The Geely brand - China's entry into the car market
One of the most competitive markets in the world today is probably the auto industry with its many car brands competing fiercely against each other. The last couple of years have seen a dramatic shift of power within the car industry. The traditional big three - GM, Ford and Chrysler - are no longer the undisputed rulers of the road. It has been estimated that Toyota will take on the mantle of market leader by the end of 2006. Western car makers have been operating under relentless pressure from Japanese and Korean brands like Toyota, Honda, Hyundai and Nissan during the last two decades. But it will be exciting to watch this battle with yet another entry of Asian competition: The Chinese car brands.
Geely is one of the leading Chinese car brands that aspires to make it big on the global market. The brand is based in Hangzhou, the capital of East China's Zhejiang Province. Geely Group is a privately owned Chinese car maker controlled by Li Shufu, one of China's richest men. The brand's aspirations were apparent when Li Shufu commented: "We will not be subject to any world auto giants, and we will devote ourselves to the production of our own brand of cars, which the average Chinese consumer can afford. The Geely brand will have strong Chinese cultural characteristics".
The Chinese car market is becoming one of the fastest growing car markets in the world with 3.1 million cars sold in 2005, a 26% increase from 2004. Geely has set its goals pretty lofty. It aims to produce 1 million cars by 2007 and capture the market from other leading global brands. Geely has been playing the price game till now - all its cars are sold below US$9600, with some models being sold for as low as US$3500. But branding is about value and perceived quality, so price alone can never facilitate a victory. Enhancing quality and ensuring that its cars are on par with the global leading brands are still a major challenge for Geely.
A recent J. D. Power study showed that though the Chinese cars improved on quality by 19% over 2003, they still had 374 quality problems per 100 vehicles compared to only 118 problems per 100 vehicles for American cars. Low quality and high component costs are expected to keep the Chinese cars in the novelty car category for at least a couple of years.
For Geely to build a strong brand that resonates well with its customer base, it has to focus relentlessly on quality and keep exploiting its cost advantages from its Chinese manufacturing base. Geely also has to build and sustain a strong brand promise which can take on the global brands - not an easy task. The well-established global car brands balances fairly well between their brand promise and brand delivery.
If Geely wants to grow into a strong competitor in the coming years, the brand has to raise its own bar constantly and make sure all customer touch points work in tandem around a strong brand promise. A strong and appealing car brand is more than just price and the Chinese consumers are very style and image conscious.
Geely is one of the leading Chinese car brands that aspires to make it big on the global market. The brand is based in Hangzhou, the capital of East China's Zhejiang Province. Geely Group is a privately owned Chinese car maker controlled by Li Shufu, one of China's richest men. The brand's aspirations were apparent when Li Shufu commented: "We will not be subject to any world auto giants, and we will devote ourselves to the production of our own brand of cars, which the average Chinese consumer can afford. The Geely brand will have strong Chinese cultural characteristics".
The Chinese car market is becoming one of the fastest growing car markets in the world with 3.1 million cars sold in 2005, a 26% increase from 2004. Geely has set its goals pretty lofty. It aims to produce 1 million cars by 2007 and capture the market from other leading global brands. Geely has been playing the price game till now - all its cars are sold below US$9600, with some models being sold for as low as US$3500. But branding is about value and perceived quality, so price alone can never facilitate a victory. Enhancing quality and ensuring that its cars are on par with the global leading brands are still a major challenge for Geely.
A recent J. D. Power study showed that though the Chinese cars improved on quality by 19% over 2003, they still had 374 quality problems per 100 vehicles compared to only 118 problems per 100 vehicles for American cars. Low quality and high component costs are expected to keep the Chinese cars in the novelty car category for at least a couple of years.
For Geely to build a strong brand that resonates well with its customer base, it has to focus relentlessly on quality and keep exploiting its cost advantages from its Chinese manufacturing base. Geely also has to build and sustain a strong brand promise which can take on the global brands - not an easy task. The well-established global car brands balances fairly well between their brand promise and brand delivery.
If Geely wants to grow into a strong competitor in the coming years, the brand has to raise its own bar constantly and make sure all customer touch points work in tandem around a strong brand promise. A strong and appealing car brand is more than just price and the Chinese consumers are very style and image conscious.
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