BEIJING: Automotive brands based in China are unlikely to attain a global status in the near future, despite the fact their home country is now the category's biggest market worldwide.
While the volume of vehicle sales in China surpassed the US for the first time last year, two-thirds of shipments were attributable to the joint partnerships of multinationals like Volkswagen and General Motors.
As such, even though Chinese firms have recently acquired well-known marques – with Geely buying Volvo and BAIC taking over Saab – some scepticism remains about their prospects overseas.
Bill Russo, the former chief of Chrysler's Chinese operations and current head of the specialist consultancy, Synergistics, argued that Chinese companies should concentrate on their domestic market.
"Chinese car companies must first convince Chinese consumers of the quality of Chinese-branded cars before they can expect wide acceptance in overseas markets," he said.
More specifically, Chinese manufacturers are "not yet mature" when it comes to their idea of branding, an area which will require significant investment going forward.
"They still have to prove that their cars actually represent something more than just lower-priced alternatives to foreign-branded cars," said Russo.
Chery and Geely have both made some progress in this area, and the latter of these organisations will use Volvo's European R&D and production operations to retain its prestige in China and help sell vehicles in Europe.
More positively, Russo suggested the previous successes of other Asian corporations in this sector, such as Toyota and Hyundai, may prove instructive.
"It took the Japanese decades, it took the Koreans a decade, it probably will take the Chinese less," he argued.
"[In] one or two product cycles – in five-to-ten years – we will see Chinese-branded cars in the mature markets."
Ivo Naumann, of the consultants Alix Partners, reported that the share of the Chinese auto market held by domestic marques climbed from 21% in 2004 to 34% in 2009.
He also predicted that local businesses would see their proportion of sales rise by a further 5% over the period to 2015.
Moreover, Chinese companies are now offering 159 separate models to consumers compared with just 53 in 2006, indicating they are reaching the kind of scale necessary to compete internationally.
As such, while Naumann does not expect a Chinese automaker to assume a leadership position in another major country in the next five years, he was "absolutely sure that it will happen some day."
Great Wall Motor is the first auto manufacturer based in China to have been granted approval to sell its range in the European Union.
However, Wang Fengying, the company's chief executive, warned it “could take 20 years” before firms headquartered in China can truly make an impact on the global stage.
One reason for this is the perceptions that are currently associated with goods carrying the label "Made in China", something that will need time and perseverance to overcome.
This is not unusual, Wang added, as Toyota was also required to take a long-term view in its bid to win the trust of shoppers outside of Japan.
"It would be hard to establish a brand like Toyota in a short time," she said.
While the volume of vehicle sales in China surpassed the US for the first time last year, two-thirds of shipments were attributable to the joint partnerships of multinationals like Volkswagen and General Motors.
As such, even though Chinese firms have recently acquired well-known marques – with Geely buying Volvo and BAIC taking over Saab – some scepticism remains about their prospects overseas.
Bill Russo, the former chief of Chrysler's Chinese operations and current head of the specialist consultancy, Synergistics, argued that Chinese companies should concentrate on their domestic market.
"Chinese car companies must first convince Chinese consumers of the quality of Chinese-branded cars before they can expect wide acceptance in overseas markets," he said.
More specifically, Chinese manufacturers are "not yet mature" when it comes to their idea of branding, an area which will require significant investment going forward.
"They still have to prove that their cars actually represent something more than just lower-priced alternatives to foreign-branded cars," said Russo.
Chery and Geely have both made some progress in this area, and the latter of these organisations will use Volvo's European R&D and production operations to retain its prestige in China and help sell vehicles in Europe.
More positively, Russo suggested the previous successes of other Asian corporations in this sector, such as Toyota and Hyundai, may prove instructive.
"It took the Japanese decades, it took the Koreans a decade, it probably will take the Chinese less," he argued.
"[In] one or two product cycles – in five-to-ten years – we will see Chinese-branded cars in the mature markets."
Ivo Naumann, of the consultants Alix Partners, reported that the share of the Chinese auto market held by domestic marques climbed from 21% in 2004 to 34% in 2009.
He also predicted that local businesses would see their proportion of sales rise by a further 5% over the period to 2015.
Moreover, Chinese companies are now offering 159 separate models to consumers compared with just 53 in 2006, indicating they are reaching the kind of scale necessary to compete internationally.
As such, while Naumann does not expect a Chinese automaker to assume a leadership position in another major country in the next five years, he was "absolutely sure that it will happen some day."
Great Wall Motor is the first auto manufacturer based in China to have been granted approval to sell its range in the European Union.
However, Wang Fengying, the company's chief executive, warned it “could take 20 years” before firms headquartered in China can truly make an impact on the global stage.
One reason for this is the perceptions that are currently associated with goods carrying the label "Made in China", something that will need time and perseverance to overcome.
This is not unusual, Wang added, as Toyota was also required to take a long-term view in its bid to win the trust of shoppers outside of Japan.
"It would be hard to establish a brand like Toyota in a short time," she said.
Data sourced from Financial Times; additional content by Warc staff
