Driv­ing on­ward in a com­pet­i­tive race

How com­pany is achiev­ing its vi­sion of lux­ury Chi­nese cars

China Daily (Hong Kong) - - BUSINESS COMPANIES - By LI FANGFANG li­fang­fang@chi­nadaily.com.cn

Hsin-Fa Wu has spent all his 30-year ca­reer at Tai­wan-based au­to­mo­bile man­u­fac­turer Yu­lon Mo­tor Co Ltd.

“When I de­voted my­self to the au­to­mo­tive in­dus­try and Yu­lon af­ter I grad­u­ated as an engi­neer in me­chan­ics, I dreamed of help­ing to en­able the Chi­nese to drive our own self­de­vel­oped high- qual­ity cars some­day,” said Wu. “I wouldn’t have quit the in­dus­try and the com­pany un­til I made it hap­pen.”

Now, as pres­i­dent of Dongfeng Yu­lon Mo­tor Co Ltd, a 50- 50 joint ven­ture be­tween the Chi­nese main­land’s sec­ond-largest au­tomaker Dongfeng Mo­tor Group and Tai­wan’s Yu­lon Mo­tor, Wu said his dream has been re­fined to try to make Lux­gen, the new brand un­der the ven­ture, a renowned Chi­nese auto brand across the en­tire globe.

“More im­por­tantly and sig­nif­i­cantly, Lux­gen will be the first self- de­vel­oped ve­hi­cle brand jointly pro­duced by the Chi­nese from both sides of the Straits,” said Wu, who dresses like any other em­ployee in the com­pany. “I am proud of do­ing it.”

Run a dif­fer­ent way

Be­ing a tech­ni­cian was the first job for Wu in 1983, af­ter he grad­u­ated in 1981 and did a two-year stint in the army.

“As that time, the ve­hi­cles were all from Ger­many and Ja­pan. Yu­lon, which built Nis­san mod­els un­der li­cense, started from zero for its first self­de­vel­oped model called Feel­ing,” said the pres­i­dent, who was a mem­ber of the re­search and de­vel­op­ment team.

To take the Feel­ing model for a trial, Wu, in early 1990, went to Dongfeng’s test ground in Shiyan, in Hubei prov­ince. “It took me a whole day to get there, be­ing the first Yu­lon per­son to make con­tact with Dongfeng.”

Al­though it only sold 20,000 units, Feel­ing proved Yu­lon’s ca­pa­bil­ity for pro­duc­ing cars. Af­ter that, Wu led the team to co-de­velop another sedan with Ja­panese part­ner Mit­subishi Mo­tors. “That kicked off my long way to­ward the de­vel­op­ment of a true Chi­nese car,” he said.

Ded­i­cated con­sci­en­tiously, from engi­neer, mar­ket­ing and sales to man­age­ment for 25 years in Yu­lon, Wu was ap­pointed the leader for the Dongfeng Yu­lon project in 2008 and then took the pres­i­dent’s po­si­tion of the newly es­tab­lished ven­ture in 2010.

Af­ter two years of un­ex­pected high an­nual growth of 46 per­cent and 32 per­cent in China’s do­mes­tic au­to­mo­bile mar­ket in 2009 and 2010, re­spec­tively, ve­hi­cle sales sud­denly braked in 2011 and 2012 with nearly stag­nant growth.

“And we were also fac­ing the chal­lenge that nearly all for­eign au­tomak­ers have es­tab­lished them­selves suc­cess­fully in China and dom­i­nate more than 80 per­cent of the mar­ket share,” said Wu. “Even the home­grown Chi­nese do­mes­tic brands were strug­gling for sur­vival in such a fiercely com­pet­i­tive mar­ket, so how could we, a brand new com­pany, find a sil­ver lin­ing in this sea of red?”

The pres­i­dent found out that there is still a niche sec­tor be­tween the in­ter­na­tional brands and China’s home­grown brands.

“We po­si­tioned our­selves as a high-end in­no­va­tive Chi­nese brand from the very be­gin­ning and cre­ated Lux­gen, a com­bi­na­tion of ‘lux­ury’ and ‘ge­nius’,” he said. “And the logo of the brand, a hu­man shape, also in­di­cated that the Lux­gen brand is peo­ple-ori­ented and user-friendly.”

