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From Refrigerators to Volvo Part Four: The Geely Story – Making More Cars, Sports Cars, and Factories
7 déc. 2013 - 17:00
From the turn of the millennium onwards Li Shu Fu started to believe that the wider global automotive industry. On January 6th 2000 Li Shu Fu did his first media tour, over 1300 people, including dealers and media, descended on Guangzhou to view Geely’s latest cars. The results were strong with Geely being remembered.
To promote Geely globally Li Shu Fu took to the promotional circuit giving talks at conferences or different events, the result was that this down to earth, somewhat country bumpkin-esque car making businessman was mocked constantly. On one particular TV show Li talked extensively about his technology, investment and branding but was quoted as saying “Making cars? Making cars is nothing special, is it not just four wheels, two sofas and an exterior shell?” the host quipped back “So this is how Geely cars are made….” The audience roared into laughter but it was like water off a ducks back to the down to earth Li, he believed that all promotion was good promotion.
2001 was a good year for Geely, Li Shu Fu was anointed by the China Entrepreneur magazine as the most ideologist person of the year, with the reasoning being that no matter what he chooses he is always determined to do it, for example making cars. Li Shu Fu’s nickname of “Crazy Car Guy” followed him wherever he went, with increased exposure – no matter if positive or negative, helped Geely’s sales go from strength to strength.
One particular day is revoured in China’s economic history, and that is November 9th 2001, the day China formally joined the World Trade Organization. At the same time good news came for Geely in the form of an announcement from the National Development and Reform Council in which Geely’s JL6360 model made it onto the list. Geely had gone from being an ‘unregistered child’ into a ‘registered citizen’. The celebrations at Geely were explosive, Li sat down with upper management, engineers, designers and line workers alike to celebrate by drinking, and rumor says they drank a lot. On December 26th of the same year, Geely’s first sedan was approved along with their original first two hatchback models, meaning Geely was now a legal automotive enterprise.
With the support of Central Government policy Geely’s development was exceptionally fast. In June 2002 Li announced a long term development plan which included ‘three projects’ of which contained the JunMa Project, Liebao Project, and XiongShi Project. The Junma project involved producing and selling 300,000 cars by 2005 with the Ningbo plant producing 100,000 and Linhai 50,000, Qiaolu 100,000 and the Shanghai factory producing 50,000 with sales income reaching 1.8 billion RMB and 100 million profit. The Liebao project set goals of 1 million sales by 2010 with Zhejiang province absorbing 500,000 units alone and sales reaching 4 billion RMB with sales income of 2.5 billion RMB. The XiongShi Project – which translates as ‘Ferocious Lion’, was to sell 2 million cars per year with 1.5 million years being absorbed by the Chinese market and the rest being exported, with an estimated income of 80 billion RMB and taking 10% of the Chinese market. As current statistics show, the plans did not meet expectations at any level but it did show that Geely had a heart to aim big.
Geely continued with its car models, bringing the Geely YouLiOu to the market, which was essentially a sedan version of the existing Meiri and helped Geely promote itself as a producer of not only hatchbacks but sedans too. Shortly afterwards, Geely launched the Geely MeiRenBao, ‘Beauty Leopard’ which was the first Chinese sports car and was designed by an Italian design house.
The Beauty Leopard had all the looks of a sports car, but lacked the engine power with it having a 1.3L and 1.5L four cylinder engine. Both engines produced 86 or 94bhp, producing 110Nm and 128Nm of torque respectively when mated to a 5 speed manual gearbox. Official 0-100km/h times were set at 12.8 seconds and 12 seconds for the 1.5L, nothing to write home about. The Beauty Leopard did have one thing for it, it was cheap at 129,999RMB to 148,888RMB.
From 2001 to 2005 Geely used the Haoqing, MeiRi and YouLiOu models to improve its fortunes and continue to invest in infrastructure with renewed investment.
The most notable factory was Geely’s Shanghai facility, which was then producing the HuaPu range of cars under the ownership of Li Shu Fu’s younger brother. As HuaPu’s fortunes ran in a different direction to Geely’s own successful road, the company failed to gain central government support and thus didn’t have the official license to produce cars – but did so anyway, like many other small auto companies in China during that period. To get around the lack of legality at Huapu Li rolled his brothers enterprise into his own, calling the new company Shanghai Maple. The factory is located into Shanghai’s suburbs of Jinshan District and is able to produce 150,000 cars per year with the models includes HaiFeng, Hai Shang, Hai Xun, Hai Yu etc – the majority of which were loosely based on clones of the popular Citroen ZX.
