China’s biggest independent car company is growing up in public – and making more than a few mistakes. But there’s a real strength to Geely behind the amusing ‘Chinglish’ and the dodgy crash tests, as Mark Bursa discovers
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This year, China’s Geely celebrates ten years as an automaker – and during that time, it’s established itself as the largest non-aligned Chinese independent car producer. The company is ambitious too, with plans for overseas production, as well as more up-market cars than the cheap ‘n’ cheerful models upon which it’s built is strong domestic position.
And yet… Geely remains something of an enigma. Most people can’t pronounce its name properly – the ‘G’ is soft, not hard – as the Geely name is an Anglicisation of the Chinese name “Ji Li”. Its web presence is peppered with typically laughable “Chinglish” – why don’t these companies employ an English-speaking, non-Chinese website editor? Even its new global corporate slogan is faintly daft – “Beyond the value”.
It showed a range of decidedly underwhelming cars at the recent Detroit Show. “Behind the times” might be a more appropriate slogan. Quality is shonky to say the least. In Russia (of all places!) the Geely CK small sedan, recently rather unpleasantly failed a 64kph crash test organised by a local motoring magazine. Driver and passenger were given only a 10% survival chance.
Subsequent Chinese tests at 50kph look more encouraging, but the CK couldn’t be sold in Western Europe or North America – indeed, it was the likely disastrous crash test outcome, plus the inability to meet emissions standards, that forced Geely to shelve earlier plans to sell cars in Europe and North America.
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By GlobalDataRewind to Detroit 2006 and Geely was talking about a US launch by the end of 2007. Now it’s hinting at 2010 at the earliest – many believe 2013 would be a more realistic goal. Asked when Geely would start operations in the US, chairman and founder Li Shufu’s response was enigmatic: “It is a tough question. We will do it when you welcome us here.”
Meanwhile, Geely is picking the lower-hanging export fruit, focusing on exports to other emerging markets – more than 30,000 cars last year. Geely sold around 8,000 CKs in Russia alone last year. It looks quite modern – imagine a Dacia Logan with a Mercedes grille and headlamps. Under the skin it is a strange hybrid of an unspecified Daewoo platform and older Toyota engines. The platform was apparently “licenced from Daewoo” – probably while Daewoo was in administration before it was bought by GM. Chery acquired its QQ Matiz clone the same way.
Unscrambling the Geely product range takes some doing – largely because of the desperate state of Geely’s translation department. The CK is known in China as the Zi You Jian, and this translates, variously, as the Freedom Ship, the Freedom Vessel or the Freedom Cruiser. The Russian magazine that carried out the ill-fated crash test grimly renamed it the Death Vessel. Whoever translated the Geely press kit at the Detroit Show got a bit confused, calling the CK the “Free Warship”, (logical, I suppose – a Cruiser is a kind of warship) and describing it as “a technical treasure with Geely’s own brand, so to speak!”
I’ve painted a pretty gloomy picture of Geely – and really that’s not the intention. Like a lot of Chinese companies, Geely is growing up in public – and making some big mistakes. Again like a lot of Chinese companies, Geely seems to exist in its own bubble – advice and guidance from westerners who could help it avoid simple mistakes does not seem to be sought.
There may be a reason for this. Like its competitor Chery and its ill-fated deal with Malcolm Bricklin, Geely’s initial exploration of the global export market was somewhat naïve – resulting in a dubious 2005 “deal” with US-based entrepreneur David Shelburg to sell the cars in the US. Too much, too soon for a company that started making washing machines in 1986, before graduating to scooters in 1994 and cars in 1998. Geely managed to extract itself from the deal, but perhaps understandably, the experience appears to have left it wary of seeking external advice.
That’s a shame – as with some fine-tuning, Geely’s message would look very positive. Product quality does appear to be moving in the right direction, and rapidly. The old Daihatsu-based models are being superseded by more modern, original designs. A five-door hatch called the MK – or the King Kong (!!) – looks a lot better, and while the FC large sedan won’t win any prizes for styling, it looks about right for China, where large sedans are popular and profitable. Perhaps the most impressive is the Geely BL Coupe – or the Beauty Leopard as it is known in China.
