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What do own brand manufacturers need to do to compete with JVs in the Chinese market?

What do own brand manufacturers need to do to compete with JVs in the Chinese market?
Issue Time:2016-08-12

 Ever since the rise of the Chinese automotive market, the topic of when and how domestic own brand manufacturers will be able to take on joint venture enterprises has stirred heated debate.

When discussing homegrown Chinese brands, one of the most recognizable is FAW’s Hongqi. Since its establishment, Hongqi has sought to develop and produce luxury vehicles which can compete on the global stage. However, without being able to succeed in even the Chinese market, it is impossible to reach that global level. Even though models like the HQE, LS5 and L5 have been praised, their sales have been very poor due to the models’ lack of technical prowess. Patriotic sentiments seems to fade when consumers actually have to put out their wallets.

While it is currently unfathomable for Chinese manufacturers to lead on a world stage, they do have the potential to be able to compete with rival JV companies in their own market. Only by succeeding here will they be able to realistically achieve that next level. Geely, Changan, Chery and BYD are among the own brand manufacturers that many analysts are looking towards.

Among them, Geely and BYD deserve special attention. Sales of Geely’s Borui sedan have been very commendable. The Boyue SUV, which was chosen as the vehicle to be used for escorting guests to the upcoming G20 summit, also looks to be very promising, as it keeps the Volvo-inspired design language that has been key to the market success of the Borui. Geely has also benefited from effective advertising and marketing campaigns. With its use of Volvo’s technology, Geely has a lot of advantages going for it as it seeks to become a leading enterprise in the Chinese automotive market.

For its part, BYD has previously been engaged in price war to compete in the automotive market. Eventually BYD found its own stride by focusing on the new energy vehicle segment. Samsung has previously spent 3 billion RMB to purchase a 2% share in BYD. As an increasing number of consumers shift towards new energy vehicles and driverless technology, BYD may very well see even more market success in the future. One of BYD’s biggest hurdles that it needs to contend with is its perceived lack of attractive vehicle designs.

The road is still long for own brand manufacturers, which need to continue working to improve their R&D capabilities and increase their brand reputation in the country. With the appropriate design and technological prowess, Chinese manufacturers will be able to better leverage feelings of patriotism to take a leading position in the market.

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