In 2003 Toyota was unhappy with Geely. In a case which was called ‘The Auto Industry’s First IP Protection Case’ by the Chinese media, Geely was accused of treading on Toyota’s own IP. Toyota claimed that Geely’s logo was too similar to Toyota’s own logo, and at the same time Toyota were unimpressed with Geely using ‘Toyota Powered’ as part of its advertising campaign. Geely was asked to compensate Geely 14 million RMB.
Li Shu Fu put forward his own case in court, he said the Geely logo was based on the Chinese characters ? and ? which could be loosely translated as beautiful day rather than intentionally aiming to copy Toyota’s logo. On the ‘Toyota Powered’ issue, Li claimed that he was being honest as Geely models were at that time Toyota powered with engines bought from Tianjin-Toyota who did not disagree with sales to plucky little Geely – on this point Geely won. Despite Toyota products being cloned by other Chinese manufacturers, it seems that Toyota has lost heart in the Chinese legal system and hasn’t ventured forth since.
By 2005 Geely’s JunMa Project had its first year harvest after being implemented, although Geely sold 150,000 units it was still far away from its intended 300,000 units but at the same time it had a stellar 36% growth rate which pushed Geely into the Top Ten World’s Biggest Car Makers on volume. At the same time, Geely listed its shares on the Hong Kong stock market.
Geely Freedom Vessel or ‘Zi You Jian’ was also launched in 2005. This model was developed in partnership with multiple international partners including Korea’s Daewoo and Japan’s Kyocera, for the Chinese market this update was considered impressive.
Geely’s technical prowess continued – the Zi You Jian came with three engine options: a 1.3L, 1.5L and 1.6L with the latter two being self-developed by Geely. Gearboxes came in the form of 5 speed manual and also an automatic model – again, developed by Geely in house and the first Chinese automatic gearbox.
7 déc. 2013 - 15:39
Renault has secured Chinese government approval for a joint venture with Dongfeng Motor, giving the French group its first manufacturing foothold in the world’s largest car market by units sold.
Renault has long been rumored to be in the process of setting up a joint venture with on and off savior, Dongfeng. Rumors have been persistent since 2005 but nothing concrete has been landed until the Chinese government gave the french company official approval to establish its new business in China.
Dongfeng and Renault are planning to invest 7.8 billion RMB in a dormant company, Sanjiang Renault, which was established in 1993 with Sanjiang Space Industry Group which Dongfeng later absorbed into their group. Renault established the company relatively early in the Chinese market when compared with its rivals but sales were slow, leaving Renault to eventually abandon the partnership after building the Renault Traffic Master van and also extremely limited number of Renault Espace MPV’s.
Since the abandonment of the joint venture, Renault has been importing vehicles from its Korean partnership with Samsung which has meant their Chinese market offerings have been priced slightly higher than rivals. The Sanjiang Renault JV will be officially renamed to Dongfeng Renault Automotive Company and will be based in Wuhan, the home of Dongfeng.
Dongfeng has already established a long term and highly successful joint venture with Renault’s partner, Nissan, but at the same time it also has a parntership with Renault’s rival PSA where the Citroen and Peugeot models are produced.
7 déc. 2013 - 15:29
Read the rest on The Business Standard
In what may come as a surprise to many, India is quietly becoming a production hub of high-end vehicles meant for export to China. Iconic US motorbike maker Harley Davidson, Austrian motorcycle manufacturer KTM and Mahindra & Mahindra have preferred to set up manufacturing facilities in India than in the relatively low-cost China and export the output.
KTM, 48 per cent owned by Bajaj Auto, has identified two of its products under the Duke brand for export to China as completely knocked-down (CKD) units. The initial target is to sell over 10,000 CKD units of these high-end bikes annually. Exports are expected to commence in 2014. The two bikes are Duke 200 (Rs 1.35 lakh, ex-showroom, Delhi) and Duke 390 (Rs 1.88 lakh) manufactured at Chakan in Pune as part of the company’s joint development programme with Bajaj Auto. The KTM strategy is to sell high-power bikes from Europe and low-power ones from India. The bikes would be assembled at an outsourced facility in China.
Confirming the plans, S Ravikumar, senior vice-president (business development), Bajaj Auto, said, “The China strategy for KTM is clear. They want to target the niche upper end of the motorcycle market in China. They are not interested in the lower end where there are many players and huge volumes. We expect there to be a large market for high-end bikes in China.” The China thrust is part of the joint strategy of Bajaj-KTM to treble exports to around 70,000 units per annum from India, from about 25,000 currently. That effectively means about 13 per cent of the exports would come from selling to China.
