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Can sales guru Li Feng deliver at Beijing-Hyundai?

by Wu Ming 

Li Feng’s capability of selling cars has long been recognized in the auto industry circles. But as he enforced his ideas and schemes, he inevitably infringed on the interests of existing sales executives and invariably met opposition. As a result perhaps, he finally parted ways with his college classmate Yin Tongyue, chairman and CEO of Chery Automobile. Li Feng has now come north to take up the reins at Beijing-Hyundai, where he is expected to confront a situation more complicated than that at Chery. Can he deliver?

As president of Chery Sales, Li was regarded as a great marketer of independent-branded cars. In January 2009, Li was named executive vice president of Beijing-Hyundai and given the responsibility of overseeing the Sino-Korean JV’s general operations. On February 3 Beijing-Hyundai made public its sales figure for January, a monthly record of 35,184 cars, which was a nice welcome note for the new executive.

What will happen to the struggling JV at the low end of the car market once a controversial sale guru starts running it? Will he create a miracle, or will he be just another temporary resident of the executive suite?

A press release by Beijing-Hyundai reads: “With many years of experience in R&D, sales and marketing and corporate management, Li Feng is an innovative all-around talent. He has made great sales achievements at both Foton Motor and Chery Automobile. He will lead Beijing-Hyundai to faster growth.”

 

Turning Chery around

Li Feng once worked as president of Foton Motor’s engineering center. Like many professional managers, he started as an engineer and worked in the technical field for many years before rising to management.

In January 2005, Yin Tongyue convinced his old classmate to join Chery. Li was then vice president of Foton Motor and president of Foton Sales. Yin was having a difficult time, with sales dropping steeply to 85,000 units in 2004, just half of the sales target. At the same time, the Party chief of Wuhu city, where Chery is located, had been forced to give up his post as chairman of the company.

But for Li Feng 2004 was his glorious year. Sales of Foton vehicles went up by 53 percent over the previous year and accounted for more than 70 percent of total sales of Foto’s parent, the Beijing Automotive Industry (Holding) Group (BAIC). Despite risks, Li’s ship jumping brought him a brighter halo than before and he helped lift Yin Tongyue out of his predicament.

After becoming concurrently vice president of Chery and president of Chery Sales, Li began implementing a new sales and distribution strategy that separated sales networks for different vehicle models and created franchised dealership clusters around the country. He also initiated a production to order scheme at the assembly plant. These measures effectively reversed Chery’s gloomy fortune and made him and Yin Tongyue stars of the industry.

In 2005 Chery sales were up 118 percent and the company assembled the 100,000th car, a miracle of sorts in China’s history of automobile assembly. Yin Tongyue was awarded the titles of “national model worker” and “CCTV 2005 Economic Figure of the Year.” Yin did not forget to have Li Feng share his glory. “Chery did not have sales and distribution before Li Feng came,” he told the media.  

 

Praise and blame

In carrying out vigorously his sales reform at Chery, Li Feng was seen by some as being too tough sometimes. And he may very well have collided with senior level executives.

Although neither Li Feng nor Yin Tongyue talked about why they parted ways, what happened at Chery after Li’s departure may shed some light on the cause. Li resigned from Chery in August 2008. At a September regional dealer meeting in Beijing, participants almost unanimously talked about serious problems of Li Feng’s separation of sales networks for individual car models and called for a change.

Nor is Li Feng’s “dealership cluster approach” without blame. A dealer in Guangzhou, south China, said that such dealership clusters play mainly the role of product display. As Chery offers few fast-selling models, three-dealership clusters can hardly make a profit, he said. To finance huge expenses of cluster dealers, some “super dealerships” were given an ever wider geographical area for business operation. This adversely affected the sales of other dealerships and left Li Feng in ever greater conflict with them. Chery originally planned to build 20 dealership clusters, but only 12 clusters had been built at the time of Li Feng’s resignation.

Differences of opinion on some other issues also caused subtle changes to relations between Yin and Li, according to a source close to Chery management. Before the launch of the A3, Li Feng hoped to do more tests to minimize problems after its launch, whereas Yin Tongyue wanted to launch the car as soon as possible to seize market opportunities.

Li Feng’s policies at Chery had admirers as well as detractors. Sun Hongbin, a Chery dealer in Guangzhou, said that separation of sales networks for individual vehicle models does not harm the interests of most dealerships. Cheng Wenbing, president of Mai Wei Consulting, said that people in the industry circles had long recognized Li Feng’s marketing talent and that this talent justifies his executive position at Beijing-Hyundai.

 

Heavy pressure

Despite his notable success at Chery, Li Feng faces considerable challenges at Beijing-Hyundai as the chief executive from the Chinese partner.

Beijing-Hyundai’s production capacity is expected to increase from this year’s 300,000 units to 600,000 units next year. But except for the two models of the Elantra and Elantra Yuedong, Beijing-Hyundai does not have fast-selling cars in its lineup to double sales in two years. Li Feng needs to find a new area for growth in the shortest possible time. In recent years, as prices for cars in the Chinese market keep falling, Japanese and German brands have been squeeze into the low-end car market. Beijing-Hyundai, once known as a “price killer,” has lost the capital to wage a price war.

In January 2009 Beijing-Hyundai sold a total of 35,184 cars, of which the Elantra and Elantra Yuedong account for 76 percent, according to figures released by the automaker.

Beijing-Hyundai’s first independent model will be launched soon. But it remains to be seen if the new model will be a success. It will be major test for Li Feng.

When Li joined Chery four years ago, Chery was in trouble. This time Li Feng finds a Beijing-Hyundai that has just recovered from a slump. Against a general market slide, Beijing-Hyundai’s sales in 2008 were 294,000 units, up 27.4 percent over the previous year. Li Feng’s pressure is how to keep the growth momentum.

When he was in charge of Chery Sales, Li Feng built up a sales and marketing team that was clearly of his own imprint. He brought with him two of his colleagues at Foton, Yang Hongze and Chao Lihong. Yang became Li’s deputy and Chao was in charge of marketing. Li also invited Qi Lihong, who had experience working at a multinational corporation, to serve as vice president in charge of brand development and market communications.

Immediately before and after Li went north, both Qin Lihong and Chao Lihong left Chery. As he takes up the reins at Beijing-Hyundai, Li Feng needs to build up a strong team, and that is not without difficulty.

At Beijing-Hyundai, Korean executives are in charge of procurement, marketing, development planning and finance while the Chinese are in charge of production, the technical center and management. Li Feng does not have much room for a personnel reshuffle. And, without the kind of support he enjoyed at Chery, Li Feng may find unexpected resistance at Beijing-Hyundai when he tries to push for new ideas and changes.

Ever since the establishment of Beijing-Hyundai, there has always been rivalry between the Chinese and Korean sides of the joint venture. And that contributed to a serious downslide in sales in 2007. Hyundai has since transferred Kim Dong Jin, its vice president, to Beijing to take charge of Beijing-Hyundai’s production and marketing.

Continued weak sales of its medium- and high-end cars are one of the issues Li Feng has to tackle at Beijing-Hyundai.

Beijing-Hyundai’s high-end cars, the Sonata NF Yuxiang and the Sonata NFC Lingxiang, have not sold well on the Chinese market. In January 2009 sales of the Sonata NFC Lingxiang were only 1,792 units. The Sonata NFC Lingxiang debuted at the end of 2008.

In his resume, Li Feng did not have the experience in sales and marketing of medium- and high-end cars. This is another cause for question over Li Feng’s future achievement at Beijing-Hyundai.

Rewritten by Raymond Chen based on author’s

article carried by Shidai Zhoubao or Times Weekly

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