In Septem­ber 2011, the first model, Lux­gen 7 SUV (sport­su­til­ity ve­hi­cle) hit the mar­ket and joined the com­pe­ti­tion in China’s fastest grow­ing auto seg­ment. A year later, its sec­ond model, Mas­ter CEO, a lux­ury multi-pur­pose ve­hi­cle rolled off the pro­duc­tion line.

“It’s quite dif­fi­cult for a new auto brand to com­pete in the red-hot sedan seg­ment. Then we took a dif­fer­ent tack to tap into the big SUV sec­tor,” said Wu. “That helped Lux­gen de­velop a high-end im­age from the be­gin­ning.”

Wu told China Daily that his sec­ond out-of-the-box strat­egy was in­no­va­tive-ex­pe­ri­ence style mar­ket­ing. “Pow­er­ful in­ter­ac­tion with our cus­tomers can help us in our vi­sion of deeply touch­ing peo­ple’s hearts, which is what I mean by suc­cess­ful mar­ket­ing.

“Im­press­ing the mar­ket with our 7 SUV, we nicely timed the launch of the Mas­ter CEO, which we call a limou­sine for mas­ters,” he said.

Al­though the Mas­ter CEO tar­geted a niche mar­ket with lim­ited sales, Wu said the model re­in­forced Lux­gen’s high-end po­si­tion in the mar­ket. “With a clear lux­ury im­age cre­ated by the 7 SUV and es­pe­cially the multi-pur­pose ve­hi­cle Mas­ter CEO, it was time for Dongfeng Yu­lon to make a foray into the sedan seg­ment this year with our Lux­gen 5 Sedan.”

Again to make a dif­fer­ence, Lux­gen’s 5 Sedan was highly in­te­grated with in­tel­li­gent tech­nol­ogy. “Our ‘Pad in Car’ in­tel­li­gence sys­tem fully con­nected the car and the mo­bile phone,” said Wu, whose eyes shine when he talks about the tech­nol­ogy.

Dongfeng Yu­lon plans to have eight mod­els pro­duced on four dif­fer­ent plat­forms by 2015, at its Hangzhou plant, which has an an­nual pro­duc­tion ca­pac­ity of 120,000 ve­hi­cles and 200,000 en­gines, in the first phase of the project.

To fur­ther es­tab­lish its brand among China’s young gen­er­a­tion, Dongfeng Yu­lon man­aged to get its ve­hi­cles used in the Chi­nese ac­tion com­edy movie Black&White episodes I and II.

“Dongfeng Yu­lon planned to first sta­bi­lize our brand in the mar­ket within three years — some­thing we have al­ready achieved — and then ex­pand brand aware­ness and ac­cep­tance over the next five years. Then con­tinue to re­in­force it step- by- step in the com­ing decade,” said Wu. “Even the Ger­man au­tomak­ers spent 20 years forg­ing a strong foothold here in China. We need to be pa­tient.”

For Wu, de­vel­op­ing a “wow” im­age is just one part of his brand-build­ing strat­egy. “Over a long-term per­spec­tive, it is fatal to com­pete with for­eign joint ven­ture prod­ucts sim­ply on ba­sic ca­pa­bil­ity. Lux­gen should with­stand the test of the mar­ket and cus­tomers.”

Ac­cord­ing to Wu, when he de­vel­oped Feel­ing 30 years ago in Tai­wan, Yu­lon equaled the pro­duc­tion stan­dard to Ja­panese au­tomak­ers. “And now we are lift­ing the bar to meet Euro­pean stan­dards, not only in pro­duc­tion but also in man­age­ment,” the pres­i­dent said. For in­stance, Dongfeng Yu­lon part­nered with Del­phi on con­trol sys­tems and co­op­er­ated with Magna on trans­mis­sion. They are both global lead­ers in the au­to­mo­tive parts in­dus­try.

“Qual­ity and tech­nol­ogy come be­fore price. We choose the best part­ners and sup­pli­ers

LU ZHONGQIU / CHINA DAILY

Dongfeng Yu­long’s as­sem­bly lines for its Lux­gen 7 SUV ve­hi­cles.

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