Stefan Pierer, CEO, KTM Motorcycles AG, said, “We are in the process of setting up an assembly unit in China, which is expected to be commissioned sometime next year.” Keeping KTM company will be Harley Davidson, which has lined up for export models developed on the recently unveiled Street platform from its facility in Bawal (Haryana). Currently, Harley does not have any plants outside the US, except in Brazil and India, and it wants to leverage those plants for export to China. Anoop Prakash, managing director, Harley Davidson India, said, “Harley Davidson has developed the Street platform after a gap of 14 years. Both Street 750 and Street 500 will be manufactured in India, the only other production hub for the models apart from Kansas in the US.
These bikes will be exported from India to markets in Europe and Asia, including China.” Production and export of both models on the Street platform are expected to commence in India mid next year. Prakash, however, declined to specify a timeline for starting exports to China.
7 déc. 2013 - 15:27
Whenever there seems to be a problem in China, the issue is blamed at the feet of foreigners. The one sided fued started by China’s state owned Central Television Service started earlier this year aimed to address the issue of high prices on imported cars, but now the issue has moved over to the price of replacement parts.
China’s state broadcaster, China Central Television (CCTV), has accused some foreign auto makers, including Land Rover, Subaru and Audi, of profiteering and called for revision of auto market regulations.
A common rear end accident costs the owner of an imported Range Rover100,000 yuan (16,313 U.S. dollars) to fix, because of expensive parts on which the manufacturer has a monopoly, while the car costs a little over 1 million yuan.
Likewise, owners of imported Subaru and Audi also have to buy parts at a high price, according to Tuesday’s CCTV program “Half-Hour Economy”.
It also takes time to get parts because they can only be ordered from foreign producers, according to the program.
Industry insiders said duties and taxes on imported car parts, usually about 29 percent, do not make a big contribution to the prices.
The program blames the 2005 guideline on car sales management for excessive prices. The regulation allows foreign car makers to set up their own franchisees to handle sales, after-sales service and the supply of spare parts, which gives them monopolies.
7 déc. 2013 - 15:18
Volvo’s first factory in Chengdu under Chinese ownership is on the verge of producing its first model for the Chinese market, the S60L. The S60L is for all intents and purposes the same car as the European made S60 but given the addition of an extra 80mm in the wheelbase to keep rear seat Chinese passengers happy and comfortable. Another point of note is the Volvo S60L’s addition to the government procurement catalogue which will surely give the Swedish-Chinese company a solid boost in the coming months when govt depts are looking to clean out their 2013 budget.
Chinese media are reporting that the S60L will launch with six models in the coming weeks with pricing starting at just 269,999RMB and rising to 384,900RMB for the top of the line T5 model. All of the six models come up with a 2.0T engine so there is a potential for a LWB 1.6T in the near future at a lower price point.
The S60L’s pricing, if confirmed to be correct, will put it in direct competition with the BMW 3-Series and Audi A4L family both of which offer stretched models but at the 300,000RMB and rising price area.
An official launch date of December 13th has been announced, with the car being in dealerships shortly afterwards.
7 déc. 2013 - 15:03
General Motors and its joint ventures in China saw their domestic sales increase 13.3 percent on an annual basis to a new November record of 294,500 vehicles. It was the second-best sales month of 2013.
During the first 11 months of 2013, domestic sales by GM and its joint ventures increased 11.4 percent year on year to 2,889,368 units and will reach 3 million units for the first time in the middle of December.
Shanghai GM sold 142,009 vehicles in China during November, a year-on-year increase of 4.1 percent. SAIC-GM-Wuling’s domestic sales rose 23.4 percent to 146,296 units. FAW-GM sold 6,015 vehicles in the domestic market, an increase of 24.4 percent.
Buick sold 76,085 vehicles in China during November, an increase of 8.4 percent on an annual basis. The brand was led by the original Excelle family, which experienced sales growth of 9.8 percent to 25,673 vehicles, and the Excelle XT and GT, whose sales grew 12.2 percent to 19,877 units.
Chevrolet sales in China dropped 5.3 percent year on year to 59,647 units. The brand continued to be led by the Cruze, with demand rising 12.1 percent to 24,909 units. Demand for the Malibu was up 20.3 percent to an all-time monthly high of 9,257 units.
Cadillac sales in China increased 92.5 percent on an annual basis in November to 6,277 units. The SRX and XTS had all-time monthly sales of 2,783 units and 2,561 units.
Wuling sales in China during November totaled 135,830 units, a year-on-year increase of 25.4 percent. It was led by the Hong Guang family, which had sales of 60,168 units – an increase of 143.1 percent from last November. Baojun sales were up 2.3 percent from last November to 10,466 units.
