Internationalization of the Geely Brand

By+staff+reporter+LI+WUZHOU

A test car drives through a roll- ing Middle Eastern desert. Negotiating a sharp turn at 170 km/h， the car， due to a lapse by the driver， lurches and twists， and comes to a stop badly wrecked. Spectators rush to the rescue， expecting the worst for the four people inside. Amazingly， apart from the front-seat passenger who suffers a dislocated shoulder， all three others are pulled out unscathed.

“Thats the car were looking for！”cries the Saudi dealer among the spectators. Soon a deal is signed with the manufacturer Zhejiang Geely Holding Group Co.， Ltd. Saudi Arabia is now the companys largest market in the Middle East.

Geely （ji li） means “bliss” in Chinese. The company believes high quality is first and foremost in bringing motoring bliss to its drivers and passengers.

Rebuilding the Made-in-China Brand

“Some of our models such as Emgrand EC7 boast a higher safety index than better-known foreign brands. Thats one of the factors increasingly recognized by the international market，” said Geelys Chief Public Relations Officer Yang Xueliang. Starting in August 2013， Geely products were exempted from export inspection – the only family sedan brand with this privilege in China.

Such an honor is fabulous for a company that produced its first complete car， manually， only 17 years ago. Geely is now one of the top 10 carmakers in China， and stands out among domestic brands with its unrivaled export growth， which has remained strong despite the global market downturn. Last year， when the overall exports of most Chinese auto brands were largely on par with 2012， Geely notched up a 20 percent growth for the first 11 months （December data unavailable at the time of writing）， with its Embrand topping the export charts for a single domestic car model.

With Geely increasingly talked about in the international media， the company has become the new public face of Chinas auto industry， as well as of its whole manufacturing industry.

When leading Geely into the auto industry， Geely President Li Shufu aspired to nothing more than producing affordable cars for the average Chinese driver. But with this goal seemingly achieved –the introduction of its low-priced models catalyzing a price war in the domestic auto market – the Geely company began to think bigger， aiming to build the worlds safest cars. It has continued to move steadily toward this goal.

Geely CK has passed the top-impact tests in the U.S.A.， the first Chinese car to achieve this. Its independently developed Panda cars scored 45.3 out of 51 in the C-NCAP （China-New Car Assessment Program） evaluation， the highest for Chinese cars， winning it a five-star rating. Its Embrand EC7， another independently developed model， rated four stars by Euro-NCAP， becoming the first Chinese car model certified by an authoritative European safety rating institution.

“All facts testify to the success of our strategic transformation. We are steering in the right direction，” declared Li Shufu last June.

Acquisition of Volvo

The rise of Geelys international reputation owes much to its acquisition of Volvo.

Geely， a Chinese private automobile manufacturer with a history of just 17 years， buying internationally famed Volvo？ It may seem strange， but Li Shufu， did just that.

Because most Chinese automobile companies entered the international market later than their foreign counterparts， Chinese cars have lower brand recognition overseas. “But when you mention Geely now， foreign consumers know Geely bought Volvo，” said Zhang Lin， vicepresident of the Geely Holding Group.

Yang Xueliang also admits that the acquisition of Volvo has greatly boosted Geelys brand value and brand recognition overseas. It has also helped strengthen the confidence of overseas partners to cooperate with Geely. Now several foreign partners and dealers are willing，to the extent of competing， to cooperate with Geely.

However， from Li Shufus point of view， Geely is Geely， and Volvo is Volvo. Geely is a popular brand， and Volvo is more of a luxury brand. Li does not place too much hope on Geelys future with Volvo. “Cross-border acquisition is not the only way for a domestic brand to achieve global development. Our lifeline depends on realizing scientific and technological innovation，” Li said.

In fact， it is innovation that is helping Geely to make todays achievements. Geely Automobile invested hundreds of million yuan to establish the Geely Automobile Research Institute， building up a strong capacity to develop complete vehicles， engines， transmissions， and automotive electronics. The company has been honored as a national “corporate technical center，” “postdoctoral workstation” and “high-tech enterprise.” Geely has 13 academicians from the Chinese Academy of Sciences and nearly 9，000 patents in automobile technology.

The acquisition of Volvo was no doubt a boost for Geely， because joint development of different brands under the same group allows for the sharing of development platforms， resources， technology and personnel. This helps Geely to make further progress in terms of details and automobile systems.

In March and November 2012， Geely signed agreements with Volvo to launch cooperation in modular architectures of mid-sized vehicles， interior air quality control， and safety technology. In September 2013， the Europe research and development center jointly built by Volvo and Geely began operation. “The operation of the R&D Center is a sign that the synergistic results of Geely Automobile and Volvo have shifted from the concept stage to the implementation stage，” comments Li Shufu.

Authentic Localization

Geely Automobile started exports in 2003. Now， the company has entered overseas markets in nearly 40 countries and regions， including the Commonwealth of Independent States， and countries in the Middle East， North Africa， South America， and Southeast Asia. The estimated figure of Geelys 2013 exports was beyond 120，000. Its market share in the Ukraine has exceeded 10 percent， surpassing some international brands. Emgrand， one of Geelys marques introduced to Egypt in 2012， has become one of the top 10 best-selling automobiles there.

