Strategy: How the Chinese are setting themselves up for success (Part 4: Asia)

Chevrolet Enjoy India May 2013. Picture courtesy of motoroids.comThe Wuling Hongguang launched this month in India as the Chevrolet Enjoy.

* This is Part 4 of 5 in my series on Chinese carmakers abroad. See also Part 1 (Africa)Part 2 (Latin America)Part 3 (Eastern Europe) and Part 5 (Mature markets) *

In the first 3 parts of this series we observed that Chinese carmakers have managed their expansion into Africa, Latin America and Eastern Europe by securing less developed markets and using them as anchor points for a more widespread presence in these regions. In this context it’s interesting to note that in their own ‘backyard’, Asia, the same strategy has not been met with the same success, with only a handful of small markets in the region ‘cracked’ so far. However as you can expect, Chinese manufacturers are now busy working on correcting that situation, so they can finally surf on what is currently one of the most dynamic car markets in the world.

Chery QQ Myanmar 2012. Picture by Ryusuke IkedaChery QQ in Yangon, Myanmar

In Myanmar, as the market becomes normalised, all 1,000 Chery QQ imported by the Ministry of Industry sold out within a week in December 2012 in spite of seeing their original price more than double once various duties, taxes and licensing fees were added. The QQ is now a common sight in the main city in the country, Yangoon, mainly as taxis.

Chery M1 in Luang Prabang, Laos, January 2011.

Laos is the only other South-East Asian market where Chinese carmakers seem to be enjoying very healthy sales, with the Chery M1, QQ & Tiggo, JAC Tongyue and BYD F0 all noticed in the streets of Luang Prabang my dear Mum and Dad during their last trip there in January 2011.

Pyeonghwa Samchunri North KoreaThe Pyeonghwa Samchunri should be the best-selling vehicle in North Korea.

Neighbour North Korea is potentially the market in the world where the Chinese dominate the most, thanks to government links between the two countries. I estimate this based on the observation of rare videos of the streets of the capital Pyongyang. Local manufacturer Pyeonghwa assembles under license the Samchunri (aka Jinbei Haise) which should be the best-seller in the country, Brilliance BS4, FSV and Huanghai Shuguan, romantically renamed Ppoggugi 4WD. More recently, a batch of 200 Hawtai Lusheng E70 taxis were imported from China.

Micro Panda Sri Lanka February 2013Micro Panda in Sri Lanka

A little more to the West in Sri Lanka, Geely has associated with local brand Micro Cars to assemble and sell the Panda and MK (renamed MX7) to relative success. Micro Cars also assembles and sells Great Wall and Jinbei vehicles and ranked #2 in the country in February 2013. In India, Chevrolet launched the Enjoy in 2013 which is in fact a rebadged Wuling Hongguang and Chery assembles and sells the QQ in Pakistan, however no sales figures are available so far.

Change Freedom Dushanbe TajikistanChangHe Freedom in Dushanbe, Tajikistan

Another part of the world completely bypassed by most car manufacturers except the Chinese is all the Central Asian former Soviet nations. Even though official data is still rare for these countries, anecdotal evidence shows they are present there en masse. For example, did you know that judging by YouTube videos the Changhe Freedom must have been the best-selling car in Tajikistan for a couple of years before such minivans were abruptly banned over safety concerns in 2010? Lifan has been assembling cars in Azerbaijan since 2010 and the MG3 can already be noticed in the streets of the capital Baku. Finally Geely will export part of its Belarus production to Kazakhstan from 2014 onwards…

Geely MK2 Indonesia April 2012Geely MK2 taxi in Bali, Indonesia April 2012

All other significant markets in the region have resisted the Chinese assault so far. Chery apparently assembles cars in Indonesia, Malaysia, Taiwan, Thailand and Vietnam but their only claim to fame to-date has been the 27th place of the Chery Eastar in Malaysia in 2010. Geely assembles in Indonesia but the only models I saw in two weeks in Bali were a few MK2 taxis and one single Panda.

chana-era-cv6-changan-compactMalaysian advertisement for the Chana Era CV6

Hafei launched the Brio as the Naza Sutera in Malaysia in 2006, then renamed it Forza in 2007 without luck, while Chana’s attempt at launching the Era CV6 and CM8 there in 2009 also failed. Lifan assembles in Vietnam since 2007 and I did see one 520 sedan in Sapa when I travelled there but it seems DongFeng is having much more luck in the heavy commercial vehicle sector there. The situation is similar in Iran where Chery and Lifan have been assembling cars since 2006, and even though the Fulwin 2 hit a record #4 in April 2013, the volumes remain very small.

Manila Auto Show Foton2Foton Thunder at the Manila Motor Show, April 2013

However the Chinese carmakers’ situation in Asia may change rather quickly, judging at how dynamic the entire Chinese delegation was at the Manila Auto Show in the Philippines one year ago, as I detailed in my article Manila Auto Show 2013: Has the time come for Chinese manufacturers? According to Leon Herrera, CEO of Chery Motors Philippines, Chery is “aiming at a spot in the Top 5 at the end of 2013 year and between 10 and 15% of the market” by 2015 which is exceptionally ambitious given this is Chery’s second attempt at cracking the Filipino market after the first one failed.

Paradoxically, their proximity with Asia seems to have worked against Chinese car manufacturers so far, giving a surprisingly less positive balance sheet in a region where defiance towards Chinese domination may have hindered their progress. Potentially not for too much longer. Where there’s a will, there’s a way?

Stay tuned for the final Part of this series about Mature markets!

This Post Has 7 Comments
  1. In the Philippines, Foton pick ups are popular for government agencies like MMDA and Foton vans are popular ambulances by PCSO. In some cities such as Cebu and Davao it is common to see chinese car taxis such as Lifan 520

  2. Very Interesting article, Matt… Waiting for another ex-developed countries movement (India, Brazil, South Africa, etc) to coloring the world with unique brand and models.

  3. People purchase Chinese vehicles on the basis of price – this is evident in markets like Chile, Egypt, & sub-Saharan Africa. In other markets like the former Soviet Central Asian states (the “stans”), Myanmar, & Laos, consumers, for political & other reasons, don’t have much choice. The reason Chinese vehicles haven’t made much headway in most ASEAN markets save for Laos & Myanmar is that there’s more competition & vehicle choices for consumers. Quality problems are also a factor with regard to made-in-China vehicles but this hindrance will eventually be overcome – this is the same problem Hyundai & other South Korean automakers faced when they started their export drive in the mid-1970’s but now Korean vehicles are mostly at par with their Japanese competitors.

    1. Hi Walter,
      Thank you for your comment!
      I agree with you, however there is also a lot of competition in Latin America and Egypt for example and even then the Chinese have managed some great headways. I agree though, ASEAN will not ‘resist’ for much longer I believe.
      Best,
      Matt

  4. I was charmed by the ancient UAZ sitting behind the Chery M1 in Laos there. Truly the Eastern version of old meets new.

  5. Matt you are among a disappointingly small number of automotive sites that are putting some effort into understanding and interpreting the biggest automotive new story of the new millennium: the evolution and rise of the Chinese domestic car industry. Great work.

    1. Thank you very much Paul I really appreciate your comment.
      It’s a fascinating time for the automotive industry and I have absolutely loved researching and writing these articles – keeps me up-to-date too! Stay tuned for the last part of this series coming very shortly 🙂
      Thanks again,
      Matt

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