By on October 13, 2011

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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11 Comments on “China On A Deadly Brand Binge...”

  • avatar

    Well, there were a lot of brand during the early years of American auto-making as well. As the market matures, they will inevitably be consolidated into a few strongest ones. Strange that the guys running the Chinese automakers did not know the history, and are now running headlong into repeating it…

  • avatar

    This sounds about right for my people. Traditionally, the Chinese have regarded western-style marketing and branding as an exercise in puffery and ripping people off…. why pay for a brand name when you could pay less for a generic. Hence the gleeful abandon with which knock off cell phones come out of Shenzen… in a way, it’s the Chinese version of ‘sticking it to the man’.

    So no surprise that collectively, marketing sophistication isn’t on par with other economies…. we understand the charging people more part of capitalism, but we don’t really have a handle of giving people more for their money. That’s not to say that it can’t happen. But this was part of the reason why Lenovo expanded outside of China, because internally, the Chinese consumer market was an overcrowded, overcapacitied mess.

  • avatar

    Have these people ever heard of General Motors?

  • avatar

    Bertel, has Geely increased the number of brands they have? I know they were already using two brands, Geely and one that uses a maple leaf as a logo I think.

  • avatar

    Is Ron Zarrella running Chinese car companies?

  • avatar

    Beat me to it, Russ.

  • avatar

    I’d buy a Chinese car with a nice enough brand… for sure. How could they not do it better than Hyundai?

    Still waiting though.

  • avatar

    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.

    • 0 avatar

      Not to mention dead American ones: Studebacker, Packard (instant luxury cachet there!) Nash, Hudson, Edsel, Desoto, Oakland, LaSalle, and the more recently deceased: Saturn, Pontiac, Mercury, Oldsmobile, Hummer, Plymouth…

      For their invasion into Europe, how about Simca, or Riley? Wolseley? I know they have MG, and the famous Longbridge plant.That Hong Qi limousine would be perfect with the Vanden Plas badge.

      • 0 avatar

        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.

  • avatar

    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.

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