Brilliance Auto’s export of its BS4 and BS6 sedans to European market came to a stop after its partner, HSO Motors, declared bankruptcy late last year. An unnamed company executive revealed that the company has no immediate timetable of resuming its export business to Europe.
Brilliance was hailed by the Chinese media about four years ago as “the first Chinese automaker that has cracked open the door of the European market” when it signed a deal with German importer HSO to sell 158,000 Zhonghua cars to Europe in the following five years.
But the catastrophic ADAC collision test in 2007 crashed the automaker’s dream of “conquering Europe.” Despite the efforts of Brilliance and HSO, total sales of the BS4 and BS6 have been less than 4,000 units since 2007. In 2009 HSO was able to unload a paltry 502 units.
Brilliance blames the ever-changing European emissions and other regulations for its failure but the basic fact of the matter is that the Brilliance Zhonghua sedans have never been designed to meet European safety and emission standards and other regulations.
As a late comer, China lags behind mature markets in terms of automobile safety and emission standards and regulations. Currently, for example, Euro IV emission standards are implemented only in the cities of Beijing and Shanghai, while Euro III standards are applicable to the rest of the country.
Brilliance was the first Chinese carmaker trying to exporter a mid-level sedan to the EU. Its failure signals a major setback for Chinese carmakers venturing into a developed market. Brilliance’s failure unfortunately confirms the general perception that Chinese products are cheap and of low quality, even though in comparison Brilliance Zhonghua cars represent improved engineering, design and processing technologies among Chinese brands.
Local independent carmakers must realize that in order to successfully export in large volume into developed markets such as Europe or the U.S they must first be successful in achieving a commanding market shares in the domestic market with which to not only generate enough sales and profit but also acquire enough manufacturing, sales and service experience before they venture into mature markets overseas.
Secondly, to sell into any mature market, they must start from R&D in developing a vehicle meeting safety, emission and other standards of that market.
Although Brilliance has reportedly established a new export agency in Germany, it should have learned its lesson in the failed attempt of entering Germany. Moreover, meeting the two criteria mentioned above is only the initial challenge in tapping a developed market.