henri sun felix mikaelian - fudan...

Henri Sun Felix MIKAELIAN

INTRODUCTIONWho is Geely?

The first Chinese private automobile manufacturer

Not only a manufacturer, but also a R&D company

Not only it is a company, but also has schools

Not satisfied with the Chinese market, but reaching out to the global market

Geely has developed a range of strategies in order to competewith both international and Chinese brands

Automobile market in the world, size, increase rate ?

Automobile market in China, size, key players,increase rate ?

What is Geely’s business model ?

Geely history and Company Overview ?

Geely’s Competitors Analysis & SWOTAnalysis (Cherry, Volkswagen, Toyota)

What are Geely’s product strategies?

What are the competitive advantages of Geely comparing to its competitors?

What are Geely’s marketing and product strategies in China?

EXECUTIVE SUMMARYKey Questions

PLAN

1) Introduction• Who is Geely ? • Key Questions

2) Automobile Market Situation

• WorldWide • In China

3) Company Overview• History • Value Chain • Business Model • Key Figures • Location

• Multi-Brand Strategy • Integration • Internationalization Strategy • R&D Strategy • Human Ressources & Education

3) Geely Strategy

4) Competition• Key Figures Comparison • SWOT • Porter 5 Forces • Competitive advantages and

marketing solutions5) Conclusion

PLAN





3) Geely Strategy




AUTOMOBILE MARKETWorldwide

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

World passenger car production – trend | 1997-2012

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

-0.7%+4.2% +3.7% -3.4% +3.8% +1.5%

+6.2%

+6.6% -0.9%

-9.4%

+22.0%+2.9%

+6.5%

Units

+5.2%

2012

+5.2%

The production of passenger car is constantly increasing since the beginning of 21 century. A little downturn happened in 2008/2009 because of the financial crisis.

World passenger car production – international comparison | 2001-2012

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

Units

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

EU

China

Japan

South Korea

India

USA Brazil

Russia


In 2001, EU used to be the first producer, followed by Japan and US. During the last decade, production in EU and Japan has decreased, while US production is quite constant.

The production in China has increased dramatically, from 1M in 2001 units to 16M units in 2012, being now the first producer in the world

10,000,000

15,000,000

20,000,000

25,000,000

5,000,000

0

Passenger car production - international comparison (% share) | 2000 – 2012

2000 2005 2010 2012

EU* NAFTA Japan South Korea BRICUnits

39.3%

20.3% 20.3%

6.3%8.4%

34.1%

14.2%

19.2%

7.2%

15.8%

26.2%23.2%

8.7%

11.0%

14.3% 13.6%

6.6% 6.6%

35.2%

37.1%


Since 10 years, we can see that the influence of emerging countries in the world production of passenger cars increased from 8.4% to 37.1%

Passenger car production - world (% share) | 2012

SOUR

CE: A

CEA

- OIC

A –

2013

11.0% NAFTA

13.6% Japan

23.2% EU

24.6% China

South Korea 6.6%

Brazil 4.2%

Others 3.2%

Russia 3.1%

Europe - Others 1.0%

India 5.2%

Asia-Others 4.3%


In 2012, EU produce 23.2 % of cars in the world China produce 24.6% of cars in the world

Together, China and EU produce half the cars in the world

Asia 35% China 19.2% Japan 6.6% India 4.0% South Korea 1.9% Asia-Others 2 3.3%

Europe 23.5%EU 17.5%EFTA 0.7%Russia 4.3%Turkey 0.8%Ukraine 0.3%

America 31.2% NAFTA 24.8%

USA 20.9%

MERCOSUR 6.4%

Brazil 5.3%

Others 10.2%


New passenger car registrations - world (market shares) | 2012 New passenger car registrations - world (market shares) | 2012

The trend of market share is close to the trend of production.In developed countries, the number of car sold are decreasing, whereas it is increasing in other countries. In 2012, The main market is Asia, followed by America, and Europe. China represents 19.2% of new passenger car registrations in 2012