These models are backed by a substantial investment in manufacturing. Vice-president Frank Zhao said the company was building new assembly plants in China to give it a total capacity of 1.7 million units by 2015 though no nine facilities. Already four plants are in operation in China:
- Linhai – This is Geely’s original plant, opened in 1998. It has a 194,000sq m of factory buildings on a 560,000sq m site, and builds 50,000 cars a year. The Linhai plant employs 3,000 workers and is a full manufacturing complex with stamping shop, body shop, paint shop and assembly line, as well as an on-site test track.
- The cars it builds are mainly older designs sold in China as Haoqing, Meiri and Youliou models, as well as probably the best of all silly-named Chinese cars – the Urban Nanny and the Rural Nanny, light commercial derivatives of the same basic design. These are all based on the platform of the Tianjin Xiali – itself a descendent of the early-1980s-vintage Daihatsu Charade. Geely licenced this platform from Tianjin Motor in the 1990s, and it still forms the basis of many of its cars.
- Shanghai – This factory produces cars under the Shanghai Maple brand, a separate sub-brand that seems to be deigned to appeal specifically to buyers in Shanghai – though the cars it produces are also exported to 17 countries in Africa, Eastern Europe and the Middle East. This plant, called Shanghai Huapu Car Co, was opened in 1999, and seems to have become part of Geely group in 2003. Early models appear to have been bad clones of the Citroen ZX/Fukang model, though the Maple Hifun (Haixun in China) sedan shown at Detroit looked more VW-inspired. Sort of.
- Ningbo – Opened in May 2000, Ningbo produces the newer Geely models such as the CK and FC sedans. It currently makes 50,000 cars a year, but that is on single-shift working – so clearly there is headroom for expansion here. Like Linhai, Ningbo is a fully integrated plant with 38 heavy stamping presses and 2,000 employees.
- Taizhou Luqiao – Geely’s newest plant to date opened in November 2004. This cost RMB4.91bn to build, and was backed by the local and regional governments in Taizhou City. This plant builds the new, more attractive MK hatchback, as well as engines and gearboxes. Like Ningbo, it’s a 50,000-unit integrated plant on one shift – so again there’s scope for growth.
In addition to these three plants, a further two are under construction, at Xiangtan in Hunan province, and at Lanzhou in Gansu province in Western China. These are being built to a similar template – integrated plants with an initial 50,000-unit capacity on a single shift. Xiangtan will open this year and will eventually make 200,000 cars, while Lanzhou has a more modest target of 100,000 units by 2015.
The pattern is interesting – rather than sweat existing assets, Geely is building a regional manufacturing base covering the whole of China, with plenty of scope for growth. Make no mistake, Geely intends to have a major share of the Chinese market – more than 10% by 2015, by which time China could be building upwards of 15 million cars a year. And there’s no evidence that Geely wants to follow Chery’s example and get into bed with foreign partners. It seems Geely wants to be 100% Chinese.
There is a well-developed global strategy too. Zhao said the company would pursue “a very aggressive overseas manufacturing plan”, including up to six assembly plants around the world – including one in Mexico, which is already under construction and which could give Geely a future base to supply the US via the NAFTA free trade area.
A plant is also planned for South Africa, where export sales of CK started last year. This plant would supply other markets such as Australia and Europe. Indonesia, Ukraine and Russia have been earmarked for future plants, starting with CKD and gradually building up local content. A manufacturing operation in Malaysia is on hold because of a review of ‘national car’ policies.
Zhao said Geely would launch 15 new models in the next three-to-five years, as well as engines including self-developed, Euro V-compliant 2-litre diesels. The pace was rapid, he said: “In the past five years, Chinese brands have achieved what it took Japanese and Korean brands 20 years to do.” The key was to switch from ‘made in China’ to ‘developed in China’, he added.
That goal is perhaps further in the future than Geely believes, especially if Geely wants to go it alone in terms of R&D. It’s not afraid to licence technology, such as the Antonov CVT gearbox, and it’s spending heavily on R&D, establishing the Geely Automobile Research Institute in Linhai, with subsidiaries in Hangzhou, Ningbo and Luqiao. But meeting Chinese standards is one thing – meeting foreign standards in the developing world is another.
Geely’s goal is simple – “manufacturing quality cars for the common people”. On that level, it’s succeeding. Perhaps all it needs is a good translator.
Mark ‘Coolbear’ Bursa
