China On A Deadly Brand Binge

Bertel Schmitt
by Bertel Schmitt

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.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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4 of 11 comments
  • 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.

  • Richard Poore Sure, as the article itself notes (hence my ire) California has mandated that all new vehicles sold in state be EV by 2035. They require EV or hybrid by 2026. Since the author admits to this mandate it seems that the article title is clickbait... was really hoping that there was some sort of changes in the CA position since the state is sorely behind on where they need to be with charging stations for this sort of requirement.
  • VoGhost When will Audi eliminate the fake, oversized grills that impede aerodynamics?
  • Kelley It's about time! I was so discouraged to see those poor Chevy Bolts stuck at the charging station receiving level 2 speeds after 80%, it was ridiculous. It would be nice if EA would had more level 2 chargers, also, at the same locations for people to top off above 80% on the fast chargers.
  • Tane94 Carmela Harris is supportive of EV adoption, so government incentives will be continuing under her watch.