品牌 (PINPAI) is the Chinese word for “brand”. With its unique culture and economic growth, China is one of the most ideal markets for international brands. For similar reasons, China is also at the center of media attention in terms of economy, politics and performance. Unlike most foreign market, the concept of branding is relatively new. Thus, the process of building PINPAI is different. For 10 years, from 2001 to 2010, the Chinese automotive industry has experience tremendous growth at a staggering rate of 25.3% per year. This rate is much higher than the average global growth and led to a competitive industry with more than 100 different brands from both local and foreign companies. In 2011, China has ended its high-speed growth and entered a stage of single digital expansion rate. On the macro level, factors that caused the slow-down include the Chinese Central Bank raising its deposit-reserve ratio for six times in 2011, which increased the difficulties to finance certain enterprises. In terms of regulations, the Chinese government has ended its stimulus packages and introduced tightening limit for new vehicle licensing in major cities. The soaring fuel prices also influenced purchase intention among Chinese consumers. The importance of establishing a strong brand in times like these could not be more evident.

1. Labbrand Best PINPAI Practices in China
AUTOMOTIVE

2. Labbrand is the leading China based branding consultancy that provides market and
consumer research, brand strategy, and creative services to develop and manage
successful brands. With headquarter in Shanghai M50 Creative Industries Park and
featuring an international team of market research and branding experts, Labbrand
combines creative and scientific methods to inspire, guide, measure, and create local
and global branding practices.
朗标是一家根植中国的领先品牌咨询公司，为客户提供包括市场和消费者研究，品牌策
略以及创意服务的综合性品牌解决方案，帮助打造和管理成功的品牌。朗标总部设在上
海的 M50 创意园区，拥有国际化的市场调研及品牌建设专家团队。结合创意和科学，
朗标启发、引导、创建并评估兼顾本土化与国际化的品牌实践。

4. Labbrand Best PINPAI Practices in China
AUTOMOTIVE
品牌 ( PINPAI ) is the Chinese word for “brand”. With its unique culture and economic
growth, China is one of the most ideal markets for international brands. For similar
How brands reasons, China is also at the center of media attention in terms of economy, politics
and performance. Unlike most foreign market, the concept of branding is relatively
become strong, new. Thus, the process of building PINPAI is different.
not how strong
The Best PINPAI Practices in China 2012 report explores these areas and focuses on
brands are the development of strong brands in China. The report consists of two parts with
monthly publications covering 11 major industries and a final annual report ranking
the best PINPAI practices company take to build strong brands in China.

5. Automotive Industry Analysis
For 10 years, from 2001 to 2010, the Chinese automotive industry has experience
tremendous growth at a staggering rate of 25.3% per year. This rate is much higher
than the average global growth and led to a competitive industry with more than 100
different brands from both local and foreign companies.
In 2011, China has ended its high-speed growth and entered a stage of single digital
expansion rate. On the macro level, factors that caused the slow-down include the
Chinese Central Bank raising its deposit-reserve ratio for six times in 2011, which
increased the difficulties to finance certain enterprises. In terms of regulations, the
Chinese government has ended its stimulus packages and introduced tightening
limit for new vehicle licensing in major cities. The soaring fuel prices also influenced
purchase intention among Chinese consumers. The importance of establishing a
strong brand in times like these could not be more evident.

6. New energy
vehicles are gaining
momentum in China:
Chinese consumers
are open to
innovative buying
On April 18th, 2012, the Chinese State Council issued
channels:
“Energy-Saving and New Energy Vehicle Development
Plan” requiring all passenger vehicles’ average fuel
consumptions to decrease to 6.9L/100km by 2015 and
5.0L by 2020. This new regulation will push the already
strong momentum of developing and launching new
energy vehicles in China. Currently, the two main types Besides traditional dealerships (called 4S stores in
of new energy vehicles in China are hybrids (HEV) and China), consumers are welcoming new innovative
electric cars (BEV). However, certain challenges are purchasing platforms. New methods such as TV
ahead of electrics vehicles including lack of proper shopping channel have been gaining support for the
infrastructure and re-charging facilities. Unlike past few years with great sales return and media
Western living environment, most Chinese citizens attention. Recently, purchasing cars online through
live in apartment compounds, thus, finding the right accredited e-commerce platform also surfaced. Chinese
sources to recharge BEV will be difficult. Currently, BEV consumers are open to the idea of revolutionary
also faces high battery costs and quality inconsistency. purchasing channels.