Annual production of passenger cars by international manufacturers

VOLKSWAGEN

TOYOTA

HYUNDAI

GM

HONDA

NISSAN

FORD

PSA

SUZUKI

RENAULT

B.M.W

SAIC

FIAT

DAIMLER AG

CHRYSLER 656 8921 455 6501 501 9791 523 398

2 065 2162 302 769

2 483 7212 554 059

3 123 3403 830 954

4 078 3766 608 5676 761 074

8 381 9688 576 964


2012

Wolkswagen, Toyoya, Hyundai, GM, and Honda are the 5 main manufacturers in terms of production of cars.In 2012, Geely produces around 680 000 car units In 2012 Volvo produces around 230 000 car units.

Car Sales since 2003 (Millions)

0

5

10

15

20

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

AUTOMOBILE MARKETIn China

The Cars Sales since 10 years has been increasing, especially since 2007 with a higher grow rate, ignoring the economical crisis.In 2012, almost 20M cars were sold.

AUTOMOBILE MARKETIn China

Car Sales by Manufacturer in China in 2012 (Millions)

GM

Wolkswagen

Hyundai-Kia

Nissan

Toyota

Ford

Great Wall

Chery

Geely

PSA

0 1 2 3

0,4420,4910,5630,6250,627

0,841,18

1,332,812,84 PSA

4%Geely 4%Chery

5%Great Wall 5%

Ford 5%

Toyota 7%

Nissan 10%

Hyundai-Kia 11%

Wolkswagen 24%

GM 24%

Market Share by Manufacturer in China in 2012

GM, Wolkswagen, Hyundai, are the main 3 car manufacturers in China in terms of sales. (around 3M cars). Their sales growth rate is increasing on the last year. They are followed by Nissan and Toyota, but their growth rate has been decreasing on the last years.

GM and Wolkswagen represents half the Chinese Market Share, Hyundai, Nissan and Toyota represent a quarter of the Chinese market share.

CompetitionSuppliers Customers

Substitutes

New Entrants

Very high barrier for new entrants

Eco friendly electricity cars

Raw material = low bargain power

Engine, transmission = High bargain power &

profit share

COMPETITIONPorter 5 Forces

Consumer in China Consumer Abroad

Chinese consumer focus on social status the car provides « ⾯面⼦子 »

!Quality, Authentitcity

Influenced by the trend, and prefer international well known brands Authentitcity

Show off Design

New middle class young chinese salary better, tastes higher, can pay between 100 000 - 500

000 thousands RMB. In foreign countries, emerging markets consumer

who want cheap but quality cars (geely)

They wants affordable cars, but they want looks like high end cars.

COMPANY OVERVIEWSegmentation

PLAN





3) Geely Strategy




COMPANY OVERVIEW

1986 1994 2005 2008

MILESTONES

Entered the motorcycle

industry

Creation of Geely

(refrigirators)

Listed on the Hong Kong

Stock Exchange

Launched multibrand

strategy

2009

Most Honored Enterprise in

China

History

1997

Entered the automobile

industry

2010 =

• 2008 - Possible take over of Volvo Cars • 2009 - Geely preferred buyer of Volvo • August 2010 - The deal is confirmed !• Volvo is still independent • Geely wants to make Volvo cars in China and

access the E.U market

COMPANY OVERVIEWHistory

COMPANY OVERVIEWValue Chain

Raw Material

Out-sourced manufacturing

Car parts: Engine, transmission

AssemblySelf-manufacture Direct Sales Channel

After-sell service (call center)

Outsourced after-sell serviceSelling Agents

Customers

KEY PARTNERS

KEY ACTIVITIES

KEY RESSOURCES

VALUE PROPOSITION

CUSTOMER SEGMENTS

CHANNELS

REVENUE STREAMSCOST STRUCTURE

COMPANY OVERVIEW Business Model

CUSTOMER RELATIONSHIP

Geely refers to its dealer network as 4S stores and also sells some models online. (Tmall)

Automobiles, motorcycles, engines, transmissions

Shanghai LTI Automobile Components (Joint Venture) - Taxi Cab!DriveTrain Systems international, a global transmission developer!5 overseas factories assemble Geely Models (Indonesia, Sri Lanka, Malaysia, Russia, Ukraine)!