During the first 11 months of 2013, Shanghai GM’s domestic sales grew 13.5 percent to 1,386,092 units, SAIC-GM-Wuling’s domestic sales grew 9.7 percent to 1,446,767 units, and FAW-GM’s domestic sales increased 4.3 percent to 52,489 units. In addition, Buick sales rose 16.4 percent year on year to 752,161 units, Chevrolet sales were up 3.1 percent to 591,214 units, Cadillac sales increased 57.8 percent to 42,717 units, Wuling sales were up 11.7 percent to 1,359,108 units, and Baojun sales grew 16.3 percent to 87,659 units.
7 déc. 2013 - 13:41
After 4 years of preparation, the first Geely model was finally rolling down the production lines. That first car was of course the Geely Hao Qing model, a car that would aim to revolutionize the Chinese car market. On the auspicious date of 1998 August 8th at 8am the first Geely Haoqing hatchback came down Geely’s Linhai production line. The Haoqing resembled a Benz from the front, a nod to Li Shu Fu’s desire to create a luxury model with a price that could attract the masses rather than the minority. The Hao Qing was based on the Xiali platform which itself was bought from Daihatsu, the engine came from Tianjin-Toyota 8A platform and a gearbox from Fiat, not quite an entirely indigenous vehicle from Geely but it was a good start for a fledgling company.
During the start of production ceremony Li ran into a major issue, he sent out 200 invites to local leaders and celebrities, but not one of them came to lend support and the reason being that the automotive regulations of the day where still against private investment in the auto industry. Li found a comrade in the then vice minister of Zhejiang province, Mr. Ye Rong Bao, who also believed that Zhejiang would benefit from being a car producing province. With Ye’s attendance confirmed, other leaders would fall in line and attend.
At the end of 1998, Li had produced the first 100 Haoqing hatcbacks and invited potential dealers to come and check the goods. Another barrier was thrown up in Li’s dream – dealers saw the car, shook their heads and left. Quality was a major problem, rain testing proved the cars to be less effective than an umberella in keeping occupants dry, the brake system would fill with water, the lights filled to the brim and when road testing, road dirt would blow through the air vents suffocating the driver and the tops of the door were coated in glue and the door thickness left even Li thinking that the car was substandard and wouldn’t get market support. Li was furious and ordered the cars destroyed, resulting in a net loss of millions.
Li moved to streamline his workforce, he retired workers with poor welding skills and hired a new bunch of highly skilled workers. Quality, therefore, increased several fold. By November 1999 a new batch of Haoqing’s had been produced and entered into the marketplace, within a short few months over 2000 models had been sold. But as car dealers shook their heads at the original Haoqing, Li had to use his motorbike network to sell cars thus limiting potential sales.
Under Li Shu Fu’s command Geely moved to create “China’s cheapest car”, borrowing heavily from the then Xiali model and pushing Xiali into a price war. As soon as Xiali lowered their prices Geely would match it or beat it. Xiali dropped their price to 31,800RMB, Geely met them at 29,999 RMB which resulted in the entire auto industry cursing Li Shu Fu, later Li would admit that he was only making several hundred RMB on each Geely Haoqing sold.
Although Geely had its products, quality was nonexistent, a popular saying at the time in Taizhou was “When going up hill you have to push it, and when it rains you have to open your umbrella inside.” To tackle this Li hired over 100 technicians from Tianjin-FAW and hired fresh graduates to push technology and quality levels higher. Geely established a relationship with Hangzhou university, offering students scholarships and in the end spending 10 million RMB to hire 60 recent graduates but finding that nearly none of them were willing to work from the bottom rung on the ladder, eventually all of them would leave.
With Li being a practical man he didn’t want to wait for graduates to come to him after university, he wanted the graduates to come directly to him. He thus created his own technical high school where students could learn a trade – the Zhejiang Economic Management Technical School was created in 1998. In November 1999, Geely University was officialy created in Beijing’s Changping district.
From 1998 to 2007, over a near decade Geely Group established a strong educational base in the Chinese market with 8 of its own educational facilities that educate at multiple teritiary education levels from apprenticeships to associate/technical degrees and undergraduate to post graduate degrees. Geely currently boasts 3500 teachers and over 57,000 students on campus.
Li was not content with his lot in Taizhou’s Linhai, he looked north to the coastal city of Ningbo where a Japanese businessman was ready to sell over 300mu of factory land and thus the Geely Group Ningbo Plant was born. It was in Ningbo that Geely produced its second car; the Mei Ri or Merie in export markets. When the Hao Qing opened the automotive market’s door for Geely, the Mei Ri allowed Geely to make money.
7 déc. 2013 - 04:23
Despite the rumor mill here in China saying Porsche’s latest baby SUV, the Macan, will be made in China foreign media have heard directly from Porsche saying the SUV will not see Porsche will not see Chinese production lines. What is happening first is that the Macan will see Chinese sales, at least according to these patent office filings.
