The reasons why Youngman can save Saab and Saab can save Youngman
by, 16 December 2011 at 06:50 (1020 Views)
But why are these companies so keen to acquire the deeply troubled Swedish brand? The answer is that Pang Da and Youngman understand the value of a global brand.
Supported by cheap labor, Chinese companies can make products at very low cost, but they are still weak at brand-building.
Weak brands are especially problematic for domestic Chinese automakers because nearly all the global automakers have entered China.
As president of China's largest auto dealer group, Pang Da President Pang Qinghua knows the importance of a strong brand.
Pang Da sells imported Subarus in China. Pang Qinghua knows that even a second-tier global brand such as Subaru commands more respect among Chinese consumers than a domestic brand.
That's why Saab attracts him, and that's why he wants to buy it. "As a brand that has been around from 1947, Saab has a rich cultural heritage and many unique attributes," he told reporters during an industry forum in October.
Youngman -- originally a bus manufacturer -- likewise is dying to acquire a strong brand.
In 2006, the same year that Youngman began producing cars -- company President Pang Qingnian cast his eye on Saab. In 2009, he contacted Saab to express his wish to invest, only to be turned down.
"Saab is a global brand and China is a large market," Pang Qingnian told journalists after signing the acquisition deal with Saab last month. "It is pretty sure that we'll use it to explore the Chinese market."
China's government also has learned to appreciate a strong brand.
In 2010, Beijing overruled Sichuan Tengzhong Heavy Industrial Machinery's bid for General Motors' Hummer brand. But a year later, the government happily blessed the Saab deal.
Behind its attitude change is the government's recognition that the Chinese automakers must build their brands.
Because of their poor images, domestic brands are losing market share in China to global rivals such as Volkswagen and GM. Moreover, they are years away from competing successfully in Europe and the United States.
Zhejiang Geely Holding Group Co.'s acquisition of Volvo has shown that a Chinese automaker can manage a foreign brand. Now the government believes that other domestic automakers might profit from Geely's example.
But Chinese automakers must move quickly. As global automakers recover from the recession, they have become increasingly protective of their technology.
Opportunities to scoop up a distressed global brand are quickly vanishing. This explains why Pang Da and Youngman are making a last-ditch effort to rescue Saab.
Source : Yang Jian who is managing editor of Automotive News China.