9 Factories in China!2 making plants of Volvo!

Chinese new young middle class willing for an average price car that look like an high-end luxury car

Foreign developing countries customers who are looking for a cheap and efficient car

Affordable price SafetyTechnologyLuxury LookQualityEco-friendly

Volume of unit sold Sales Worldwide Listed on Hong Kong Stock Exchange

Labor Force Material LogisticsManagementR&D Depreciation Other Costs

Product QualityManagement of after Sale service systemFive Star Call center, electronic based service Stronger Brand image

08

09

10

11

12 483 483421 611

326 710326 710

204 205Annual Sales

Volume 2008-2012

Annual Production Volume

2008-2012

08

09

10

11

12 625 000600 000

560 000420 000410 000

COMPANY OVERVIEWKey Figures

Both Annual Production and annual sales of Geely has been increasing between 2008 and 2012. Geely is still producing more than it sells.

9 x

18,5K x

14+ x

5 x

981 x

480K x

21%

4B

COMPANY OVERVIEWKey Figures

Factories in China

Workers

Brands

Car Models

Shops in China

Cars Sold in 2012

of cars are exported

Profit

37 x43 x

Agents abroad

Shops abroad

COMPANY OVERVIEWLocation

Shanxi

Beijing

Shanghai

Ganshu

Sichuan

Hainan

Zhejiang

Shandong

Hunan

Vehicule FactoryPower Train FactoryUniversityParts FactoryHeadquarters

PLAN





3) Geely Strategy




GEELY STRATEGYSummary

1. Multi-Brand Strategy 2. Integration Strategy 3. Internationalization Strategy 4. R&D Strategy 5. Human Resources & Education Strategy 6. E-commerce Strategy

GEELY STRATEGYStrategical Transformation

Geely (1997)

Emgrand (2009)

Gleagle (2008)

Englon (2010)

Volvo (2010)

New Mission

Producing the safest, most environment friendly and most

energy saving cars. Geely cars everywhere in the

world

Old Mission

Making cars cheap enough for people to buy.

Geely cars everywhere in the world

GEELY STRATEGYStrategical Transformation

GEELY STRATEGY

Successfully change the image of “the cheapest car”

BYD CheryGeely

0%

25%

50%

75%

100%

2008 2008 2009

41%69%97%

33%

26%

1%

26%

5%2%0%

25%

50%

75%

100%

2008 2008 2009

27%22%12%

72%64%

56%

1%13%

32%

0%

25%

50%

75%

100%

2008 2008 2009

33%29%31%

31%33%32%

36%38%37% ≤ 4 万4-6 万≥ 6万

≤

Strategical Transformation

GEELY STRATEGY

Geely made a collective event stimulating the community in order to create a new car emblem for his brands.The total cost of the event was 3.6Million yuan

Strategical Transformation

GEELY STRATEGY

1997 2009 20102008

BRANDS

Multi Brand Strategy

EC7-RVEC7EC8

Personality, Style, Passion, Leisure, Fun Core Value: “Creating for the Future”

GEELY STRATEGYMulti Brand Strategy

Classic, Rational, Mature, Family, Trust Core Value: “Rational and Low Profile”

GX7

Panda

GC7

New Vision

GX2

New Free Ship


King Kong Golden Eagle TX4 SC6

SX7 SC7 SC5-RV SC3

Solid, Strength, Excellence, Elegance Core Value: “Chinese Wisdom, World Quality”


