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Q: Chinese car industry - are they buying foreign brands to encourage domestic growth?
Chinese car companies have been buying certain foreign brands (GM Hummer a while ago), and I was just wondering at the logic of it all. Is it to have more credibility domestically, or do they really hope to compete on an international level?
12 years 7 weeks ago in Business & Jobs - China
Only the top executives of the different Chinese car companies will know the real reason. But in my eyes, I can see at least two main ones to do so:
1.- The car market in China is huge, and unfortunately, many Chinese feel that if made locally is no good in quality, and must buy foreign in order to have a good quality vehicle. So, by buying foreign brands, they also strenghten their local market position.
2.- And also to foster their growth abroad. By adquiring a foreign brand, they do not only get the "brand" itself, but also get all of the distribution outlets and publicity "instantly". To develop those will take a lot of time and money, much better to buy what it is already in place and working, than setting up a totally new one.
My take is that the economic woes in the west (especially the last 2 years) offers chinese companies an opportune time to acquire. Most importantly, they acquire technologies and knowledge which would otherwise take years for the chinese companies to reach and attain.
They're buying foreign brand cars because those cars are much better than there own. I have been seeing Hummers and Jeep Wranglers on the streets of CHina more often these days.
The cars itself are more appealing to the eye. And the safety rating for these cars are higher than the local one's that you were used to seeing. Out of all the accidents they had throughout China I guess it was finally time to invest in something safer when traveling on the road.
