Is Ford finally getting its act together in China?
Its latest strategic initiative to turnaround its operations in the world’s largest auto market – still not yet its largest market unlike most of its multinational peers – ushers in what Ford China President & CEO Chen Anning calls an era that will be “more Ford, more China and more partners.”
Ford in its official press release uses the terms “Best of Ford” and “Best of China” as the overarching theme for the “Ford China 2.0” transformation blueprint, what it believes is a step change in the company’s approach to its China business. It comprises of five key plans and four centers of competence to accelerate the redesign of Ford’s business and sharpen its focus on the Chinese market.
The five key plans focus on: accelerating product development and delivery, developing smart technology, deepening strategic partnerships, driving innovation and developing local talent. The four centers of competence are dedicated to: product, design, innovation and new energy vehicles (see Being more Chinese: Ford China announces latest initiative to “escape” its recent funk).
If Ford China’s “2025 Plan” announced at the end of 2017 was simply focused on bringing more products to market (50 new vehicles by 2025), then the latest transformative blueprint is an all-encompassing strategy that builds on that product offensive.
For the most part of the past year, Ford has been in “therapy” mode as sales fell off a cliff – realigning its sales and distribution activities of its joint ventures in a single unit called National Distribution Sales Division (NDSD), finally establishing the China business as a standalone unit reporting directly to global headquarters (probably the last major multinational automaker to do so) and filling its senior leadership roles in China with more local talent (the appointment of sales & marketing veteran Jason Yang as president of NDSD is the latest example).
The reason behind Ford’s funk in China over the last couple years is simple: lack of speed. It’s the lack of speed in responding to and introducing products catered to the changing needs of demanding Chinese consumers and it’s the lack of speed in decision making (that has to do with China not being a standalone unit, changing senior leadership in China and overdependence on the North American market).
“More Ford, more China and more partners” simply means that Ford can remain a global brand, integrate its global experience with Chinese characteristics utilizing help from local partners. The SYNC+ in-vehicle infotainment system jointly developed with Baidu to be equipped exclusively in Ford and Lincoln vehicles in China catered specifically for Chinese drivers is an example.
“China is leading the world with smart vehicles, and is a key part of Ford’s global vision for the future. We are excited about seeing more products developed in China, for China and from China,” said Ford President & CEO Jim Hackett. It’s by far the strongest comment from Hackett on China yet.
If Ford wants to be successful globally, it has to be successful in China. One yardstick would be that annual sales in the country exceed one million units again, like what happened in the first half of this decade with its “1515 Plan.”
This time around, it will be a lot tougher, because the market is already much different than it was five years ago.