China On A Deadly Brand Binge

Bertel Schmitt
by Bertel Schmitt
china on a deadly brand binge

If your dearest wish is that the Chinese car industry will implode, then you should pray that the Chinese remain on strategy. For whatever inconceivable reason, the Chinese car industry has embarked on a plan, which – if properly executed – will mean its assured destruction.

Government planners tell Chinese car manufacturers: “Create successful brands.” Manufacturers reply as a chorus: “Yes, we will create as many brands as possible.” Every second word at the Chengdu conference appeared to be “brand.” If Chinese carmakers will do what they say – and they appear to be utterly committed – then China will soon wallow in a sea of car brands nobody has ever heard of, and nobody will ever be able to remember. Sometimes, it feels as if it is the long-term goal to give each and every of the 1.3 billion Chinese his or her individual car brand.

It’s not that there is a shortage of brands already. Nobody has an exact number, but the guesses are over 100. Soon, that number could easily double. BAIC alone announced today that it will add 9 new brands on short notice. Others have similar plans.

At the same time, speakers at the conference named many reasons why it is less than prudent to create many brands.

  • “Our brands have low name recognition.” But nobody warns that it costs untold sums of advertising money to create this recognition.
  • “We compete against brands that sometimes are over 100 years old.” But nobody warns that a new brand can take decades to be successful – if it doesn’t succumb to crib death.
  • “The multinationals invest a lot of money into advertising.” But nobody warns that already small budgets will get increasingly smaller when spread over many brands.
  • “Customers expect to pay 20 percent less for homegrown brands.” But nobody says that it is more lucrative to stay with the brands we know.
  • “Consolidation is a given.” But nobody says that the easiest way to consolidate is to trim down brands.

While large car companies the world over prune their brand portfolios, Chinese carmakers are turning from car factories into brand factories. Joint ventures that have successful and well-known brands are urged to create new unknown brands. The knowledge and grasp of branding appears to be rudimentary. Colleagues in the business say that often, “branding” in China begins and ends with developing a logo.

Developing a new cars brand is risky, costs untold amounts of time and money. China appears to be dead-set to embark on this treacherous, costly and long journey with a highly doubtful return. In the bad old days, GM tried to leverage the equity remaining in existing brands by sticking their badges on the same body. Even the smallest carmaker in China appears to be bent on being a miniature GM. Except that now unknown badges are stuck on the same body.

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  • Zarba Zarba on Oct 13, 2011

    It' just an emerging industry, like the US car business from 1910-1930. Brands popping up,flaming out, and disappearing, while others catch on and thrive, swallowing up the weak players. In 10 years or so, they'll have shaken this all out. I'm surprised they haven't bought more defunct names; Packard, Stutz, Hipano-Suiza, Delahaye, Delage, etc., for the instant name recognition.

    • See 1 previous
    • RogueInLA RogueInLA on Oct 14, 2011

      @MrWhopee Only if they're not going to sell them in the countries they were originally sold in. I can't imagine that anyone in the United States who recognizes the names would buy a Chinese car because it had a Packard etc name on it, the cars would get ridiculed. Oh wait, you put Edsel in there... sorry, didn't get the sarcasm at first, carry on.

  • Sprocketboy Sprocketboy on Oct 14, 2011

    I like the faux-Bentley logo (with an "R") in the top right corner of the photo. The world needs more distinct car logos. Couldn't they have hired someone on the Internet to come up with something original since nobody is going to mistake that car for a Bentley.

  • FreedMike This article fails to mention that Toyota is also investing heavily in solid state battery tech - which would solve a lot of inherent EV problems - and plans to deploy it soon. https://insideevs.com/news/598046/toyota-global-leader-solid-state-batery-patents/Of course, Toyota being Toyota, it will use the tech in hybrids first, which is smart - that will give them the chance to iron out the wrinkles, so to speak. But having said that, I’m with Toyota here - I’m not sold on an all EV future happening anytime soon. But clearly the market share for these vehicles has nowhere to go but up; how far up depends mainly on charging availability. And whether Toyota’s competitors are all in is debatable. Plenty of bet-hedging is going on among makers in the North American market.
  • Jeff S I am not against EVs but I completely understand Toyota's position. As for Greenpeace putting Toyota at the bottom of their environmental list is more drama. A good hybrid uses less gas, is cleaner than most other ICE, and is more affordable than most EVs. Prius has proven longevity and low maintenance cost. Having had a hybrid Maverick since April and averaging 40 to 50 mpg in city driving it has been smooth driving and very economical. Ford also has very good hybrids and some of the earlier Escapes are still going strong at 300k miles. The only thing I would have liked in my hybrid Maverick would be a plug in but it didn't come with it. If Toyota made a plug in hybrid compact pickup like the Maverick it would sell well. I would consider an EV in the future but price, battery technology, and infrastructure has to advance and improve. I don't buy a vehicle based on the recommendation of Greenpeace, as a status symbol, or peer pressure. I buy a vehicle on what best needs my needs and that I actually like.
  • Mobes Kind of a weird thing that probably only bothers me, but when you see someone driving a car with ball joints clearly about to fail. I really don't want to be around a car with massive negative camber that's not intentional.
  • Jeff S How reliable are Audi? Seems the Mazda, CRV, and Rav4 in the higher trim would not only be a better value but would be more reliable in the long term. Interior wise and the overall package the Mazda would be the best choice.
  • Pickles69 They have a point. All things (or engines/propulsion) to all people. Yet, when the analogy of being, “a department store,” of options is used, I shudder. Department stores are failing faster than any other retail. Just something to chew on.
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