The 3.0L V6 twin turbo and also a 3.6L V6 turbo mated to a 7 speed PDK gearbox. Chinese pricing is still a mystery, we think it will be circa 700,000RMB or circa 120,000USD which makes it relatively affordable, although expect demand to be high and dealers will likely add on their own extras.
A Beijing Auto Show launch is expected next April with sales starting shortly afterwards.
6 déc. 2013 - 00:30
When Li Shu Fu’s motorbike business was blooming he decided to look at the auto industry once again. Li Shu Fu was ready to reduce his fixed assets to zero and invest his heart into the auto business. Li believed that cars were too expensive at that time and of course with the Chinese population numbers the China auto market had huge potential. What Li lacked was government support, he believed that automotive policies would become more open in the near future so he carried out automotive R&D in advance to prepare for any potential opening in the gaps.
Although Li had made up his mind, the policies of the day did not always go hand in hand with his own entrepreneurial spirit. Believing that Li Shu Fu had no people, no money and no technology Li Shu Fu did not gain the government support he needed, a lack of support was also noted at home where his family were against his car making plans. Eventually Li Shu Fu’s brother would cave in and offer his support , they decided to invest a maximum of 100 million RMB to let Li Shu Fu play at making cars believing they were supporting a good cause and if they lost money they were just unlucky.
With a 100 million RMB in his pocket Li Shu Fu was eager to make cars, although he ‘only’ had 100 he was eager to tell other people it was actually closer to five. In 1984 Shanghai and Volkswagen produced the first Santana and set auto industry investment at a minimum of 1.5 billion RMB to become an automaker, and with Geely as a private company it was nearly impossible for them to get government support especially as the central government was controlling the industry to an extremely high degree and openly refused privately owned companies access to the car making market. At that time the auto industry was fractured into the ‘Big Three’ and ‘Little Three’, the big three being First Automobile Works, Dongfeng (under the Second Auto Works name) and also the ‘Little Three’ production centers in Beijing, Tianjin and Guangzhou.
To make cars, Li realized that you needed technology and people. Li went through his motorbike company HR files and pulled out three people with auto industry experience which was basically modified cars, and they started researching the car industry. But they needed something to research first – Li Shu Fu went on a buying spree, he bought cars from Mercedes, BMW and Toyota as well as other vehicles.
Li Shu Fu loved Mercedes and wanted to make his own ‘Chinese Mercedes’, he bought and took apart a Mercedes and then went to FAW to buy a Hong Qi platform, engine and gearbox back to research himself. After several months of tinkering, Li had finally got to grips with basic technology equipment. Li came out with an expression that still follows him to this day: “Cars are just an engine, four wheels and two sofas.”
As the Benz E-Class and Hong Qi’s sizing were about the same in terms of platform and body size Li Shu Fu created the first Geely vehicle, a Frankenstein car based on Benz and Hong Qi tech stamped with a Geely brand. The exterior looked like an E-Class, but was based on the Hong Qi platform, the car was named the ‘Geely Yi Hao’ or ‘Geely Number One’
With the first car already made, Li took his new car into the downtown area of Taizhou for a quick spin where he reportedly received loud applause from pedestrians who couldn’t figure out if it was a Mercedes, or something else. Li Shu Fu took out a series of adverts in the Taizhou Daily News which led to people calling in and asking how much it was. With no quality controls built in, quality quickly became a major issue.
Li Shu Fu really wanted to make a luxury car but quickly found that technology requirements were beyond his then limited capacity. Li looked to low cost cars as a means to grow his Geely dream and decided that he wanted to make cars that everyday men could afford, at that time cars were extremely expensive with the cheapest models being Xia Li and Suzuki’s Alto, both of which were well over 100,000RMB and the Santana then cost 170,000RMB, leaving no cars priced at around 70,000RMB meaning Li had found his chance.
Li Shu Fu took to researching small cars with gusto, he looked to the ‘AnChi’ range of vehicles which has long since disappeared from Chinese roads (rolled into JAC) and also the Zhong Hua ‘Bullet Head’ vehicles (long since bankrupt, and only produce for four years from ’94-98) where he learned how to develop automotive platforms and also how to develop a supply chain system. At this time Tianjin based Xiali had just released its latest model, a rebranded Daihatsu Charade which enamored Li with its stylish design and small size, it was essentially perfect for what he needed for the first mass market Geely vehicle. Li bought several of them, and like a good scientist come engineer, he dissected them to learn more about the platform, the engine, the gearbox, the odometer, and where could he buy all of these from.
