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Following Sun Xiaodong, another Geely executive jumps ship

Following Sun Xiaodong, another senior executive has left Geely to join Chery. On January 4, 2015, Lu Bin, Geely vice president of sales and manager of the 5th district, left the company “due to personal reasons.”

Both Lu and Sun worked at Shanghai-GM in sales before. Two years ago, Sun joined Geely as vice president of sales. Following his step, Lu also joined Geely and took charge of the 5th district (Southwestern China’s Yunnan, Guizhou and Sichuan provinces).

This time, following Sun again, Lu will reportedly join Chery and become executive vice manager of sales reporting to Huang Huaqiong, assistant to Chery president and president of sales.

 

“Culture shock” for the “GM gang”

Lu is a good example of the GM gang. People from Shangahi-GM started to join Geely after Sun. They wanted to continue to learn from Sun and contribute to a Chinese native brand with their joint venture experiences.

According to insiders at Geely, sales were not bad in Lu Bin’s 5th district. In fact, it was one of the only two growth regions out of five. On top of that, Lu consolidated sales network in his district, shrinking the dealership network by 40 percent. But he grew businesses of individual dealers by multiple folds, increasing individual dealer sales from 300 to 600 units. Geely president An Conghui reportedly tried many times to persuade Lu Bin to stay.

People who know Lu said the other main reason why Lu decided to leave Geely for Chery is that he could not adjust to Geely’s working culture.

Unlike Shanghai-GM, native brand Geely’s competiveness still heavily relies on employee individual efforts instead of an efficient company structure. At Geely it is common to have meetings around 11 pm and even An often participates himself. Employees call those late night meetings “riverside night club.”

Geely expects every employee to be entrepreneurial. However, due to historical reasons, Geely has not been able to set up an entrepreneurial corporate structure. An entrepreneurial startup company usually has a simple, flat organization structure. Geely, on the other hand, has more than 20 vice presidents, all with voting rights. This complex management system often leads to meetings which drag along for more than two days. The much bigger Shanghai-GM has a 10-people executive committee, among which only four of them have voting rights. Geely’s cumbersome management system delays implementation of new strategies.

For instance, with the “One Geely” policy, the company started to consolidate dealership network but in execution many executives deviated from the original decision. Another example is Geely’s brand positioning strategy. Originally, Geely wanted to model Volkswagen’s arrangement by positioning Volvo like Audi and the Geely badge like Skoda. However, this strategy was never implemented. Moreover, Geely’s sales target has constantly been adjusted.

Geely’s vehicle quality has been drastically improved in recent years. The new generation GC9 is built on a supply chain modeled on BMW and Volvo. An Conghui claims: “Geely will build high quality cars for everyone in the future.” But company sales and marketing, on the other hand, still lags behind.

According to an insider, Geely’s cars are good compared with other domestic OEMs. Its weakness is in sales. Geely has yet to establish a competitive dealership network. Although Geely calls every department an operational entity, they do not really have the power to make decisions. The “GM gang” believed that more sophisticated sales plans were needed for high-end Geely cars such as the Emgrand and GX7. But such plans need to go through the company’s byzantine management system to be approved. Senior sales executives are not often as responsive and flexible as they need to be. Consequently, Geely’s original dealers who are accustomed to selling low-end vehicles could not keep up with Geely’s brand transition. In fact, many dealers sell only 200 cars a year. The “GM gang” identified the problem, but they failed to solve it due to the resistances from inside.

Sun’s biggest motivation in joining Geely was to build a competitive sales team, a complete dealership network, and eventually establish an efficient sales organizational structure. In the end, Sun realized that he could not fulfill his goal within Geely’s bureaucratic management system, and chose to leave.

Challenge for Yin Tongyue

A source inside Chery discloses that Lu will be executive vice manager of sales. Together with Sun as executive vice president and Huang as sales president, Chery’s senior sales management team has been reorganized with executives who have experience at joint venture companies.

Compared to Geely, Chery’s management structure is much simpler and more clearly defined. Team members have definitive duties and do not interfere with each other. For example, with Huang’s arrival, Chery has become more visible with flashing sales activities, achieving better performance. In November 2014, Chery sold 41,126 cars, 34,256 of which domestically. This number is 7.4 percent higher than October and 34.1 percent more than the same month last year. This marks the 8th consecutive month for sales growth and the highest since January 2014. This feat makes Chery one of the few native brands sustaining constant growth. Under Huang, on top of the hot sale of the second generation Tiggo, Chery is steadily making its vehicles more appealing to young people who will be the dominating force in the future market.

Having seen what talents with joint venture experiences can do, Chery chairman Yin Tongyue has determined to get more people with similar background. His goal is to make Chery a world-class automotive company by 2020. To him it is not enough to be successful in the SUV market, especially given how competitive this segment has become. There are so many new SUVs introduced at the Guangzhou Auto Show that the show effectively became an SUV event. Should Chery’s dominance in the SUV market wane, it would be life-threatening. Therefore, the success of Chery’s sedan strategy is absolutely critical.

“From 2015 Chery will start emphasizing passenger cars,” said Yin when he announced the “Arrizo Series Strategy.” Meanwhile Chery will be working on transforming its brand image. Chery’s future lineup will consist of three series of vehicles: the Tiggo, Arrizo and QQ. The Tiggo will be fighting in the SUV segment, Arrizo competing in the sedan segment and QQ in the sub-compact, new energy and smart car segments. In terms of passenger cars, Chery will gradually complete its Arrizo product line. The Arrizo 3 is the first step to be followed by three more models next year, including a minivan Arrizo M7.

However, products do not always bring success. After upgrading its vehicles, like all other native brands, the biggest challenge for Chery now is to change customer perception of the make of low-end cars. To make a breakthrough in rebuilding the brand image, it is extremely important to construct a complete sales and dealership network. This is where Sun and his people excel. “Other OEMs were also trying to get him, and there was no guarantee that we could win him over,” Yin said last November. Yin is happy to get what he wanted.

But getting the right people is only the first step. How is Chery going to use them is more important. Now that two highly experienced sales executives are on board, it is up to Yin to see how to maximize their potentials. If he succeeds, it would not only help talents fulfill their dreams at a local carmaker, but also lay the ground for attracting more talents for Chery in the future.

(Rewritten by Kevin Wang based on author’s article on Yuguan Cheshi or Yu’s Observation of the Auto Market)

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