An insightful writing about problems and opportunities of Chinese automakers.
A global road map for China’s automakers
http://www.businessdayonline.com/economic-watch/business-intelligence/12748.html
A global road map for China’s automakers
http://www.businessdayonline.com/economic-watch/business-intelligence/12748.html
The impressive domestic inroads of Chery, Geely, and other domestic automakers in China are fueling the global aspirations of its OEMs.
Yet significant shortcomings, including insufficient quality- and talent-management approaches, as well as a lack of strategic focus, could hinder the realization of the industry’s significant global potential.
China’s OEMs should reexamine their plans for entering overseas markets and meanwhile study ways to improve their pricing and margins by repositioning brands around value, not just low prices. Moreover, China’s automakers must push their quality improvement efforts further upstream, bolster their management teams with global talent, and explore ways to encourage greater cross-functional collaboration.
A decade of astonishing growth has catapulted China past Germany and Japan to become the world’s second-largest market for automobiles, trailing only the United States. Global OEMs such as GM, Toyota Motor, and Volkswagen still command the lion’s share of sales in China. Nonetheless, the impressive inroads of homegrown upstarts such as Chery and Geely in the local market are fueling a desire among China’s OEMs to become not only domestic but also global competitors—aspirations encouraged by the government. Such ambitions aren’t far fetched: as recently as 2004, China was a net importer of automobiles; in 2005, the country became a net exporter, and in 2007 it exported over half a million cars and trucks, the majority of them Chinese-branded vehicles shipped to developing markets around the world.
Our experience working with Chinese OEMs suggests that many of these problems have operational roots. But there are other issues, too. Some OEMs, in their zeal togo global, fail to prioritize target markets sufficiently and therefore divert precious management attention away from product quality. Some embark on ambitious globalization plans before establishing strong market positions at home and so fail to take advantage of the important learning opportunities available there. And some don’t pay enough attention to marketing and distribution—even outsourcing these activities to local partners (see sidebar, "Beyond production"). Such quick-and-dirty approaches risk permanently damaging brands.
Further, organizational shortcomings can short-circuit operational processes and thus raise costs and lower quality. One Chinese carmaker we studied, for instance, had a seemingly robust and well-documented quality-gate system to catch defects during product development. Although the system detected problems adequately, many errors went unfixed, largely because of poor collaboration within the company and intense pressure on engineers to deliver products quickly.
