Just How Are Sub Brands Performing in China?
The sub brand seemed like a great idea at the time. The Chinese government introduced the market access for technology idea in the early 80′s to allow foreign manufacturers enter the Chinese market, this allowed foreign manufacturers to prosper in China but didn’t help local manufacturers all too much, sure they were able to produce international cars in China but they didn’t receive much in return despite the previous technology for market access agreement, it was basically a one way road into China.
The government came up with another solution: sub brands. Sub brands were supposed to be mini joint ventures between local brands and international brands where the local partners would be able to gain technological know how and also marketing experience from working directly with their foreign partner. Sub brands were not mandatory, but they were heavily hinted at if a manufacturer wanted to enter China or expand their production considerably. Subaru’s Chinese production plans were apparently terminated for a lack of a sub brand, where as PSA’s was gained the all essential red ink rubber stamp for go ahead thanks to plans for a sub brand.
How have sub brands worked out in reality? GM’s Baojun started with a major bang, 900o orders in the first month! That quickly tailed off towards the end of this year. First of all, we should point out that Baojun was one of the only sub brands to actually develop their own car where as the other sub brands on show were re-branded original models from the foreign side with a new badge, whilst these models are quick to take to the market, the Chinese partner does not learn anything about the R&D and production methods introduced by foreign brands but they do gain the blueprints and IPR. For GM’s Baojun the first launch month looked fantastic, by July there was obvious cause for concern but sales are picking up fast, now it seems to be a two way race between Nissan’s Venucia and Baojun for king of the sub brand. Venucia’s introduction of the last generation of the Nissan Tiida seems to have been a wise one, Nissan are rapidly picking up sales with the hatch and sedan combo which boosts their sales considerably, by September it looks like the China-Japan spat had seriously harmed sales. Honda’s Everus line up is so far based on the last generation Honda City (a sedan version of the Honda Fit) which was not a popular when launched under the Honda brand.The Ciimo range consists entirely of the last generation Honda Civic with a new badge, blink and you would miss it.
Reasons for Slow Sales?
Venucia, Ciimo and Everus are currently sold via their mother companies dealership, with the China-Japan territorial dispute in full swing these dealerships have seen sudden traffic drops as Chinese consumers stay away. Baojun are sold via the Wuling dealership network which should keep visitor traffic steady, however a strong marketing campaign is needed in the face of stiff competition from ever stronger, and cheaper, vehicles.