7. SUV segment
continues to grow
Most automotive with increasing
customers are brand competition:
first-time buyers:
100%
76% 73%
47%
18% Growth Rate of SUV
Rate of Chinese Segment in the Chinese
first-time buyers Automotive Industry
2010 2011 2009 2010 2011
Unlike Western markets, most Chinese consumers are SUV segment in the Chinese automotive industry has
buying their first car. These consumers focus on criteria been growing for the past few years with a rate of
such as costs and performance. German vehicles are 47.15% in 2009, 100% in 2010 and even 18.05% in 2011
growing faster because of their sturdy quality and cost- despite the over-all market’s slow down . During the
effectiveness. However, figures do demonstrate a slight 2012 Beijing International Automotive Exhibition in
change in consumer purchase with 75.9% of first-time April, out of the 120 world premiere models, 25 were
buyers in 2010, and 73.3% in 2011 . This drops signals SUVs, signaling growing competition from both Chinese
that Chinese consumers are gradually moving into their and international brands in this segment.
2nd or 3rd car.
http://www.aqsiq.gov.cn/zjxw/dfzjxw/dfftpxw/201110/t20111011_200031.htm
http://auto.ifeng.com/news/expreview/20120507/778740.shtml

8. Luxury car segment
Brands are heading is growing with
into 2nd and 3rd competition on after-
tier cities with sale customer service
production plans in and localization:
Western China:
Auto companies are gradually shifting more attentions With the gradual introduction of most luxury car
to 2nd and 3rd tier cities due to increasing demand. models in China, the competition is heating up. In
Compared with 1st tier cities, 2nd and 3rd tier cities terms of communication strategies, major players
will bring difficulties to brands in terms of providing have already adopted similar routes. As the Chinese
customers with convenient and reliable services market matures, brands will need to focus on after-sale
due to broader geographic spread. A number of auto customer service and localization strategies to remain
companies are setting up production plants in Western competitive.
China to service these cities.

9. Chinese indigenous
brands are facing
slow sales growth and
branding challenges:
Recent report from the Chinese Association of Automobile
Manufacturers (CAAM) indicates that China’s own branded
passenger cars had a sale volume of 6.11 million vehicles
in 2011, down 5.42% from the year before, accounting for
42.23% of total passenger car sales. Besides decline in
sales and shrinking market share, local Chinese brands also
face branding challenges including becoming increasing
conservative in market strategies and a lack of signature
car models for each brand. With foreign brands’ gradual
introduction of lower-price-range models, Chinese
indigenous brands are losing its competitive advantages.

10. Best PINPAI Practices in China
Automotive
Using personalized localized communication to establish high
Mini regards among consumers
Increase relevance among a broader range of consumers by
Audi extending models in the Chinese market

11. Strong CSR programs to sustain brand esteem even in tough
Toyota times
Further enhancing brand esteem through implementing
Mercedes-Benz innovative initiatives which resonate with consumers’ habits
Aspiring communication design to integrate brand relevance
Chevrolet with younger consumers

12. Using personalized localized communication to
establish high regards among consumers
On the global scale, the Mini brand is “unconventional” and “different”. In China,
the same umbrella principles still apply, but during its initial stages, most branded
messages and product positioning were completed using English, which were hard
for Chinese consumers to understand. Starting in 2009, Mini shifted its strategy by
crafting creative communication messages with a Chinese flare to generate positive
responses from consumers.
When Mini launched its convertible vehicles in China, many people challenged
Branding the move by pointing out that certain cities are too dusty and are not suitable for
convertibles. Mini’s reply was “my five elements are missing soil”. The slogan was
Story bold, unique, and memorable yet utilizing ancient Chinese elements to make a
point. In 2011, Mini Countryman’s launch in China also demonstrated its localized
communication. Mini Countryman represents people’s yearning for a getaway. Mini
China’s members felt that a simple “escape” ( 逃 离 tao li) cannot express the brand.
Thus, members created the nickname “ 开 溜 ” (kai liu, loosely translated as “leaving in
stealth mode”) for Mini Countryman which is more playful and local. Mini’s distinctive
localized brand platform paid off with a dramatic sales increase of 4000 vehicles in
2009 to 10,000 in 2010, and 15,000 in 2011.