After research, comes the production issue. As Geely couldn’t rely on government support Li had to take think of other methods. He applied to Lin Hai government, a small city on the outskirts of Taizhou, to build a motorbike factory, by now Li was one of the better known motorbike manufacturers in China but even still, the government questioned why Li needed such a big factory, “We’re going to make the world’s most luxurious bikes” Li told them, a white lie but one that would pay off eventually. Li got his factory in Linhai based on 800mu of swamp land, but at the bargain price of 500RMB per mu, the downside that there was no power, no water, no restaurants, no stores, and no communications lines.
Li Shu Fu finally had his factory land, but he lacked a license to produce automobiles, and only with a license would he be able to legally produce vehicles – not that it stopped Chery from producing vehicles without a license, but Chery was under the protection of Wuhu Government as a State Owned enterprise. Eventually Chery would come under the protection of SAIC but eventually gained its independence. Li, being a shrewd man with connections that spread across China, heard that the Deyang County Prison Director over in Sichuan was also moonlighting as the director of Deyang Prison Vehicle Factory, the factory was out of business but it still held the all-important ‘mu lu’ which is essentially the document you need to legally produce vehicles in China – a much coveted document. Deyang’s mu lu allowed for the production of hatchback and light coaches. Li struck a deal with the prison factory, they would invest 24 million RMB, take 70% of the shares and create ‘Sichuan Geely Boyin Automotive Company’ which eventually became known as Geely Automotive Production Company. One major issue of having a car factory that is also a prison factory is that entering and leaving is a pain, which ultimately led to a low output. Li wanted to take all the shares in the factory and move it back to his native Zhejiang province, but the prison director struck out.
Eventually, the elderly prison director passed away and Li bought the remaining 30% shares and moved the factory equipment into Linhai in March 1997. By the end of 1997, the factory was complete and ready for production of the first Geely cars.
5 déc. 2013 - 10:09
Five to six years ago if you would have asked anyone what you thought of Geely’s cars you would get a snarky response: “Poor Quality”, “Shoddy”. Accelerate to 2014 and ask anyone what you think of Geely and you will get a nod of appreciation, Geely’s transformation has been nothing short of miraculous. But how did it start?
In 1982 Li Shu Fu, the future Geely and Volvo CEO, graduated from high school with not much of a bright future ahead of him but he changed his fortunes by ‘jumping into the ocean’. In the early 1980′s China was at the start of a series of opening and reforms which would put China on course to becoming the industrial powerhouse that it is today, Li Shu Fu as a bright eyed high school graduate was well placed to take advantage of it.
Most people believe that Li Shu Fu started to create his fortune by manufacturing refrigerators but the truth is that as soon as he graduated Li bought a ‘Seagull’ camera, which was once a well respected brand in China. Li’s goal was simply to take photos of tourists at scenic spots. After a years work he had saved 2000RMB which was a fairly large sum of money, higher than government ministers at the local level at the time. With his profits he opened his own camera store which gave him strong profits, after a few years he had made his first million RMB or Bai Wan as its known in China.
In 1984 Li Shu Fu was kicking back and relaxing with workers from a shoe factory when they came upon the idea of making refrigerator parts. At this time Chinese ‘consumers’ (in the loosest sense of the word) were eager to bring refrigerator into their homes for meat and vegetables, having a fridge was a major point of personal wealth. Li started making refrigerator parts and made his investment back at a rapid rate thanks to the Chinese refrigerator market expanding from 250,000 units in 1983 to over 735,000 units by 1988. Li Shu Fu managed to take his tiny refrigerator business from nothing to having a total value of 400 to 500 million RMB.
Despite the refrigeration business having strong profits, Li was not happy. Li went directly into making his own refrigerators rather than merely making parts under the ‘Artic’ brand in 1987. By 1989 the refrigerator market market shrunk suddenly, largely due to the amount of competitors in the market which at the time reached over 400 rival companies. The Central Government intervened and started giving out production licenses, but with only 41 companies receiving licenses the Artic brand couldn’t continue to produce. Feeling a lack of education, Li went south to the Capitalist Wild West of Shenzhen to study at university.
When at university, Li was talking with a roommate where they were planing to decorate their dorm room. At a local materials market Li Shu Fu discovered Aluminum magnesium boards and admired them due to their high prices as well as imported status, Li guessed that profit could potentially be high if they produced locally in China. By 1991, Li Shu Fu and his brother Li Xu Bing had a factory producing the boards. By the end of 1991 sales had reached 8 million RMB, a year later this expanded to over 70 million RMB, by 1993 this had increased yet again to 150 million RMB and in 2001 it was again 340 million RMB. The factory still exists under the Geely Group and still continues to have strong sales.
