ASIA NEWS NETWORK

WE KNOW ASIA BETTER



» Business

Japan automakers lag in brand war in China

Chinese car dealers see Volkswagen AG’s cars during a pre-opening event of the Beijing International Automotive Exhibition, held April 19 in Beijing National Indoor Stadium.

Publication Date : 08-05-2014

 

Japanese companies are hurriedly seeking to enter other Asian countries’ markets to take advantage of the countries’ economic growth, as domestic markets shrink due to the low birthrate and graying of the population.

Because competition with US and European rivals is fierce, it is necessary for companies to strengthen their appeal by developing greater brand recognition and improving consumer perceptions of both the companies and their products, if they wish to gain dominance in overseas markets.

On April 19, German maker Volkswagen AG (VW) held a preopening event prior to the Beijing International Automotive Exhibition, which is one of world’s largest motor shows.

VW Chairman Martin Winterkorn said at the event, “We, Volkswagen, will also play a pioneering role in the field of environmentally friendly vehicles in China.”

Winterkorn showed VW’s latest models of electric vehicles, plug-in hybrid vehicles and other eco-friendly cars to about 3,000 invited guests, most of whom were owners of car dealerships in China.

In 1985, VW became the first foreign automaker to begin production of passenger vehicles in the country.

According to Fourin Inc., a private market research company, VW’s shipments in 2013 numbered 3.03 million units, which was equivalent to about 60 per cent of Japan’s annual new car sales.

VW ranks top for market share in China at 16.9 per cent, which was much higher than the maker in second place—China’s own Shanghai Automotive Industry Corp.

A large number of VW’s Santana sedans are used as taxis, and vehicles made by fellow group company Audi AG are used for government official’s cars in China.

VW’s products are overwhelmingly popular as “affordable luxury cars”.

In addition to the high reliability of German makers’ cars, another reason German brands are popular is that many design features favored by Chinese are included. For example, at the front of car bodies, flashy gold parts are installed.

At the motor show venue, Ren Jie, a 30-year-old company employee, said, “The design of the front part is attractive and conveys a sense of luxury.”

VW showcased many eco-friendly car models in the motor show, aiming to capture future demand.

Among foreign-capital automakers in China, South Korea’s Hyundai Motor Co. holds the second-largest market share. Hyundai’s products are priced 10 per cent to 20 per cent lower than those of Japanese makers.

Hyundai has distinguished itself from rivals with a brand identity associated with reasonable pricing, and has attracted young consumers buying family cars for the first time.

General Motors Co. of the United States, ranked third in China, lags Hyundai by just a slight margin. GM’s flagship bands, such as Chevrolet and Buick, are known for large vehicles.

Li Boyu, a 24-year-old public servant, said they “have presence and are magnificent”. GM has gained presence and competitive edge in China by emphasizing their image as “powerful American cars”.

Japanese automakers have a handicap in China, where public opinion tends to be unfavorable towards Japan. But even considering that factor, it cannot be said that Japanese automakers have succeeded in effectively communicating their brand images.

Mariko Yasue, a research fellow at Dentsu Innovation Institute who is an expert on consumer trends in China, said that Japanese makers’ cars “have high performance, and people know they are good if they try driving them. But the designs lack interesting features”.

In addition, inaccurate ideas about eco-friendly cars, where Japanese makers have an advantage, have spread in China. For example, some in China believe that hybrid vehicles need to be recharged with electricity, and others believe the batteries are at risk of catching fire.

Dong Changzheng, an executive vice president at a Chinese unit of Toyota Motor Corp., said, “Until consumers have understood product features, we need to work twice as hard in China.”

Seiji Kuraishi, chief of the Chinese business operations department of Honda Motor Co., said: “We had thought that if we produce good products, we would be praised. But, in China, unless we send out information about our brand aggressively it is no different from remaining silent.”

A company established by Nissan Motor Co. with a local firm in China signed a sponsorship contract in February with Guangzhou Evergrande Football Club, a popular soccer team in China.

Ma Guixian, 39, who is a supporter of the soccer team, said, “My friends and I have decided to buy Nissan cars.”

This year, Toyota’s Chinese unit features Beyonce, a very famous US singer, in its advertising promotions, to reinforce its brand strategy.

China has grown to be the world’s largest car market, in which shipments of passenger cars number 17.92 million units and new car sales, including those of commercial vehicles, number 21.98 million.

But the penetration rate against the total population is still about 10 per cent, and thus growth potential is large.

The superiority of brand images will decide who wins or loses in the Chinese market.

 

Mobile Apps Newsletters ANN on You Tube