Est. 1948 with headquarters in Tokyo, Japan Moto cycles, automobiles, power products Principles- Respect for the individuals and three Joys
Great market potential, automobile industry was booming in china Rapid increase in- Internal demand Vehicle production Exports Imports
Equity participation by foreign automakers was restricted to 50% Separate sales channels for vehicle made in china, for those imported, and those manufactured by joint venturesNew Rules: Equity participation was same Min investment in a new project: US$ 292 million Min investment in R&D: US$ 73 million
Highly fragmented market 80% were buying their first car In tier one cities- sporty and hatchback automobiles were preferred Other cities-branded automobiles were preferred Emotional factors Intangible attribute rather than tangible attributes such as fuel efficiency or engine equality
An automobile that appealed not only to buyers with traditional brand association but also to modern consumers looking for individuality in their cars Word of mouth marketing through internet portal Chinese government subsidies- fuel prices in china were low, so luxury cars were affordable Strong cultural link between automobiles and social status
Joint venture between Chinese companies & internationally recognized automakers Local automakers producing proprietary branded cars Competition from Toyota, GM and VolkswagenSuccess of Volkswagen- success of its joint venture in china - Product mix of not only traditional models but also modern modelsSuccess of Local automakers- They received a big boost from the Chinese government
Invention and new Product development centre to honda’s culture Almost 5%revenue budgeted for R&D Honda R&D co. founded 1960, had been separate org. True sources of Honda were technology and innovation and hence independent financing for R&D. Same white uniform, for all to symbolize equality. Honda segmented its markets for growth, exemplified by Element Project, targeted for growth in Light truck market. Concept development team in US, in 1998, to create designs for target users at affordablw price.
Observations from X-games supplemented traditional Market research for producing coherent profile of target users, with strong cohort identification, social behavior support for social ad environmental causes. Observations translated to designs, converted to products and tested. Driving performance, safety and value as themes were converted into key subsystem. To meet needs of local customers, R&D centers set up in various parts of world I Japan, North America, S. America, Europe, China and Asia. Headquartered in Japan. Set up HSV, Honda Strategic Venture Invested in technology venture companies to which had synergy with long term R&D strategy.
Since economic development from 1980, JV and Wholly owned companies had 2 conflicting interests. JV relied on Foreign capital for branding and technology, while whole ownership provided full control on R&D, and branding. Phenomenon seen globally. Japan and S. Korea refused the JV model, Latin American countries allowed for the same. Top auto makers like VW, ford, GM who entered market, set up R&D labs with high education inst. GM was Leader among global automakers in R&D. However all RD facilities by international carmakers, focused on either improving specific technologies or tailoring international models to Chinese market, as opposed to CORE TECHNOLOGIES.
Establishment of GHRD, and Li Nian, Honda was first automaker to develop products under original brand through JV in china. Guangnzhou Honda automobile Guangnzhou automobile and Honda, a JV, with 50%partnership, for 30 years. 5 other Honda affiliates, Japanese suppliers and additional 11 honda related factories opened up in Guangnzhou. Principle was “less input, faster output, and rolling development.
Guangzhou Honda developed GHRD, as JV as independent juridical entity in china. Independent legal identity so as to create favorable R&D environment, free from daily sales and production activities. Hoped to become INSPIRING , free energetic, and open research environment. Purpose was to become a whole car R&D centre. Public interest had risen to develop proprietary brands. GM, VW and others pledged for the same, and developed many improved and MADE in CHINA models.
But core technologies were still controlled by foreign manufacturers rather than Chineese partners. Hence GHRD was pioneer in china. GHRD had 2 R&D systems:: technological research and Product Development. R&D staff would step in shoes of Customer and to examine development trends, lifestyle, and preferences, GHRD planned to recruit talents from china and overseas to create advanced technologies, and products for Chinese society. Environment characterized by open and free discussion was encouraged to develop hih quality and creative products. Entertainment facilities built for leisure o staff.
Li Nian represented a brand that will continue to pursue lofty ideals with a challenging spirt. Li Nian meant a dynamic, stylish and high quality life for a new generation. GHRD responsible to develop Li Nian, with Honda Motors, Japan. Core technologies of Li Nian was of GH, and sold via GH sales network in contrast to oters, Though Li Nian targeted to Chinese customers, but it sought to be a top international automobile brand. Li Nian was to be supported by honda’s technologies and meet its quality standards.