the chinese automobile industry is driving west
TRANSCRIPT
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1Rollins College: Prof. M. Fetscherin
The Chinese Automobile Industry is
Driving West
Prof. M. FetscherinProf. M. Sardy
Rollins CollegeDepartment of International Business
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2Rollins College: Prof. M. Fetscherin
Chinese Cars Years Ago…
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3Rollins College: Prof. M. Fetscherin
…Today They Have Small Cars…
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4Rollins College: Prof. M. Fetscherin
…Sports Cars…
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5Rollins College: Prof. M. Fetscherin
… SUV and Sedans
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6Rollins College: Prof. M. Fetscherin
Agenda• Introduction
• Players, power, partnership
• First move going global and challenges
• Footprint Japanese or South Korean
• Chinese auto makers and takers
• Strategic options
• Conclusion
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7Rollins College: Prof. M. Fetscherin
Introduction
• 2005 first Chinese auto companies appeared in global 500 • SAIC with sales USD 12.4 bn
• FAW with sales USD 14.5 bn
• Production of 6 million in 2006, > German
• Third largest auto market
• Fragmented market 120 producers, 12 major• Small local manufacturers
• Large national with JV
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8Rollins College: Prof. M. Fetscherin
Players, Power….• 50th anniversary, but infancy • Liberalization of trade policy, import taxes• Key Players
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9Rollins College: Prof. M. Fetscherin
…and Partnership• Two types of Chinese automotive companies
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10Rollins College: Prof. M. Fetscherin
Production
Chery production
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11Rollins College: Prof. M. Fetscherin
Parallels to Japan and South Korea
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12Rollins College: Prof. M. Fetscherin
First Move Going Global
• Exporting introduction stage (PLC)
• In 2003, Honda produces cars to export to Europe and Asian markets
• In 2005, 170,000 vehicles exported • Asia, Africa, South America, Europe
• Trucks (60%)
• Chinese domestic brands
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13Rollins College: Prof. M. Fetscherin
Key Challenges• Currency risk, import restriction
• Processes• Lack of sales
• Distribution, and
• After sales
• Product• Quality issue (e.g., safety, environment standards)
• Brand
How do customers value Chinese cars compared to competitors?
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14Rollins College: Prof. M. Fetscherin
Value Map• Some SUV
EXAMPLES
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15Rollins College: Prof. M. Fetscherin
Auto Makers and Takers• Passenger car sales vs. Number JV
• Importance of JV?
• More JV, more sales?
• Importance of building own brand?
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16Rollins College: Prof. M. Fetscherin
Brand Matrix• Passenger car sales (own brand) vs. JV
• Extracting sales under own brand
• Matrix with 4 categories
• Each specific characteristics
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17Rollins College: Prof. M. Fetscherin
Example Rover
SAIC has launched its first own-brand car based on technology from the defunct British carmaker Rover.
The introduction of the "Roewe 750" (the name means "glory and authority" in Chinese) will be based on Rover 75 technology purchased from BMW.
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18Rollins College: Prof. M. Fetscherin
Conclusions• Domestically, China third biggest auto market• Internationally, Chinese brands are exporting,
in introduction phase PLC• Quality issue can be solve• Brand one key challenge• Consumer perception key• Parallels to Japan and South Korea• Independent more likely to export soon
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19Rollins College: Prof. M. Fetscherin
Thank you