Branding In China

When GM came to China, only the older generation of Shanghai people were familiar with the Buick brand name. It was the favored form of transportation for the gangsters in the city during the lawless 1930s. But after the communists took over in 1949, all foreign symbols of decadence were frowned on or banished. The only people with personal cars were Communist Party officials, with Red Flag limos the transportation of choice for the upper party echelons. All that began to change when China's economy opened up in the early 1980s and foreign cars began to flood back in. GM was slow to exploit the auto-import market, allowing Mercedes, BMW, and Audi to become the dominant brands. At one stage, the German-made marques were so popular that autos were being stolen to order in Hong Kong and shipped across the border to China. When GM decided to manufacture in China, an additional sales and marketing problem was the Chinese mistrust of locally made products. After years of enduring slipshod goods, Chinese knew only too well that local quality control standards fell way below international levels. All of which meant a massive promotional and educational push was needed before anyone would contemplate buying a China-made Buick. Susan Ting, Shanghai GM brand manager, was charged with the task of changing perceptions: "We were the first upper large car in the market built in China," she says. "Everybody said they didn't believe you could make products they would want to buy. Until GM came in all the other manufacturers had 10-year-old vehicles. They were pretty much dumping their technology. "We said how and why we could build quality products. We had a clean-sheet approach and could take the best from plants around the globe and put them here in China. We wanted to set ourselves apart from our competitors. Our management is very customer-focused and intent on technical improvements -- they sound like buzzwords but we actually believe it." As an example, Ting cites the flexibility and changes already made during the first year of operation to cope with customer comments. The company discovered that private buyers accounted for almost half the sales -- as opposed to the 20% expected -- and they were demanding a more driver-oriented car with floor shift, higher top speed, performance tires, and a stiffer-riding chassis. Enter the GS model. Post-sales service was stressed by GM -- another concept alien to most Chinese. The company is aiming for integrated centers throughout the country, where sales, service, and parts are available under one roof. Ads for the Buicks, which would seem simplistic by American standards, concentrate on comfort, safety, and performance. According to GM, brand awareness has gone from 14% to 80%. "It was very rewarding and exciting to work on the project," says Ting. The top-of-the-range Buick sedan goes for 369,000 yuan(US$43,000), way beyond the range of all but a tiny percentage of the population. But there are plenty of ambitious entrepreneurs in the big cities of Beijing, Shanghai, and Guangzhou who are potential future buyers. They watch ads, devour brochures, and swarm to car shows. GM's announcement last month of plans to build a small-car model at the Shanghai plant beginning in December lays the groundwork for meeting the needs of those potential buyers. If China continues with its explosive economic growth of 7% annually, GM's investment will look like astute and farsighted planning.