Geely stops re-badging insanity, and why whole China should follow

Ah, they all look alike ...

Ah, they all look alike …

“In 2008,” writes Chinacartimes, “Geely announced that it would establish a multi brand stategy which would eventually see the Geely brand terminated from car front ends and act as a holding company. In a shock reverse move, Geely will now take its Emgrand, Englon and Gleagle brands back into the Geely brand name with future cars simply using the GEELY brand name on its cars.” The best thing that can happen to the Chinese car industry is that this sets a trend – again.

In 2008, Geely announced it would imitate one of the worst Detroit disasters: To slap different badges on the same cars in a hope to make more money. When Detroit imploded, when GM, one of the worst offenders, had to shed brands from Pontiac to HUMMER, the Chinese government turned the disease into policy and “strongly suggested” to its industry to create more car brands. At this point, China had more than 100 car brands or even automakers, nobody could really tell. After that, the number may have quadrupled.

The Chinese government also “strongly suggested” to joint ventures between foreign automakers and Chinese to launch what I quickly named “fake Chinese brands”. They had new Chinese badges on old overseas technology. While a Chinese-made Corolla, Jetta, or  Malibu generates royalties back home,  the “fake Chinese brand,” owned by the joint venture, generates bupkis. Beijing thought this was a clever idea to get Western know-how on the cheap.  They were outsmarted by their western partners who offered long amortized platforms as tribute to the rulers of the Middle Kingdom.

While I was in China, Chinese automakers and media sometimes asked what I thought of this idea. Uncouth me told them it was suicidal. I told them that brand building is definitely the costliest, most time consuming, and trickiest undertaking in the car business, and that you can’t get brands on the cheap. They looked at me and thought I lied, as it is customary in China.

In 2011, at the Global Automotive Forum in Chengdu, they asked me who would be “China’s Toyota.”

I answered: “Volkswagen.”

Last year, Volkswagen was China’s largest automaker.

When the next Global Automotive Forum came around and me to Chengdu, the enthusiasm for new brands had cooled a bit. The car business has long pipelines, and carmakers kept introducing new brands. Toyota, which had successfully been dragging its heels on the fake Chinese brands business, introduced two at last year’s Shanghai Auto Show: Ranz, and one with no name.

Let’s hope that Geely sets a trend. China needs fewer and stronger car brands, not more.