In fact， Geelys largest overseas market is Russia， with annual sales of around 30，000 vehicles， according to Shanghai Geely Meijiafeng International Trade Co.， Ltd. （Geely International for short）， the exclusive export subsidiary of Geely Holding Group. Figures for countries like Egypt and Saudi Arabia also exceeded 10，000 in sales. More importantly， Geelys overall overseas sales are growing rapidly.

In addition to favorable influence due to purchasing Volvo and a fine reputation for quality， another significant reason for Geelys popularity in the overseas market is its high performance-cost ratios. According to Chen Peng， marketing director of Geely International， when it comes to quality， Geelys mid-size cars are as good as those of any large multinational manufacturer， while its price is 20 percent lower than such competitors. Based on customer response， the cost of Geelys maintenance and parts is more economical than Japanese cars.

More importantly， Geely has successfully implemented its localization strategy and created authentic local enterprises abroad. More specifically， Geely has achieved localized production through building assembly plants in foreign countries with large market capacities.

At present， Geely has established assembly plants in Russia， Ukraine， Belarus， Egypt， and Uruguay. More than half of its overseas sales are manufactured in these plants.

According to Yang Xueliang， in October 2012 Geely set up a assembly plant in Egypt to produce the Emgrand EC7. Six months later， the sales of cooperative dealerships reached 1，000 cars per month， ranking in the top 10 in the local market. Local dealers are confident Emgrand EC7 will become the “national car” for Egyptians.

Meanwhile， Geely has developed new models based on local market requirements. For example， to accommodate Saudi Arabias high temperatures， Geely enlarged the vehicles water tank and enhanced air-conditioner capacity. To deal with Russias extremely cold climate， Geely improved the windshield wipers and increased car body capacity. To cope with Latin Americas mountainous roads， Geely strengthened the vehicles drive performance.

To improve after-sales service， Geely has not only carefully selected its local dealers， but also set up training centers for local staff. Meanwhile， Geely has built more regional logistics centers， which have significantly improved the efficiency of spare and accessory parts supply.

Since Geely built factories overseas， an increasing number of components and parts can be purchased locally， which has also promoted employment. Most employees at Geelys overseas assembly plants and sales and after-sale service outlets are locals. For instance， in 2011， Geely and the Uruguayan company Nordex jointly built an assembly plant in Montevideo， capital of Uruguay， producing an annual output of 20，000 vehicles and creating 300 jobs and providing 900-plus potential job opportunities.

Moreover， Geely pays great attention to local etiquette and customs. Since Muslim followers pray in the afternoon， the entire production line stops at these times. In order to allow workers to observe their prayer rituals， Geelys plant in Egypt employs eight people in shifts at a position usually covered by one person in China.

Ambitious Plans for the World Stage

Strategically， overseas markets have become increasingly important for Geely. According to Yang Xueliang， Geely sold 490，000 vehicles in 2012， including 100，000 in overseas markets， taking up 20 percent of Geelys total sales volume.“This percentage is expected to rise to 25 percent in 2013， and to 30-40 percent in the coming three to five years，” Yang said. In order to advance the brands popularity in the global market， the automaker is planning to integrate its three sub-brands（Global Hawk， Emgrand， Englon） into one – Geely.

At the same time， a three-step overseas development strategy has been mapped out. At the first stage， the company attaches importance to entering emerging markets through which Geelys team for overseas markets can be developed and trained. Geely has three advantages in this aspect： first， the technical barriers in these markets are similar to those in China； second， emerging markets have higher growth rates than developed markets； and third， most overseas consumer groups focus on cost performance. The vehicles produced in China usually have superb cost performance， although they have not gained outstanding brand recognition yet.

EU and the U.S. are Geelys targets in the second and third stages. Zhang Lin， vice-president of Geely Group， states：“Technically， there are no blocks in Geelys routes into the EU and even the highly competitive U.S. markets. Our products like Emgrand cars meet EU import standards and have achieved E-NCAP standards.” Zhang further explains： “We are not in a hurry to enter the EU market since we need time to build our overseas marketing capacity.”

Zhang also revealed that the products jointly developed by Geely and Volvo are expected to be introduced into the European market in 2017.

Whats more， the automaker is sticking to its plan to build more factories overseas. It has mapped out a project for opening factories in Russia， and an assembly plant has been put into operation. In 2013， Geely signed an agreement with the Belarusian government on setting up factories there. In addition， Geely is mulling over a plan to open a factory in Brazil. R&D centers are also expected to be set up in the near future.

Geely plans to introduce its latest models to overseas markets. For example， the most up-to-date Emgrand EC7 is currently Geelys major export product. In June 2013 in Saudi Arabia， EX7 was launched， as Geelys first SUV to enter the overseas market. EX7 is believed to form a product grouping together with EC7.

At present， Geely is researching a collision mitigation system capable of protecting a car from collision as well as of detecting objects at a distance. A sample model equipped with this system has been successfully developed， with firstgeneration products to be launched at the end of 2014.

At the gates of Geelys Beilun Factory in Ningbo， China， a poster can be seen declaiming， “Make Geely a Brand Famous across the World.” This represents an ideal and a career goal for all of Geelys staff. They are committed to bringing automotive bliss to people all over the world through their quality products.