Date
16 August 2017

Dongfeng shows how to make the most of joint ventures

A new format of alliance with foreign brands and an unconventional approach to jumpstart its own marque are some of the smart moves Dongfeng Motor Group Co. Ltd. (00489.HK) has made this year to crank up its mileage in the business.

Venucia {啟辰}, Dongfeng’s own brand that has broken the 100,000-unit sales mark since its launch last year, is the first breakthrough. The ingenuity here is that Venucia’s models, although manufactured by Dongfeng’s own technicians, are being marketed on the strength of its joint-venture Nissan franchise.

The indigenous models with distinctive cost-effective features are advertised under the slogan “From Dongfeng-Nissan”. The aim here is to forge a link between the Japanese auto giant and Venucia’s own brand image. While the models are sold separately from Nissan’s network, after-sale services are available to Venucia owners at Nissan service centers nationwide.

Media reports say the strategy was so effective that some buyers thought Venucia was Nissan’s new product line. The wrong impression is understandable; Venucia models piggyback on Nissan’s popular hatchback series Tiida. Nissan is not raising any objections: the joint-venture partners have a profit-sharing arrangement on Venucia.

Another milestone is Dongfeng’s commercial vehicle unit which was formed in collaboration with Volvo Group earlier this year and in which the Chinese firm has a 55 percent stake. All the vehicles rolling off the production lines, mainly coaches and tractor-trailers, will be marketed under the Dongfeng brand.

Official mouthpiece Xinhua applauded Dongfeng as the new tie-up set a new example to supersede the malfunctioning “market share for technology” strategy as Volvo Group had agreed to transfer its core intellectual properties ranging from engine to gearbox even though it has less say in the venture’s decision-making.

Dongfeng now is eager to apply the same successful formula to its other JVs with PSA Peugeot Citroën, Honda, Kia and other foreign brands with the goal of shipping three million self-branded cars within three years.

– Contact the writer at [email protected]

CG

 

EJ Insight writer

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