EC7

OthersSC6

EC8SC3

GC7Geely PandaGeely KingKong

Free Cruiser

SC7

GX7/SX7Vision

Model Unit Sold %EC7 142,503 29,5%

Geely KK 78,444 16,2%Free C. 66,481 13,2%

SC7 45,569 9,4%GX7/SX7 30,793 6,4%

Vision 33,306 6,9%Geely P. 31,471 6,5%

GC7 14,948 3,1%SC3 12,952 2,7%EC8 12,771 2,6%SC6 11,377 2,4%

Others 2,868 0,5%Total 483,483 100%

Annual Sales by model (2012)


S80 XC70 C70 XC90

S60 XC60 C30 C70

Environment, safety, design, excitement and quality


Sales Volume 176999 cars


Number of shops297


Number of shops360

40.000 - 230.000

RMB61.000 - 210.000

RMB37.000 - 130.000

RMB

Number of shops324

Sales Volume 42 000 cars

6.1%

Number of shops

240.000 - 620.000 RMB


TOYOTA : 5 different brands


GEELY STRATEGYIntegration Strategy

Vertical Integration

Transmission Raw Materials Labor Force

DSI acquisition (2009)

英国锰铜公司 (2013)

Geely owned Schools

Horizontal Integration Volvo

Geely, Shanghai Huapu and The British manganin company (2013) signed agreement to produce together english taxi

2013 : Geely purchased the The British manganin company and owns 100% shares of company

First event

Second Event

1st meaning : Now Geely has exclusive production 2nd meaning : Now Geely can lower prices

GEELY STRATEGYInternationalization Strategy

1. Import & Export 2. Offshoring 3. Outsourcing 4. International M&A 5. International

Financing

1. Domestic low-end Market is saturating, new opportunities in less developed country

2. Lower labor and material costs

3. Improve the brand image

Strategy Reasons


Performance Figures

07 08 09 10 11 12

101 908

39 600

20 55519 350

37 940

21 079

Export Sales Volume (Unit)

3rd export car manufacturer

in china


Top Export Destinations in 2012

Russia

Iraq

Saudi

Ukraine

Iran

Egypt

Chile

Sri Lanka

Cuba

South Africa

Turkey

Others 9 4221 0361 258

1 9662 6642 7442 829

4 16512 835

15 16322 882

24 924


EC7 34%

Other 1%SC7

6%EC8 6%

Geely KingKong 24%

Free Cruiser 19%

Geely Panda 11%

Top Cars Exported Abroad in 2012


GEELY STRATEGY

Education

R&D

Labor Force

DSI Acquisition Transmission

GEELY STRATEGYEducation and R&D Strategy

Brand Image

1850023003

GEELY STRATEGYGEELY STRATEGYE-commerce Strategy

Geely

PLAN





3) Geely Strategy




Year 2012

Production 5 771 789 ? 9 909 440 625 000

Total Sales 9 070 000 740 000 9 748 000 581 908

Sales in China

2 810 000 560 000 840 000 480 000

Export 180 000 101 908

COMPETITIONKey Figures Comparison

STRENGTHS

OPPORTUNITIES THREATS

WEAKNESSESR&D Internal Management Integration and cost saving structure Contributing to better price service system

Cost advantage to foreign brands International Operation and financing channel

New trends in car market, such as new power, with government support Acquisition of DSI, Manganese Bronze, VolvoMulti-Brand Strategy

Growth in the international Market for Chinese Brands

Low market share compared to being the first Low public awareness compared to high promotional cost Low end image hard to change

Disadvantage in tech, image compared to foreign brands Low financing support

Large investment and strategy change brings uncertain effect, due to the difficulty in changing its brand image (multi brand strategy

Risk of expanding too fast in the foreign market Absence of foreign after-sell service Core competitiveness, clear positioning International structure and integrated strategy should follow up

COMPETITIONSWOT

PLAN





3) Geely Strategy




Thanks for your attention !

henri sun felix mikaelian - fudan...

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