How company is achieving its vision of luxury Chinese cars

Hsin-Fa Wu has spent all his 30-year career at Taiwan-based automobile manufacturer Yulon Motor Co Ltd.

"When I devoted myself to the automotive industry and Yulon after I graduated as an engineer in mechanics, I dreamed of helping to enable the Chinese to drive our own self-developed high-quality cars someday," said Wu. "I wouldn't have quit the industry and the company until I made it happen."

Now, as president of Dongfeng Yulon Motor Co Ltd, a 50-50 joint venture between the Chinese mainland's second-largest automaker Dongfeng Motor Group and Taiwan's Yulon Motor, Wu said his dream has been refined to try to make Luxgen, the new brand under the venture, a renowned Chinese auto brand across the entire globe.

"More importantly and significantly, Luxgen will be the first self-developed vehicle brand jointly produced by the Chinese from both sides of the Straits," said Wu, who dresses like any other employee in the company. "I am proud of doing it."

Run a different way

Being a technician was the first job for Wu in 1983, after he graduated in 1981 and did a two-year stint in the army.

"As that time, the vehicles were all from Germany and Japan. Yulon, which built Nissan models under license, started from zero for its first self-developed model called Feeling," said the president, who was a member of the research and development team.

To take the Feeling model for a trial, Wu, in early 1990, went to Dongfeng's test ground in Shiyan, in Hubei province. "It took me a whole day to get there, being the first Yulon person to make contact with Dongfeng."

Although it only sold 20,000 units, Feeling proved Yulon's capability for producing cars. After that, Wu led the team to co-develop another sedan with Japanese partner Mitsubishi Motors. "That kicked off my long way toward the development of a true Chinese car," he said.

Dedicated conscientiously, from engineer, marketing and sales to management for 25 years in Yulon, Wu was appointed the leader for the Dongfeng Yulon project in 2008 and then took the president's position of the newly established venture in 2010.

After two years of unexpected high annual growth of 46 percent and 32 percent in China's domestic automobile market in 2009 and 2010, respectively, vehicle sales suddenly braked in 2011 and 2012 with nearly stagnant growth.

"And we were also facing the challenge that nearly all foreign automakers have established themselves successfully in China and dominate more than 80 percent of the market share," said Wu. "Even the homegrown Chinese domestic brands were struggling for survival in such a fiercely competitive market, so how could we, a brand new company, find a silver lining in this sea of red?"

The president found out that there is still a niche sector between the international brands and China's homegrown brands.

"We positioned ourselves as a high-end innovative Chinese brand from the very beginning and created Luxgen, a combination of 'luxury' and 'genius'," he said. "And the logo of the brand, a human shape, also indicated that the Luxgen brand is people-oriented and user-friendly."

In September 2011, the first model, Luxgen 7 SUV (sports-utility vehicle) hit the market and joined the competition in China's fastest growing auto segment. A year later, its second model, Master CEO, a luxury multi-purpose vehicle rolled off the production line.

"It's quite difficult for a new auto brand to compete in the red-hot sedan segment. Then we took a different tack to tap into the big SUV sector," said Wu. "That helped Luxgen develop a high-end image from the beginning."

Wu told China Daily that his second out-of-the-box strategy was innovative-experience style marketing. "Powerful interaction with our customers can help us in our vision of deeply touching people's hearts, which is what I mean by successful marketing.

"Impressing the market with our 7 SUV, we nicely timed the launch of the Master CEO, which we call a limousine for masters," he said.

Although the Master CEO targeted a niche market with limited sales, Wu said the model reinforced Luxgen's high-end position in the market. "With a clear luxury image created by the 7 SUV and especially the multi-purpose vehicle Master CEO, it was time for Dongfeng Yulon to make a foray into the sedan segment this year with our Luxgen 5 Sedan."

Again to make a difference, Luxgen's 5 Sedan was highly integrated with intelligent technology. "Our 'Pad in Car' intelligence system fully connected the car and the mobile phone," said Wu, whose eyes shine when he talks about the technology.

Dongfeng Yulon plans to have eight models produced on four different platforms by 2015, at its Hangzhou plant, which has an annual production capacity of 120,000 vehicles and 200,000 engines, in the first phase of the project.

To further establish its brand among China's young generation, Dongfeng Yulon managed to get its vehicles used in the Chinese action comedy movie Black&White episodes I and II.

"Dongfeng Yulon planned to first stabilize our brand in the market within three years - something we have already achieved - and then expand brand awareness and acceptance over the next five years. Then continue to reinforce it step-by-step in the coming decade," said Wu. "Even the German automakers spent 20 years forging a strong foothold here in China. We need to be patient."

For Wu, developing a "wow" image is just one part of his brand-building strategy. "Over a long-term perspective, it is fatal to compete with foreign joint venture products simply on basic capability. Luxgen should withstand the test of the market and customers."

According to Wu, when he developed Feeling 30 years ago in Taiwan, Yulon equaled the production standard to Japanese automakers. "And now we are lifting the bar to meet European standards, not only in production but also in management," the president said. For instance, Dongfeng Yulon partnered with Delphi on control systems and cooperated with Magna on transmission. They are both global leaders in the automotive parts industry.

"Quality and technology come before price. We choose the best partners and suppliers from the very beginning to guarantee high quality from the starting point," said Wu. There was no bombast or conceit in his words.

In JD Power's newly released report 2013 China Automotive Performance, Execution and Layout Study, which was published this month, when it comes to the appeal of new vehicles, Luxgen ranks highest among Chinese domestic self-developed brands and was one of the only two among them that was above the industry average.

Now in its 11th year, the study examined how gratifying it is to own and drive a new vehicle, based on owner evaluations during the first two to six months of ownership. The study examines 82 attributes across 10 vehicle performance categories. The study also found that new-vehicle performance has a strong impact on customer loyalty and advocacy. The more satisfied owners are with the performance of their vehicle, the more likely they are to recommend it to others and repurchase from the same brand in the future.

"We always set our eyes 10 years ahead. And we know if we go toward our vision step-by-step, we will succeed," said Wu.

lifangfang@chinadaily.com.cn

Dongfeng Yulong's assembly lines for its Luxgen 7 SUV vehicles. Lu Zhongqiu / China Daily

(China Daily 12/12/2013 page15)