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Chery and Geely should abandon their multi-brand strategy
Haste makes waste. In almost every language, there is a saying like this cautioning against rush actions and excessive ambition.
But it's a message two leading domestic Chinese automakers are not heeding.
At the Shanghai international auto show that ended on Tuesday, Chery Automobile Co. and Zhejiang Geely Holding Group Co. for the first time unveiled their multiple sub-brands.
Chery showed 32 products under its four sub-brands, Chery, Riich, Rely and Kerry.
Geely, meanwhile, displayed 22 cars under an equal number of sub-brands, Geely, Emgrand, Gleagle and Shanghai Englon.
Each sub-brand carries a different badge.
Both companies hope the adoption of a multi-brand strategy will help them explore different market segments with distinctively branded products.
Yet until now, Chery and Geely have been weak brands on the domestic market and even more so outside China.
Their efforts to build multiple brands simultaneously will therefore only add confusion and undermine their already low brand recognition.
At the Shanghai auto show, visitors were indeed impressed by the sheer number of new cars the two companies displayed.
But they also felt bewildered by their multiple sub-brands.
"These sub-brands are so confusing,"says a colleague of mine who came to see the show from Germany.
To be frank, it's not just foreigners. Chinese visitors like me are also confused by so many sub-brands. Even today, I still have trouble telling which is which.
And it's not just confusion that will harm Chery and Geely. The expense needed to run multiple marketing campaigns will probably do more to sap strength from the two companies.
Established in the late 1990s, both automakers are small players by international norms. In 2008, Chery sold 356,093 vehicles while Geely only sold 221,151 units, according to Jato Dynamics, a data consultancy.
Hit hard by slumping sales, Chery Automobile Co. ran out of cash in late 2008 and had to rely on government-controlled banks for financing.
Earlier this year Geely's president Li Shufu admitted to Chinese media his company had accumulated some 10 billion yuan ($1.5 billion) in debt.
At the Shanghai auto show this year, it was plain to see that all international players are leveraging their strong brands to push into China, the only market that is growing worldwide.
With weak brands and limited resources, if Chery and Geely want to survive the competition they would do well to remain focused in their operations, particularly in the area of brand building.
But it's a message two leading domestic Chinese automakers are not heeding.
At the Shanghai international auto show that ended on Tuesday, Chery Automobile Co. and Zhejiang Geely Holding Group Co. for the first time unveiled their multiple sub-brands.
Chery showed 32 products under its four sub-brands, Chery, Riich, Rely and Kerry.
Geely, meanwhile, displayed 22 cars under an equal number of sub-brands, Geely, Emgrand, Gleagle and Shanghai Englon.
Each sub-brand carries a different badge.
Both companies hope the adoption of a multi-brand strategy will help them explore different market segments with distinctively branded products.
Yet until now, Chery and Geely have been weak brands on the domestic market and even more so outside China.
Their efforts to build multiple brands simultaneously will therefore only add confusion and undermine their already low brand recognition.
At the Shanghai auto show, visitors were indeed impressed by the sheer number of new cars the two companies displayed.
But they also felt bewildered by their multiple sub-brands.
"These sub-brands are so confusing,"says a colleague of mine who came to see the show from Germany.
To be frank, it's not just foreigners. Chinese visitors like me are also confused by so many sub-brands. Even today, I still have trouble telling which is which.
And it's not just confusion that will harm Chery and Geely. The expense needed to run multiple marketing campaigns will probably do more to sap strength from the two companies.
Established in the late 1990s, both automakers are small players by international norms. In 2008, Chery sold 356,093 vehicles while Geely only sold 221,151 units, according to Jato Dynamics, a data consultancy.
Hit hard by slumping sales, Chery Automobile Co. ran out of cash in late 2008 and had to rely on government-controlled banks for financing.
Earlier this year Geely's president Li Shufu admitted to Chinese media his company had accumulated some 10 billion yuan ($1.5 billion) in debt.
At the Shanghai auto show this year, it was plain to see that all international players are leveraging their strong brands to push into China, the only market that is growing worldwide.
With weak brands and limited resources, if Chery and Geely want to survive the competition they would do well to remain focused in their operations, particularly in the area of brand building.
