Chinese Brand Binge Claims First Victim

A year ago, we wrote about China's suicidal brand binge: "If Chinese carmakers will do what they say – and they appear to be utterly committed – then China will soon wallow in a sea of car brands nobody has ever heard of, and nobody will ever be able to remember. Sometimes, it feels as if it is the long-term goal to give each and every of the 1.3 billion Chinese his or her individual car brand." A year later, the brand disease claims its first victim, and it is Chery. A report by Reuters says that Chery barely made money during the heydays of 2009 and 2010, and "would have been deep in the red if it were not for the 633 million yuan and 1.12 billion yuan in subsidies it received in those two years." Chery's problem: Instead of building on the success.of its hit QQ, says Reuters, Chery "rolled out dozens of new models with little differentiation and even created two additional brands, Riich and Rely, which never caught on." In the meantime, domestic rivals like Great Wall and Geely, which focus on fewer models and did not get infected by brand mania, thrive. In September, the CEO of Dongfeng, one of China's largest automakers, said that last year's brand binge was misguided, "irrational, incompetent, and immature." He also recommended that China's planners should "withhold resources," and starve the afflicted companies to death. Chery would be one of the first to be euthanized. from The Truth About Cars http://www.thetruthaboutcars.com

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