The Chinese hit the headlines at Frankfurt - though perhaps not in the way you might have expected by now. Only two Chinese importers showed up - and Mark Bursa discovered two very different business approaches.

They're building two more halls at the sprawling Frankfurt Messe, the exhibition site that hosts the biennial Frankfurt Motor Show. The organisers probably expected the halls to be full of Chinese manufacturers by now - though judging by this year's turnout, there's no need to rush the construction of the new halls.

Only two Chinese importers showed up - it seems the Chinese have found easier export pickings elsewhere - like Moscow, which eight China car companies attended last month.

Meanwhile, the two Chinese companies at Frankfurt took very different approaches. Brilliance, through its importer HSO Motors Europe, played it by the book.

But the other company, China Auto Deutschland (CAD), caused something of a controversy. Wildfire rumours suggested that the company was about to be thrown out of the show, following objections by Western carmakers over allegations of design piracy. A media scrum ensued, though no eviction notice was served on the German-based importer that is trying to turn itself into the "Aldi or Lidl of the car business".

CAD concentrates on SUVs. Currently it offers three models - the Sheunghuang CEO, the Jonway UFO and a Gonow pick-up- with five other new models coming in 2008. Note the different names - CAD is operating a very different business model to anyone else. The cars it sells are not sourced from a single Chinese manufacturer. Instead CAD shops around and buys specific models from different factories "We deal with five separate factories," said Karl Schloessl, chairman of China Automobile Deutschland.

"We're cheap and nice. Many people in Germany know [supermarket chains] Aldi and Lidl - people want good quality at a cheap price - it's the same with cars. We're the Aldi and Lidl for the car market."

Dealers use the China Automobile brand because Chinese manufacturers have very complicated names. "We tell them it's better to have one name for Europe - it's very complicated to transfer this concept to the Chinese - they all wanted to have their name on sale," said Schloessl.

The problem is, the cars on the stand have clearly been "inspired" by existing foreign models in terms of styling. The Jonway UFO looks like a clone of the Toyota RAV4, right down to interior detailing, though it has a Mitsubishi engine. The Sheunghuang CEO bears more than a passing resemblance to the BMW X3. In China, this sort of "design piracy" is rife, but allowable - only if the cars carried Toyota or BMW badges would they be deemed illegal under Chinese law.

Schloessl believes there is no case to answer. "The CEO has been produced for more than three years now and is on sale in many world markets. It is not a copy. You can find inspiration from other cars - the last inspiration is the tyres - they're always black!"

BMW should be careful, he warned. "Maybe they want to block the Chinese cars in Europe, but BMW is also trying to sell cars in China, and now the Chinese people are beginning to think, what can we do in China also? I think it is not good for BMW and it's not good for the competitive market."

CAD has been selling in Austria, Germany and Italy for nine months, and has sold 600 cars so far, with 800 cars on order. And Schloessl wants to take the concept to the UK: "We're looking for an importer in England, and can deliver RHD in 60 days. We hope to find the right person and start to sell our SUVs in all European markets." Crash tests are under way for the models - he expects three or four Euro NCAP stars.

While controversy reigned at the China Automobile stand, Brilliance, the other Chinese auto maker at Frankfurt, continues to tick all the right boxes. Following a well-received launch at Geneva in March, Brilliance has now started selling cars in Europe and launched a fourth new model, the BS2, at Frankfurt.

The company has also overcome its first setback - a poor showing in crash testing for its first model, the BS6 sedan. This gained only one EuroNCAP star - but Brilliance has rectified the situation by ordering a rapid redesign. Independent tests suggest the car will now gain three stars, something that pleases Hans-Ulrich Sachs, head of Brilliance's European distributor HSO Motors Europe.

Sachs knows the car business - he launched Hyundai in Germany in 1991, he's been a senior brand manager for Volkswagen, and he's been CEO of Germany's largest Ford dealer. Brilliance is BMW's assembler in China, and signed a deal with HSO Motors to distribute its cars in 17 continental European markets in September 2006. At the show, distributors in Slovakia and the Czech Republic signed with HSO - Sachs believes there is great potential for Brilliance in the "new EU" states of Central Europe.

Currently only the BS6 is on sale in Germany, but the smaller BS4 saloon will come by the end of 2007 and the SC3 coupe will follow in early 2008. The BS2 hatch will arrive by October/November 2008, and more models will follow, including a Pininfarina-styled station wagon at next year's Geneva show.

Next year, Sachs expects to sell around 15,000 Brilliance models in Europe - ambitious, but not beyond the realms of possibility given the number of markets - it equates to fewer than 1,000 cars per year in each of the 17 countries where Brilliance cars are sold.

Sachs described the relationship between Brilliance and HSO: "Brilliance's target is to be the first Chinese manufacturer in Europe. Our approach is to be their service partner - choosing sales partners in different countries, organising technical support, organising homologation and feeding product ideas - telling them what is a must to have in Europe and what is not really necessary," said Sachs.

Unfortunately, the UK and Ireland will have to wait for Brilliance - the company currently has no plans to build RHD versions. "I don't know when this will happen, " says Sachs, who has the UK rights and would like to sell the cars here.

Brilliance is ambitious - its production capacity of 220,000 at moment - but by 2010, will have almost trebled this to 600,000. It is building a new factory for the BS2 beside the existing factory, and has a big plot of land for further growth. It also has its own engine capability, and has developed diesel engines in partnership with German engine specialist FEV.

"The facilities are very modern," said Sachs. BMW has had an input, helping to build the factory and designing the logistics. "BMW is happy to help with production processes but has no components input to the Brilliance-brand cars," said Sachs. BMW also helped source plant equipment - most is German-made.

BMW 3- and 5-series cars are assembled on a separate line, and the only common area is the paint shop, where both BMW and Brilliance cars are painted on same line - so the finish is to BMW standards. After the paint shop, painted bodies go to the different assembly lines. Bodies-in-white are also made in separate pressing and welding shops for BMW and Brilliance, before they converge in the single paint shop.

HSO is still working on EU type approval - a process that is proving "time consuming, heavy stuff, especially the pedestrian protection aspects of crash testing. This means the bonnet has to be weakened, which impacts on the normal crash tests - "It's impossible for us to get five stars because of this."

While CAD sees itself as Aldi, Sachs is aiming for a slightly higher market position - though not much higher. "The main competition for Brilliance is Korean - Hyundai, Kia, Chevrolet, plus some Japanese such as Nissan. I don't think we'll be able to touch Passat customers for some years."

Customers so far seem quite happy with Brilliance brand, he adds. "Driveability of the car is good; the car is safe and will be even safer in the future, so we don't think we'll get a lot of complaints. Market research said our ideal customer is a young family with income of EUR3,000 per month - people who need to take care of money, and are not so bothered about an aspirational brand."

Mark Bursa

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