Under its “Made in China, for China” ethos, Daimler has embraced the notion that success in China requires long-term commitment to the local market and its customers.
For example, its Beijing Benz Automotive Co. (BBAC) joint venture with Beijing Automotive Group Co. (BAIC) has produced a staggering two-million-plus cars since the first E-Class peeled off the production line in 2006. Those vehicles have been supported by local research and development facilities to delight Chinese customers with specialized market features.
Daimler continues to focus on localization, last year committing €1.5 billion together with BAIC to operate a second production location for high-quality premium vehicles.
Bringing the production of electric cars under Mercedes-Benz’s product and technology brand EQ to China is another testament to Daimler’s long-term commitment to the Chinese auto market. Meanwhile, together with BYD, Daimler will further develop the home-grown new energy vehicle (NEV) brand DENZA, with the all-new DENZA X due to hit the market by early 2020.
In addition, Daimler this year agreed to form a 50–50 joint venture with Zhejiang Geely Holding Group to operate the smart brand, and to produce an entirely new generation of electric cars in China, with global sales due to start in 2022. Daimler also expects its R&D Tech Center China, set to open in 2020, to drive further innovation in the Chinese market. Along with several other landmark investments announced in the past few years, these deals speak to the confidence of Daimler’s commitment to the market, which has been articulated in China for the last seven years by Hubertus Troska.
Under his watch as member of the board of management of Daimler responsible for Greater China, the German group has grown into one of the dominant players in China’s premium segment, from a less competitive position just seven years ago.
Troska sat down with McKinsey senior partner Daniel Zipser to elucidate the strategy behind Daimler’s success, why Mercedes-Benz is positioned to take advantage of China’s unique consumer profile, and the psychology behind Chinese customers’ appetite for the ultra-luxury Mercedes-Maybach S-Class.
McKinsey: Daimler has achieved a remarkable leadership position in China’s competitive market for premium cars. What are the major factors behind that success?
Hubertus Troska: China is by far the biggest car market in the world, having achieved in 10 to 15 years a level of development that took almost a century in Europe and the United States. Mercedes-Benz in China has also changed dramatically, having advanced from a position of lesser strength seven or eight years ago to become one of the dominant players in the premium market.
The most important success factor is having a dedicated Sino-international team, wholly committed to delivering exciting products and services to our Chinese customers, and supported by a strong local production and R&D footprint. Number two is nurturing the strength of the Mercedes-Benz brand and adapting its positioning in the China market. Last but not least is our mutually respectful and strong relationship with our Chinese partners, which is crucial when doing business in China.
Please click here to view the full interview.
SOURCE: McKinsey & Company
