It happens to all foreign joint venture partners: They are invited to have tea and a chat with representatives of China’s National Development and Reform Commission (NDRC). After the pleasantries are exchanged, the weather has been discussed, and statements of mutual admiration have been made, someone from the NDRC side will say: “Don’t you want to start a Chinese brand? We would really appreciate it.” Who can say no to the wishes of the Chinese government?
The latest to say “Ja” is BMW. BMW will build a second, truly “Chinese” brand for China. “We are discussing this with the NDRC, and we will find a solution,” said BMW CEO Friedrich Eichiner to Germany’s FAZ. BMW’s futuristic carbon fiber i cars won’t be BMWs in China.
Some will say that this will be BMW’s second Chinese brand, because its joint venture partner Brilliance has this irritating tendency of building cars that could be mistaken for a BMW. But that’s a different story for another day.
There is no law that demands that every joint venture has to have a Chinese brand. But there are strong suggestions by the Chinese government that doing so would improve the overall harmony. GM has its Baojun, Honda has its Everus, Nissan has its Venucia. Even Toyota, long opposed to any Chinese brands, caved it and allegedly will offer electric vehicles under a Chinese brand.
Volkswagen will offer its EVs and hybrids under the “Kaili” brand in China. And BMW will offer its “New Energy Vehicles” under a new, yet to be announced name.
Now why the push for Chinese brands? Multiple reasons. Carlos Ghosn, who agreed to supply a Venucia EV instead of a Leaf to China, said it’s national pride. A few months ago in Beijing, he said that Germans have a strong German car industry, France has a French car industry , Japan a Japanese and so forth. He had great sympathies for the world’s largest auto market seeking a bit of national identity – as long as Ghosn keeps his fingers in the pie. There’s more: If the brand and the model are officially Chinese, then no licenses for brand and model have to be paid (which does not mean that there won’t be license payments for the innards.) Cars will be high quality and can be exported. And lastly, the Chinese government is frustrated with its own car industry which is loafing along at 30 percent market share. And finally, the Chinese government is partner, in one way or the other, in most joint ventures, and has little to no interest in homegrown companies. As a final point, the Chinese government is unhappy with the slow pace of the electrification of the homegrown Chinese industry, and wants foreign help while keeping the all-important face. And ultimately, and so on.