In addition, organizational deficiencies may also lead to a "short circuit" in the operating process, resulting in cost increases and quality degradation. Take the example of a Chinese automaker we studied. The company has a quality gate system that seems to be very powerful and documented in detail to capture defects in the product development stage. However, although the quality gate system has fully discovered the problem, many problems have not been solved, mainly because of the lack of collaboration within the company, and engineers are also under great pressure to deliver products as soon as possible.
There are also some vehicle manufacturers that lack a goal for talent management. For example, in order to speed up product development, an automaker has dug dozens of experienced Chinese local engineers from the auto giants. Although these engineers are familiar with professional fields such as safety and internal design, they lack the project management experience and system integration skills needed to run a complete vehicle program, and they have little experience in communicating with suppliers or colleagues in other departments. . As a result, there has been little improvement in the situation and it has disappointed senior management.
The road to the future In order to improve the current situation, Chinese automakers must formulate strategies with clear priorities, improve operational skills and product quality, and establish a strict performance evaluation system, advocating a continuous improvement of corporate culture from top management to production workshops.
Focused strategy First, the managers of Chinese auto companies should ask themselves: Do we currently have sufficient scale, sufficient financial resources, and sufficient management resources to go abroad? For most auto companies, especially for vehicle manufacturers that sell less than 300,000 vehicles a year, the answer to the above question may be "not yet done." For example, when Hyundai Group entered the US market in the mid-1980s, its car sales were comparable to many of today's smaller vehicle manufacturers in China. The pace of rapid entry into the US market in the modern era was hampered because quality and other issues damaged the company’s reputation among consumers. It took the company several years to repair its image.
China's smallest batch of vehicle manufacturers has the highest risk. Companies that sell less than 100,000 vehicles in these years will face tough choices because if they are to meet stringent safety and emission standards in the West, manufacturers may have to raise prices to a level that Chinese consumers cannot afford. These companies should consider licensing their technology to partners. For example, China’s emerging auto company BYD can take this approach. BYD started from supplying battery and electronic components to mobile phone manufacturers and has extensive experience in rechargeable Batteries. Therefore, it has an advantage in the growing market of alternative fuel vehicles.
For automakers interested in going abroad, they must first lock in key markets. In some cases, they must have patience. We have found that some Chinese vehicle manufacturers are eager to expand, ignoring or erroneously judging the size of the target market, competition, or consumer tastes. As a result, they have discovered that they have over-expanded, are too long, and are struggling to catch up with more powerful products and services. Competitors. Some Chinese vehicle manufacturers plan to enter 20 or more overseas markets at the same time. The strategic foundation of such plans is very weak. In Africa and Southeast Asia, market competition is as intense as China, but even if all these markets add up, they are much smaller than the Chinese home market.
An overly aggressive plan may also lead to management's attention deviating from the focus, complicating operational issues and creating strategic oversight. For example, in 2006, both Brilliance and JMC were eager to knock on the doors of a lucrative European market. The result was not only because of quality and safety problems but also due to the misjudgement of important market characteristics that caused the expansion potential to be subject to unnecessary restrictions. About half of the cars in Western Europe use diesel engines, and neither of these companies offers diesel-powered vehicles. Brilliance has locked in a sunset category, “Sedan-Dâ€. The market for this category is medium-sized, with sales in Europe falling by about 6% annually. About half of the European Sedan-D market is a wagon, but Brilliance did not provide a wagon. The results were disappointing: In 2007, the two companies sold a total of about 150 cars in Europe, far below the initial forecast.
Some vehicle manufacturers do a better job. For example, Chery and the Great Wall postponed plans to expand into Europe and North America, and focused on Russia because the Russian market is more favorable. For example, Russia has a large number of aging domestic cars, and the country’s economy continues to grow, stimulating a sharp increase in demand for new cars. However, the price of imported cars from Western vehicle manufacturers exceeds that of ordinary Russians. Consumers seeking new low-priced cars have brought great opportunities to Chinese auto makers. Both Chery and the Great Wall seized this opportunity: In 2007, Chery sold about 40,000 cars in Russia and the Great Wall sold more than 8,000 cars. Sometimes, Russia’s demand is so strong that Chery cannot even ship it.
To further grow, China's vehicle manufacturers must develop cars with exclusive design features. Many Chinese automakers have achieved the current scale by reverse-engineering their competitors' models. In the long term, this approach is not feasible in the export market, especially in developed markets. Compact models and standard models account for about 40% of the European and American markets, and have good prospects in the near future. However, most Chinese vehicle manufacturers do not provide enough such models. In the long run, Chinese auto makers should aim to establish a truly innovative product line, such as high-quality electric or hybrid vehicles.
