and warranties, etc.

On the back of this comes news that China’s largest independent car manufacturer, Chery, which is known for its small cars, is hoping to introduce a Chinese luxury car line.

Still in the early stages, neither the launch date nor the name of the new luxury brand has been announced.

In the past, Chery has been criticized by some for developing more projects than it can manage successfully.  However, its new company philosophy is to concentrate more resources on a smaller number of tasks.

By announcing its intentions to enter a new market, we assume that the company intends to focus considerable efforts on serving this new segment, and we presume that it has carried out a thorough market assessment study to establish that there is an opportunity for its specific new offering.

In the latest issue of Asia Research, Alaric Fairbanks, General Manager of B2B International in Beijing, talks about setting up and running a market research company in China.  Over the next three blog posts, we will serialize his interview:

Tell me about B2B International

As the name implies, we work in b2b markets and are international.  We are a specialist business-to-business market research company, with our group headquarters in the United Kingdom and subsidiaries in New York and, of course, Beijing.  Our focus is exclusively b2b, and although we cover all b2b markets, we have particular strengths in chemicals, pharmaceuticals, engineering, construction and financial services.  In terms of services, our main focus is on full service research, covering market assessment, segmentation, customer satisfaction, new product development, competitor analysis and pricing studies, and our major clients are multi-national firms engaged in b2b markets.  In Asia we also complement our full service work with data collection.

What were the main challenges when you first set up the business?

We set up permanently here in 2006 and in many ways the challenges we faced when setting up in China were similar to those that many foreign-invested businesses in China, including some of our clients, face.  These include recruiting staff, adapting and integrating systems and working styles into the local conditions, and on a practical level finding reliable partners or suppliers, particularly in areas such as IT and financial services.  I regard these as important challenges to deal with, but the primary issue from day one was, and remains, generating business and delivering quality work.

Look out for Part 2 of the interview in our next blog post.