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National brands recapture auto-maintenance market
(chinadaily.com.cn)
Updated: 2004-06-01 16:09
According to Che Hongzhi, board chairman of Shandong Chengshan Group -- a large tire manufacturer in China -- building a famous national brand is key to developing the domestic auto-maintenance market represented by the tire and oil industry.
Private-car consumption fuels maintenance-market shift
With the dawn of China's private-car consumption, the after-sales service market, covering auto repairs, maintenance and decor, is heating up. As a result, the auto-maintenance industry will have to make a shift in terms of concept and service.
In the past, China's auto-maintenance industry has focused on trucks, agricultural vehicles, passenger cars and public-service sedans mainly in replacing tires and lubricants.
As the private car market expands rapidly, the auto-maintenance industry is witnessing enormous business opportunities by providing services to common consumers. Statistics show that China has become the second-largest lubricant-consuming country (after the United States), with an expected consumption volume of five million tons and a business volume of 35 billion yuan (US$4.2 billion) this year. In 2005, 9 billion yuan (US$1.1 billion) will be consumed on sedan-maintenance across the country.
Foreign brands grab huge profits
Foreign brands, such as Shell, Exxon Mobil and BP, have monopolized China's lubricant market, with a total share of 80 percent, especially on the lucrative high-end market. This is the same case in the domestic tire industry. Although homemade tires are better fit for China's road conditions, with a price tag 50-100 percent lower than their international counterparts, they are still suffering a sluggish market due to low brand identification among consumers.
"Only property brand can bring an end to foreign competitors' huge profits and offer quality products with a reasonable price to Chinese consumers," said Li Jia, general manager of the Beijing Monarch Petroleum Chemical Co Ltd. "The great growth of domestic lubricant corporations on the high-end market has prompted foreign brands to slash prices despite a large-scale hike in raw material prices."
National brands recapture lost market
Che indicated that mastering independent IPR (intellectual property rights) and developing property brands are the prerequisites for the prosperity of China's auto industry. With 3-4 percent of business revenue as its development fund, Chengshan Group has built a State-level technology center and post-doctoral research institute, obtaining national technological advancement awards on many occasions.
With regards to the lubricant industry, Sinopec Lubricant Company has integrated its original brands, such as the Sea, South Sea, Yiping and Great Wall, to create a new Great Wall in hopes of building a flagship product on the domestic lubricant market.
In addition to intensive advertising on CCTV (China Central Television), Great Wall has also poured huge investments in developing new products, constructing a service system, updating production equipment and expanding its sales channels to set up a powerful international brand.
Against the background of economic globalization, the competition focus among corporations has shifted from product, scale and quality to brand. Tan Zhuzhou, president of the China Petroleum and Chemical Industry Association, highlighted three elements for creating a world-famous brand for domestic manufacturers: independent IPR, an outstanding reputation and advantageous human resources.
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