There are also some vehicle manufacturers that lack a goal for talent management. For example, in order to speed up product development, an automaker has dug dozens of experienced Chinese local engineers from the auto giants. Although these engineers are familiar with professional fields such as safety and internal design, they lack the project management experience and system integration skills needed to run a complete vehicle program, and they have little experience in communicating with suppliers or colleagues in other departments. . As a result, there has been little improvement in the situation and it has disappointed senior management.
The road to the future In order to improve the current situation, Chinese automakers must formulate strategies with clear priorities, improve operational skills and product quality, and establish a strict performance evaluation system, advocating a continuous improvement of corporate culture from top management to production workshops.
Focused strategy First, the managers of Chinese auto companies should ask themselves: Do we currently have sufficient scale, sufficient financial resources, and sufficient management resources to go abroad? For most auto companies, especially for vehicle manufacturers that sell less than 300,000 vehicles a year, the answer to the above question may be "not yet done." For example, when Hyundai Group entered the US market in the mid-1980s, its car sales were comparable to many of today's smaller vehicle manufacturers in China. The pace of rapid entry into the US market in the modern era was hampered because quality and other issues damaged the company’s reputation among consumers. It took the company several years to repair its image.
China's smallest batch of vehicle manufacturers has the highest risk. Companies that sell less than 100,000 vehicles in these years will face tough choices because if they are to meet stringent safety and emission standards in the West, manufacturers may have to raise prices to a level that Chinese consumers cannot afford. These companies should consider licensing their technology to partners. For example, China’s emerging auto company BYD can take this approach. BYD started from supplying battery and electronic components to mobile phone manufacturers and has extensive experience in rechargeable Batteries. Therefore, it has an advantage in the growing market of alternative fuel vehicles.
For automakers interested in going abroad, they must first lock in key markets. In some cases, they must have patience. We have found that some Chinese vehicle manufacturers are eager to expand, ignoring or erroneously judging the size of the target market, competition, or consumer tastes. As a result, they have discovered that they have over-expanded, are too long, and are struggling to catch up with more powerful products and services. Competitors. Some Chinese vehicle manufacturers plan to enter 20 or more overseas markets at the same time. The strategic foundation of such plans is very weak. In Africa and Southeast Asia, market competition is as intense as China, but even if all these markets add up, they are much smaller than the Chinese home market.
An overly aggressive plan may also lead to management's attention deviating from the focus, complicating operational issues and creating strategic oversight. For example, in 2006, both Brilliance and JMC were eager to knock on the doors of a lucrative European market. The result was not only because of quality and safety problems but also due to the misjudgement of important market characteristics that caused the expansion potential to be subject to unnecessary restrictions. About half of the cars in Western Europe use diesel engines, and neither of these companies offers diesel-powered vehicles. Brilliance has locked in a sunset category, “Sedan-Dâ€. The market for this category is medium-sized, with sales in Europe falling by about 6% annually. About half of the European Sedan-D market is a wagon, but Brilliance did not provide a wagon. The results were disappointing: In 2007, the two companies sold a total of about 150 cars in Europe, far below the initial forecast.
Some vehicle manufacturers do a better job. For example, Chery and the Great Wall postponed plans to expand into Europe and North America, and focused on Russia because the Russian market is more favorable. For example, Russia has a large number of aging domestic cars, and the country’s economy continues to grow, stimulating a sharp increase in demand for new cars. However, the price of imported cars from Western vehicle manufacturers exceeds that of ordinary Russians. Consumers seeking new low-priced cars have brought great opportunities to Chinese auto makers. Both Chery and the Great Wall seized this opportunity: In 2007, Chery sold about 40,000 cars in Russia and the Great Wall sold more than 8,000 cars. Sometimes, Russia’s demand is so strong that Chery cannot even ship it.
To further grow, China's vehicle manufacturers must develop cars with exclusive design features. Many Chinese automakers have achieved the current scale by reverse-engineering their competitors' models. In the long term, this approach is not feasible in the export market, especially in developed markets. Compact models and standard models account for about 40% of the European and American markets, and have good prospects in the near future. However, most Chinese vehicle manufacturers do not provide enough such models. In the long run, Chinese auto makers should aim to establish a truly innovative product line, such as high-quality electric or hybrid vehicles.
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