A decade ago, Chinese cars gained notoriety in the Philippine market for having poor quality and dependability. Add to that the extremely bad aftersales support customers were afforded by the importers of these cheap cars. But that was 10 years ago. Now, Chinese car manufacturers have learned their lessons, and more than ever, are determined to make their companies thrive and become sustainable. They have finally figured out that their businesses cannot be sustained by one-time purchases. Now it is imperative that they also provide their customers with products that are not only packed with state-of-the-art features, but dependable aftersales service as well.
There a hundreds of car manufacturers in China, all of which are aiming at taking a chunk of the country’s 1.4 billion potential buyers. Some companies have been in operation since the 1950’s and have slowly evolved as a leader in the industry.
One of the leading cat manufacturers in China is BAIC. This car brand came out with the “Jingganshan,” a two-door, four-seater sedan, which was their very first model back in in June 20, 1958. That same year, BAIC came out with a much bigger four-door sedan, which looked very similar to a popular American model.
BAIC continued growing and came out with its own version of the Willy’s Jeep, called the Beijing 212 or BJ212 model, which was the first mass-produced military off-road vehicle in China.
Having a vision of moving the company forward, BAIC executives formed international alliances with well known automobile brands in order for them to acquire a solid foundation in the production of cars and strengthen its ability to carry out independent research and development to make them a leader in the automotive market.
In 1984, BAIC made history by setting up a joint venture with the former Chrysler Corporation, which owned the Jeep brand. The two companies successfully developed a number of models. The partnership resulted in BAIC gaining much-needed information in the design as well as technology transfer in the production of vehicles.
In 2002, BAIC partnered with South Korea’s Hyundai corporation, and began local production of Hyundai vehicles in China. The partnership resulted in the production and sales of 1 million Hyundai cars in China, during its first few years of operations. Striving to move up the ladder, a strategic cooperation with Daimler Chrysler was inked, enabling BAIC to produce high-end Mercedes Benz models including the C-Class, E-Class and the GLK. More recently, BAIC acquired the intellectual property rights of Swedish car-maker SAAB, allowing them to perform their own R&D works, and ultimately design their very own BAIC models.
BAIC begins production of own models
In 2010, BAIC International was formed and saw the setting up of their very own design headquarters in Turin, Italy. Heading the design team is Leonardo Fioravanti from the Pininfarina design house. For those not in the know what Pininfarina is, it is the design house that provides design concepts for big car brands including the highly aspirational brand, Ferrari.
Once BAIC’s design house was formed, BAIC began developing car models; from early sketch conception, to 3D and physical models, all on their own.
With the knowhow gained from their international partnerships, BAIC International made it a point to use globally accepted components in their cars to assure its safety and reliability. Some of these global component suppliers include ABB, Linde, Durr, Demag, Ogihara and Bosch, among others.
Currently, BAIC has four production plants across China, but the biggest one is near its capital, Beijing, where it sits on a 1 million square-meter property. The manufacturing plant is fully automated, with robots performing most of the body assembly works. This method assures that all vehicles coming out of the line meet the strict specifications set for both domestic and international use. Each unit that rolls out of the line is also made to drive over a 1.5-kilometer test course filled with pot holes, ruts, bumps and humps to make sure that all welds and screws hold the car and its components together, well. In any case that a component rattles or shakes, the car is immediately brought back to the plant for corrective measures.
Now armed with years of experience in producing well-known and dependable brands, BAIC came out with their world-class, own-brand models that includes: the A115, which comes in a sub-compact hatchback and sub-compact sedan variant; the A315, which is a compact sedan; the MZ540, which is a passenger mini-van; the X424 four-wheel-drive off-roader jeep; and its flagship model, the A520/A523 mid-sized luxury sedan.
The new BAIC models received a warm welcome from the Chinese consumers for its features and durability, as well as the aftersales service provided by the company, that it saw an exponential rise in sales since its introduction in 2010.
BAIC goes international
In 2013, BAIC began international sales with exports reaching Brazil, Mexico, Russia, South America. International sales proved to be very successful as BAIC unit sales reached an astonishing 2.4 million units in 2014 alone. BAIC executives expect sales to grow to 2.9 million units in 2015.
