the chinese automobile industry is driving west

1Rollins College: Prof. M. Fetscherin

The Chinese Automobile Industry is

Driving West

Prof. M. FetscherinProf. M. Sardy

Rollins CollegeDepartment of International Business


Chinese Cars Years Ago…


…Today They Have Small Cars…


…Sports Cars…


… SUV and Sedans


Agenda• Introduction

• Players, power, partnership

• First move going global and challenges

• Footprint Japanese or South Korean

• Chinese auto makers and takers

• Strategic options

• Conclusion


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


Players, Power….• 50th anniversary, but infancy • Liberalization of trade policy, import taxes• Key Players


…and Partnership• Two types of Chinese automotive companies


Production

Chery production


Parallels to Japan and South Korea


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


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?


Value Map• Some SUV

EXAMPLES


Auto Makers and Takers• Passenger car sales vs. Number JV

• Importance of JV?

• More JV, more sales?

• Importance of building own brand?


Brand Matrix• Passenger car sales (own brand) vs. JV

• Extracting sales under own brand

• Matrix with 4 categories

• Each specific characteristics


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.


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


Thank you

the chinese automobile industry is driving west

Documents

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