According to the SMCP, some Chinese car dealers are ready to drop their Chinese brands and move over to other ‘safe brands’, but what exactly is a safe brand in China? With mob mentality at an all time high its easy for Korean, French, German or American brands to ‘Upset the feelings of the Chinese peoples‘. French supermarket chain, Carrefour, knows all about pleasing Chinese consumers with low cost grocery products but the same consumers turned their anger on them fairly rapidly when Tibetan protestors ruined the Paris leg of the 2008 Olympic torch relay. Korea treads on a fine line with China’s Foreign Office by arresting Chinese fishermen that regularly illegally enter Korean waters to fish, for a small but growing number of patriots its become a matter of national pride to support fishermen no matter where they fish or in whose waters. Are American brands safe? Chinese media headlines seem to be dominated by American acts of Military or Economic aggression, especially in right wing newspapers that are available at every kiosk. Subaru Italy upset China with its femine Mao face, and Citroen did the same in Spain with a wry looking Mao face. So who seems to be safe so far? The obvious bet seems to be the Germans or the British, but it wont be long until a diplomatic spat or marketing person manages to once again upset the feelings of the Chinese People with a poorly thought out plan.
Three months after a territorial dispute led rioters to vandalise Japanese cars in China, carmakers from Toyota Motor Corp to Nissan Motor are luring back buyers with discounts and guarantees. But dealers like William Chen may need more persuasion to invest in the brands.
“Sales of Japanese brands plunged about a third at my outlets,” said Chen, whose family owns about 30 showrooms selling Nissan and nine other brands in the eastern city of Taizhou. “I would prefer safer brands over Japanese ones in the future.”
More distributors than ever are considering quitting Japanese car brands, even as showroom traffic and orders begin to rebound, according to the China Automobile Dealers Association.
Failing to sign up enough new dealers will hurt Japanese carmakers, benefiting General Motors, Volkswagen and Hyundai Motor as they compete to expand in smaller Chinese cities where the bulk of future demand lies.
“It’s definitely going to affect the Japanese automakers’ expansion,” said Ivo Naumann, Shanghai-based managing director at AlixPartners, which advises companies on strategy.
Will dealers pull out? Probably Yes. Dealers that are in it for the quick money have already closed up shop as car sales turned downwards in late 2011 and early 2012, and those that were thinking about leaving their brands behind will probably defect but those that have been in the business for a number of years realize that when Japanese car sales are good, they are great but when a short term issue such as the Diao Yu Island spat comes around sales are poor.