13. Localizing communication messaging doesn’t simply mean translating the global
message into Chinese. Mini was able to leverage on Chinese local humour and craft
Why is it brand messages which are memorable, straight to the point with bright personality.
important While most automotive slogans can be applied to many brands, Mini’s messages can
in China? only be used for itself. This localized strategy helped Mini to create a recognizable
and respectable niche market among over-competitive automotive brands in China.

14. Increase relevance among a broader range of
consumers by extending models in the Chinese
market
Audi was previously known by consumers in China as the “government’s car” because
of the procurement of Audi A6 for officials. Over the past few years, Audi is shifting
away from this brand image by gradually extending its product lines in China to reach
a broader audience.
Audi has introduced a variety of more personalized models such as A3, A5, and Q5
over the past few years targeting different segment of the market. In 2011, the new
Branding entry-level model Audi A1 was brought to China. A1 is priced starting at 224, 800RMB
(35,000USD), which is slightly lower than Mercedes-Benz’s A Class and BMW 1 Series.
Story The car is targeted towards a younger audience with a drive for “fashion”, “confidence”
and “intelligence”. By introducing lower-priced models in China, Audi successfully
moved away from its rigid brand personality and tapped into new market segments
in China and building a stronger portfolio. The Audi brand is now more relevant for
the younger consumers, which could also be considered as cultivating future brand
loyalty. In 2012, Audi also plans to introduce 7 new models such as Q3, Q5 hybrid
Quattro, and Audi S/RS Series.

15. The Chinese auto industry is packed with a plentiful of brands. For Audi, how to
transform its brand image and increase its brand relevance among consumers will
be the key to ensure future sales growth. By extending Audi’s product offerings
and introducing entry-level vehicles such as A1 and A3 in China, Audi is not only
Why is it tapping into the low-medium price segment, but also constructing long-term brand
important loyalty. Labbrand’s research suggests that most consumers in China are first-time
buyers, thus the entry-level market currently holds great potential. Audi also sees
in China?
the potential of these consumers fiver years down the road when they decide to
purchase an upgraded vehicle; experts suggest that many of these consumers tend to
stay with one brand if they’ve experienced positive services.

16. Strong CSR programs to sustain brand esteem
even in tough times
In 2011 Toyota faced several difficult situations in the market partially due to recall
incidents in 2009/2010 and the March earthquake in Japan causing concerns over
auto parts shortage. Instead of heavily promoting its products after these incidents,
Toyota’s strong consistent corporate social responsibility (CSR) programs in China
greatly helped the brand to maintain its brand image among consumers through
giving back in three major categories: safety, environment, and education.
In China, there are two joint ventures for Toyota: GAC-Toyota and FAW-Toyota, each
Branding company is responsible for its own vehicles’ branding strategies. However Toyota’s
CSR initiatives are part of both companies’ culture. FAW-Toyota has established over
Story 600 libraries over the past seven years and created scholarships for under-privilege
students in rural areas. The company also organizes environmental activities such as
planting trees and eco-conscious seminars on an annual basis. GAC-Toyota focuses
on funding students and building education facilities in China (9 schools). Both
companies’ environmental initiatives also coincide with Toyota’s leading knowledge
in eco-friendly HEV. The company sponsors and participates in Tsinghua University’s
automotive competition and emphasis on training future talents. Their sustainable
CSR initiatives helped Toyota to establish a strong brand influence in the community.

17. When companies face challenges such as recall, strong direct promotion following
it will not work in China. Consumers tend to associate negative comments to the
Why is it campaign which might result in unwanted response. Brands need to allocate time
important and efforts to CSR programs in China on a regular basis. When facing tough times,
they could act as buffers and maintain a healthy flow of positive information to the
in China? end consumers. Parts of Toyota’s CSR programs’ focus on environment and helps to
indirectly promote and sustain its leadership in new energy vehicles (HEV).

