Chinese Brand Binge Claims First Victim
A year ago, we wrote about China’s suicidal brand binge:
“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.”
A year later, the brand disease claims its first victim, and it is Chery.
A report by Reuters says that Chery barely made money during the heydays of 2009 and 2010, and “would have been deep in the red if it were not for the 633 million yuan and 1.12 billion yuan in subsidies it received in those two years.” Chery is not dead yet, but it would be without government life support.
Chery’s problem: Instead of building on the success.of its hit QQ, says Reuters, Chery “rolled out dozens of new models with little differentiation and even created two additional brands, Riich and Rely, which never caught on.” In the meantime, domestic rivals like Great Wall and Geely, which focus on fewer models and did not get infected by brand mania, thrive.
In September, the CEO of Dongfeng, one of China’s largest automakers, said that last year’s brand binge was misguided, “irrational, incompetent, and immature.” He also recommended that China’s planners should “withhold resources,” and starve the afflicted companies to death. Chery would be one of the first to be euthanized.
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="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
More by Bertel Schmitt
Comments
Join the conversation
-insert Super Mario FAIL sounder here-
When I was younger I had a 3-5-year spell of drawing my own cars and formulated plans for multiple brands under one roof. Yes I had the silly names. I think one of my brands was called Rainclub. And I had a luxury division called Amundsen. Not as bad as Gleagle (did you say Glee-agle?) but close. :P The fact that they're all doing this child's play - does it make me a prophet, or does it just confirm my chinese heritage? lol.
Thank god they are killing those stupid brands. Who on their right mind would buy a "Riich" car?
Chery is indeed an SOE. That's a big part of its problem. All the other notable SOEs have partnered with foreign makers, mostly sitting back on their haunches while the money rolls in. Yin Tongyao may be a good engineer, and a pioneer in his own rite, but he's not the man to be at the helm of a promising company like Chery. How could he have launched such an unmarketable and ludicrous naming spree leading to Riich and Rely, if he wasn't a bull-headed xenophobe? Chery, now that you've got some designer heavies on the payroll, why not bring in some people with management and marketing talent. A shake-up at the top is overdue.....survival depends on it.