Just made in China or designed in China?

Does China just produce the world’s cars， or can it bring forward a top-global brand？

With China projected to overtake even Europe in the number of cars produced this year， another question arises： Does China just produce the world’s cars， or can it bring forward a top-global brand？

I argued before that “Designed in China” often does not convey an image of top-quality in the eyes of the customer. Even on the home market this fact becomes obvious， when we face that close to two thirds of the cars on Chinese roads are made by foreign brands （but not necessarily abroad）. In this backdrop we should realize that， especially as wages in China raise （and with it purchasing power， but also costs）， companies have to find other ways to stay competitive beyond the price tag they put on their product.

If we look at and even beyond the automotive industry， we can hardly find any global Chinese brand， that competes globally with other companies form other countries. China is often seen only as the world’s factory， not as it’s design center.

How to emerge as a global player in a globalized world can be seen best not far from China. It can be seen especially well in both of Hyundai Group’s brands - Hyundai and Kia. Both brands invested heavily into ridding themselves of the image of simply cheap cars， to becoming a recognizable and respected brand. Hyundai Motors initially could not sell the Pony - its first car - to the United States in 1984， because it failed to meet emission standards. 15 Years later the company realized it could not sustain growth by just being another company that produces cheap cars. The Koreans started to revamp its image to higher security and quality standards. Today Hyundai has become a global player， that has made headlines for shocking the European manufacturers by giving warranty beyond the established coverage time-frames and has received multiple awards for the quality of its products. To look at Kia， the front grille for the whole brand was （re-）designed by Peter Schreyer （who designed for Volkswagen for over 25 years） in 2007， to make the brand’s vehicles more distinct from others and create a unique and coherent look to the whole lineup. This is also in contrast to what many Chinese makers have often been accused of over the years： that they stole the looks from other famous makers’ vehicles. A distinct and unified design helps to shape the brand’s value as such. Notably the advances in car design by the Koreans have caused some panic among the Japanese and German car makers for their innovation， showing that Kia’s move was not only daring， but turned out to be utmost successful.

But it is of course not that China can not produce a global player. One notable exception that China indeed can produce a top-global player is the PC maker Lenovo. Like many other companies Lenovo started as a local manufacturer struggling abroad. But in 2005 Lenovo acquired IBM’s PC business and quickly emerged as a global player.

Initially there had been fears that the fusion of Chinese and American business would harm the brand-name of the “Think”-PC-brand， but despite initial problems the management pulled through and could strengthen the brand’s good image and at the same time made Lenovo a brand well known throughout the globe.

Returning to the Chinese automotive industry due to the similarity to the Lenovo example it is quiet obvious that Geely has the best basis to attain the status as a global brand. By acquiring the Volvo brand， the company has its hands on a well established， highly regarded brand - just like Lenovo had with the “Think”-brand. But in Geely’s case， Volvo is still struggling and falling behind other luxury car makers. Not to discredit his successor， but it might have not been the best timing to relocate Peter Horbury to the head office at Geely already. In my opinion it is in Geely’s interest to first strengthen Volvo as a luxury brand， before relocating its talent elsewhere. Therefore， if we look at Geely， they yet have to raise to a level comparable to Lenovo.

Another factor that Lenovo’s success story can not be transferred into the automotive industry as easily， can in my opinion be seen when we take a look at Lenovo’s product development strategy： Lenovo tests their products marketability in China and then sells successful products abroad. But for the automotive market foreign brands are doing better than local brands. Therefore the approach would likely have to be different. For example a design center in Europe or America would be an option， to learn about the markets and hire local experienced talent from other companies there.

Especially an entrance into saturated markets like the US， Europe or Japan， where the customers have high expectations towards the quality of a product， will require a great investment， and without the proper strategy is destined to fail.

As the Korean example of Hyundai shows a successful brand can be built from scratch， but it needs a consistent approach devoted to the company’s goals. It would be advisable to take a look at the Koreans’ approach. The approach to establish a competitive brand in the upper-classes would be to invest （heavily） into making the brand more distinguishable from other brands in all aspects： design， quality， safety and - after all that - in price.

Not all is bad for automakers in China though： In China they find a unique situation， where suppliers of all sorts are located and thus the supply chains are favorable for any company located in the respective regions， or for that matter simply within the country. China also is one of the most important markets for any major auto-manufacturer.

So Chinese companies do have the market on their doorstep， the suppliers in their yards， now in order to become a truly competitive global brand， they have to win the hearts （not wallets） of their customers.