In 1993 Geely Li Shu Fu continued to think about producing cars, his ideas came from his first car; a Zhong Hua model. Li had two reasons to get into the car business, firstly his metal business had already gained many competitors which made the market somewhat smaller whilst cars were a high technology product which couldn’t be easily cloned. Secondly, Li Felt that his metal business was too small, he wanted to have a bigger company. Initial consultations with government bureaus left Li without easy access to automobile production due to the limitations placed on the industry, so Li drifted his focus to motorbike production but cars did not leave his mind.
Li’s first motorbike was a ‘ta ban che‘ or a scooter. Li’s idea came from an employee of his, the employee went out on his imported scooter to handle some business but unfortunately crashed into a group of army bikes belonging to the People’s Liberation Army. When Li saw the destroyed army bikes, he immediately decided to put scooters into production after realizing there wasn’t a great deal of technology in the vehicles.
Li was right in correction that Chinese consumers would dump their motorbikes and take up scooters instead. Li found that scooters were more suitable to China’s road conditions in the early days of opening due to their ability to keep the rider dry and clean from road dirt. The first Geely bikes were on par with Taiwan and Japan’s latest bikes but the price was considerably lower, when a Taiwan bike sold for 17,000RMB to 19,000RMB, a Geely model sold for just 8,800RMB.
4 déc. 2013 - 10:34
Sichuan Yema who are notorious for making cars that look like other cars have sent another car down the production line earlier today; the B60X.
Sichuan kick started their auto making dreams on the back of the truly ancient Austin Maestro, which Moses drove himself when he freed the Israelites from Egyptian rule. It’s not clear what platform the B60X is based on, but it does carry the same 1.5L Mitsubishi engine and also the same 5 speed gearbox, the difference being the addition of a new CVT gearbox.
So, how many different car designs can you see in the B60X? Let us know your thoughts via the comment box.
3 déc. 2013 - 15:35
Chang’an Suzuki have a very old lady in their line up – The Suzuki Gazelle. The Gazelle is basically the second generation Suzuki Cultus in sedan form which North Americans will happily remember was the Pontiac Firefly in the late 80′s and early 90′s, whilst the rest of the world weened themselves off low cost Suzuki’s (aside from India, they still love their Mauruti 1000) and onto bigger and not always better models the Firefly lived on in China happily under the Ling Yang name.
Suzuki have now decided the late 80′s car is due for a remake with the introduction of a new low cost model codename the M16a. Like the original Gazelle, the new model is very much going to be a low cost sedan with a 1.6L 109bhp engine. Other information hasn’t been revealed as of yet but expect more news to leak out in the very near future.
3 déc. 2013 - 15:20
From Global Times:
Toyota Motor Corp and its two local joint-venture partners sold about 89,800 automobiles in China in November, up 40.7 percent from a year earlier, the Japanese automaker said Monday.
That follows a 80.6 percent year-on-year jump in October and a 63.5 percent rise in September, which were partly boosted by a low base from last year when sales tanked due to a surge in anti-Japan sentiment following a territorial dispute between China and Japan.
In the first 11 months of this year Toyota sold about 809,000 vehicles, up 7.9 percent from a year earlier.
Toyota officials said in August the Japanese automaker and its two local joint-venture partners were on track to sell 900,000 vehicles in China this year, up 7.1 percent from 2012.
In the Guangzhou auto show that closed on Saturday, Toyota launched three new models dedicated to appeal to the Chinese consumers.
Another Japanese auto brand Honda also unveiled new models at the auto show to gain back the attention of Chinese consumers.
Major Japanese automakers have reported sales growth of over 80 percent in October, according to statistics from the China Association of Automobile Manufacturers, though partly due to a low base number last year.
Toyota operates joint ventures in China with FAW Group and Guangzhou Automobile Group.
3 déc. 2013 - 15:15
For those who are unaware, China’s Chang’e 3 rocket blasted off a couple of days ago on a mission to the moon with China’s first lunar module that will carry out the usual soil experiments. China’s space program is a major point of national pride for the vast majority of people despite its costs. The downside is that as the rockets lift off parts of them tend to come back to earth as they are cast off during the lift off process.
Villagers in Hunan Province and Jiangxi province were rather alarmed to find space debris falling around and into their homes over the past 24 hours as Chang’e makes its way from earth into the heavens. Nobody was hurt during the process, but it seemed to have been a narrow escape for some.
3 déc. 2013 - 15:01
For the uninitiated, Chinese cities are divided into tiers. Tier one cities would include Shanghai, Beijing, Guangzhou etc where local purchasing power is on par with what you would find in a lower European country, go further down the tiers and you will find lower purchasing power but with increasing local incomes.