In the same year, BAIC started the production of fully Electric Vehicles, which came in three variants: the A115EV hatchback; the A115EV sedan; and the A520EV mid-sized sedan. During its first year of production, BAIC sold a total of 4,000 EVs. The following year, EV sales jumped to 10,000 units. For this year, BAIC plans to sell 20,000 units—making it the biggest EV seller in China.
The BAIC Group has become one of the five largest automotive groups in China. It has the most comprehensive portfolio of products, covering the full-range from passenger to commercial vehicles.
In 2013, BAIC Group achieved sales of 266.38 billion RMB and 2,164,000 units sold, making BAIC Group No. 4 in China’s automotive sector in terms of income and profit, and No.3 in terms of brand value. Today, BAIC Group ranks No. 248 in the Fortune Global 500.
BAIC International is expanding its international operations with the aim of building “Global BAIC”. This visionary project will give birth to networks in the main regions of the world: the Middle East, Africa, South America, and Asia, including the Philippines.
BAIC International president, Dr. Haiyang Dong, disclosed that although the BAIC brand is fairly young, when compared to their global competitors, they made it a point to correct the mistakes committed earlier by other Chinese brands. Dong acknowledged the fact that several years ago, Chinese car manufacturers did not think of their customers when they built their cars. “They just thought of the volume and did not think of the customers. Back then, the quality was poor and the after-sales service was almost none. This resulted in Chinese cars being branded as cheap, low-quality and bad service.”
“We have learned from their mistakes,” Dr. Dong said. “When we started BAIC International, we made it our goal to build a good image for our company. We don’t focus much on volume and low price, but good quality cars and excellent service. Not just one-time deals!” Dr. Dong exclaimed.
Dr. Dong revealed that BAIC’s core business is the development of reliable commercial, passenger, electronic and other types of vehicles, equipped with user-friendly features that meet the standards of the international automotive market and fulfill customer expectations globally. Under the motto “Faster, Leaner, Smarter,” BAIC International will use the powerful combination of its innovative spirit and its strong research and development capabilities in order to achieve the top position in technology advancement, out-of-the-box business development and global resources integration.
According to Dr. Dong, BAIC International has three goals for their global market: First is to provide ‘product differentiation.’ Dong said different countries have different needs, and said their cars must be tailor-made to the needs of the local consumers; Second is ‘service differentiation.’ “BAIC does not want to repeat the same mistakes of other (Chinese) car brands, when they did not provide after sales service to their international customers. We want to differentiate BAIC from the rest. We will practice what we preach as having the ‘Best service in town;’” Third and last is ‘localization.’ “In the countries where we have BAIC cars, we plan to put up local R&D, local procurement, local manufacturing and local marketing. Cars cannot always be produced in China and exported to other countries. They are not good for the two nations (referring to unbalanced trade),” Dong said.
BAIC in the Philippines
Last year, BAIC partnered with Universal Motors Corporation, the former distributor of Nissan commercial vehicles in the Philippines, to be their official distributor. UMC then established a new company, aptly named Bayan Automotive Industries Corporation (BAIC), to handle the new automotive brand.
Under the leadership of George Chua, BAIC Philippines now offers the complete range of BAIC International models in the country, except for the electric vehicles. BAIC is still waiting for the Alternative Fuel Vehicles (AFV) bill to be passed in congress to determine what subsidies it will get, and determine if the unit price will be feasible.
Asked about their plans in the Philippines, Dr. Dong said that with the right numbers, they are mulling the production of BAIC cars in the Philippines. “For the moment we only have CBU (complete built-up units) in the Philippines. We want to make a trial market test; to see what happens, what the company needs, the reaction for our products and services. And when the volume takes off, within six months or one year, we will start with the local production.”
“KD (knock-down) units are now in the drawing board for the Philippine market, with a production plant being planned to be put up somewhere in Luzon,” Dr. Dong added.
BAIC Philippines now has dealerships/showrooms in Makati, Iloilo and Tacloban; with dealerships opening soon in Antipolo, Bacolod and Cebu.