18. Further enhancing brand esteem through
implementing innovative initiatives which
resonate with consumers’ habits
In 2007, Mercedes-Benz rolled out its “brand rejuvenation” strategy and successfully
became brand relevant among younger consumers partially through introducing new
vehicles models. For 2011 and onward, the brand focuses on increasing consumer’s
regard through implementing new initiatives in the industry by understanding and
broadening its target audience and excelling in customer care.
Mercedes-Benz has redefined its target customer segments for certain models such
as the B and CLK classes to include younger consumers, epically in China where
the average owner of the S-class is only 39, compared to 55 in Europe. Mercedes-
Benz’s decision to purchase a 10 year naming right of the Shanghai Expo Arena,
Branding now the Mercedes-Benz Arena, shows its understanding of younger consumers’
lifestyle habits. The arena was often used for performing concerts by both local
Story
and international superstars; by frequently appearing next to celebrity names
during concert promotion news, Mercedes-Benz was able to achieve high regards
and recognition from younger consumers. This is also the first Mercedes-Benz Area
outside Germany.
Mercedes-Benz’s “125 year Anniversary Honorary Service Plan” in late 2011 also
promises that vehicles bought in the following year will enjoy 3 years of warranty
regardless of the mileage. This makes Mercedes-Benz the first German manufacture
to promote a 3-year warranty in China.

19. Mercedes-
Benz’s 125 year
Anniversary
Honorary
Service Plan
Why is it The luxury segment of the Chinese automotive industry has entered a stage of
important intense competition. Brand’s initiatives to increase consumer’s regard have to be
ground-breaking in order to stay competitive.
in China?

20. Aspiring communication design to integrate
brand relevance with younger consumers
The fundamental principal of a communication design is successfully pinpointing
target audience to develop relevant key messages and choosing the right platforms
to release. Chevrolet Cruze’s communication structure is an example.
Research shows that 70% of Chevrolet Cruze’s target audience is under 35 years old
and are striving their way up in China. The tagline “true to oneself, unremitting effort,
chase your dream, willing to show” 坚持本我、不懈努力、追逐梦想、乐于表现 was
created to increase the relevance of the car to its key demographics’ believes. These
principles are applied to different communication channels. For online, Chevrolet
partnered with Youku to produce “11 Degrees New Media Film Project” which
featured 11 short films concentrating on young Chinese’s aspiration to succeed and
Branding chasing one’s dream. Bring Chevrolet Cruze a step closer to its key consumers.
Story For offline, its communication effort focused on the buzzing Transformers 3. In China,
Chevrolet Cruze has the nickname “Little Bumblebee”. The association between
Chevrolet Cruze and Bumblebee represents the characteristics which Cruze hopes to
transfer from Bumblebee (such as loyalty, sturdy, helpful, and always diligent); traits
which its target audience hopes to achieve or represent. In July 2011, Chevrolet Cruze
even launched a China-only Transformers edition of the vehicle styled in yellow paint
and black stripes.

21. Aspiration and dreams are important for Chinese consumers. Brands who wish
to target younger, post 80s consumers often relate their brands to these ideas to
enhance relevance. Chevrolet Cruze identified clear messages and channels to deliver
these concepts and yielded in great word of mouth effect. The need to succeed is
Why is it important in current Chinese culture; brands who can relate to this perception will
important become more relevant.
in China?
*Audi, Mercedes-Benz and Chevrolet are extending toward younger consumers, but to
different sub-segments. Inspiring and reaching one’s dream are important for Cruze’s
target audience, which is not necessarily the same for Mercedes or Audi.

22. Expert Information
YE Ming Hai Thomas E. Callarman
Professor at Tongji Univeristy Professor of Operations Management at China Europe
International Business School (CEIBS)
Mr. Ye has been engaged in automotive brand
marketing research and providing advisory services to Mr. Callarman a professor at CEIBS and also the Director
numerous international automotive brands over the of CEIBS’ Centre of Automotive Research (CCAR). Mr.
past decade. Mr. Ye is also a published author regarding Callarman is a frequent speaker at international
market research and forecasting. automotive conferences.

23. SONG Jian LI Geng
Executive Director of China Association of Automobile Editor in Chief of “Auto Intelligence”
Manufacturers (CAAM)
Mr.LI is the Editor in Chief of “Auto Intelligence”, co-
Mr. Song is a professor at Tsinghua University and also published in 2002 with the world’s oldest car magazine
the Deputy Director of National Automotive Safety and “Autocar”. Auto Intelligence focuses on China and
Energy Laboratory. international automotive news, vehicle test reports and
general automotive knowledge.

24. Contact Us
Shanghai Office
Address: M50 Creative Industries Park | Building 7 - Unit 202
50 Moganshan Road | Shanghai 200060 | China
Tel: T 86 21 6298 8956
Fax: F 86 21 6298 0775
Media Contact
Ying Mu | ying.mu@labbrand.com

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