Forbes China recently announced a list of 30′s strongest counties, of which the majority where located in Shandong, Zhejiang and Fujian provinces – all of which have expanded considerably under China’s economic reform and even faster as production centers moved further away from major residential areas and further into the suburbs. Without boring you with a dry translation of what the Forbes article says, we can tell you that Forbes ranks cities, counties and villages based on their population numbers, city size, consumption power, transportation ability, goods transportation ability and revenue from local companies as part of eight areas they look at.
These counties are currently major potential hotbeds of automobile sales for foreign and Chinese brands in the automotive industry, these cities will likely expand at a rapid rate in the coming months and years with increased investment which will lead to greater automobile consumption. Even as the handful of first tier cities impose anti car barriers, there are still over 50 cities and counties with populations of less than six million people.
3 déc. 2013 - 14:38
Previously we called this vehicle Beijing Auto’s first shot at the popular Ford Ecosport, which wasn’t exactly fair of us as it clearly looks nothing like an Ecosport, aside from being a small SUV with a spare on the trunk.
The SC20 is nothing overly remarkable, it’s a crossover that measures in at 4210*1720*1735 with a wheelbase of 2560mm riding on 16 inch wheels and weighing in at 1220kg. Remarkably, its also RWD but limited to 105bhp from the 1.5L petrol engine stuffed up front and having power sent through four speed autos and five speed manual gearboxes.
Expect this little SUV to hit the market in early 2014, with pricing circa 70,000RMB to 90,000RMB.
2 déc. 2013 - 15:52
One naughty person has leaked information on the future BYD product range onto BYD owners forums over at autohome.com.cn, and the news is rather interesting. As not all CCT readers can understand Chinese, let us break it down for you.
Second Generation F3 – It will cost around 1000RMB more over the previous gen due to improved materials with a launch date of around March or April
BYD S7 SUV – A new improved version of the current popular S6, but gaining 7 seats, AWD and launching in May 2014.
Qin: Will hit the market in December. Shenzhen price tag will be 110,000RMB after subsidies.
G5: Will launch in Sept next year, based on the Su Rui platform but with no physical Su Rui design elements
S1: New SUV which will have Toyota RAV4 and Ford Kuga design elements
S3: A mid size SUV, launching in 2015
M3: A small MPV similar to the Wuling Hongguang. Will be sold under an independent sales network.
2 déc. 2013 - 15:16
When Chinese brands release yet another 50,000RMB vehicle nobody bats an eyelid, there are dozens of low cost manufacturers that are using the 50,000RMB price barrier as a method to keep their factories ticking over, suppliers happy, and local governments happy with the employment rate. There was always an unspoken rule in the Chinese market, foreign brands stayed above the 100,000RMB segment and Chinese would stay below, but with increased competition means that rules, even unspoken ones, get tossed out the window. The Chinese are going up market, and the foreign brands are coming down to meet consumers half way.
Suzuki struck the first blow with their latest Alto model, coming in at just under 50,000RMB or around 9,000USD. The Alto model has sold exceptionally well, not as well as other Chinese well known nameplates such as the QQ, but strong enough. Ford are now planning to play the downmarket game with the introduction of the latest incarnation of the Ford Ka to the Chang’an-Ford JV in Chongqing.
The Ka will of course sit below the current Ford Fiesta in the Ford food chain, and if you believe Chinese media reports the new car will sit in at just 50,000RMB; an extremely low sum for a high flying brand. Engines haven’t yet been confirmed but of course the rumor mill provides: a 1.0L three cylinder turbo and the 1.3L naturally aspirated engine from the Fiesta are rumored to be transplanted into the Ka.
There are also rumors that VW and its partner FAW are also planning to enter into this market segment with a new, China only and China designed, low cost car with the first hints of the new model expected to air in 2014.
2 déc. 2013 - 14:54
The latest incarnation of the much loved Jeep Cherokee has arrived in China at the Shanghai port, according to the images below which were snapped in a warehouse not too far away where the unloading and loading happens. The much talked about SUV has already made headlines across the Chinese auto industry for its interesting design style and also across Western media for the woes that Chrysler have had in getting this model into production. But it seems that its finally here. Expect sales to start soon with prices from around 350,000RMB for the base 2.4L rising very fast to the early 400,000RMB range for the larger 3.0L V6.
French press / Presse française
- La 400ème Veyron est sortie de l'usine Bugatti de Molsheim
- Les caméras de TF1 dans l'usine Renault de Tanger
- Pierre-Etienne Franc : "Nous recevons aujourd’hui les premières voitures à hydrogène de série immatriculées en France"
- PSA Mulhouse réfléchit à la suppression d'une ligne
- Nouvelle fonction pour le futur-ex président de PSA Philippe Varin
English Press / Presse anglaise
Appel à communication
22nd International Colloquium of GERPISA / Old and new spaces of the automotive industry: towards a new balance?
Colloque du Gerpisa