China: local brands struggle to survive image

With the Asian country the world’s single biggest auto market, all foreign brands have flocked to establish local production there, relying on China to improve global sales and output.

But the internal policy of the government has made an unintended victim – the indigenous car brands. Because each foreign automaker needs to establish a joint-venture to produce cars locally, models you’ve never heard of – like a BMW Brilliance Zinoro, an SGMW Baojun or a Dongfeng Nissan Venucia – have been gaining sales.

For example, SGMW – GM’s joint venture with SAIC Motor and Liuzhou Wuling Motors, took the government’s words by hard and created the low-cost Baojun sedans and mini-cars. After decades of pouring R&D expertise in the country, these models became popular and got as inexpensive as true indigenous models.

“After several decades in China, the earliest models introduced by the foreign joint ventures are now priced as cheaply as Chinese brands,” says Liu Bo, vice-president of Chang’an Auto. “Their ability to focus global R&D resources on the China market is putting a lot of pressure on us.”

“The indigenous brand policy is really dumb because all it does is cannibalize the local Chinese brands,” adds Janet Lewis, head of Macquarie Securities industrials research team in Hong Kong.

On the other hand, the government does let brands like BMW slip the under the radar – which in its joint venture with Brilliance Auto just “rebadged” and electrified the company’s X1 SUV – calling it a Zinoro.

Via Financial Times