Blog: Dave LeggettProton's Chinese cure

Dave Leggett | 16 May 2008

Proton has looked like a company in a bad way for some years now. As Malaysia’s protectionist barriers have come down in the wake of liberalised trading regimes in the ASEAN region, its dominant share of the domestic market has plummeted (from 60% at the beginning of the decade to just 24% last year).

Protons had sold mainly on price, not on quality of product (alas a problem that comes with protection from competition). As imports have become more price competitive, consumers have, unsurprisingly, voted with their feet.

Proton’s exports have struggled too and the long search for a Western partner with some answers to its ills proved fruitless.

But just lately there have been signs that a turnaround for Proton is not completely inconceivable. Profits rather than losses have been posted and sales have stabilised.

A number of elements to Proton’s strategy stand out.

It has made existing products better – at relatively low cost - and targeted export sales in new markets. The focus of its export strategy has moved away from Western markets (always difficult) to developing ones where Proton naturally sits a little higher in the OEM hierarchy – for example markets in ASEAN and also Iran and China.

It is also starting to realise that it is sitting on a brand that it can do more with: Lotus. And Lotus Engineering is also a strong asset when it comes to product development matters – for third parties as well as for Proton.

And it has decided to look east rather than west for collaborative opportunities with other automotive companies.

Those things could add up to a particularly potent mix in China and Proton has a promising relationship developing with a company known as Youngman. Yes, it’s Chinese medicine for the ‘Malaysian patient’. Follow the bear as Mark Bursa sets out the details.

EMERGING MARKETS ANALYSIS: A Chinese cure for the 'Malaysian patient'?


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