Group 6 was established in 1948 in Tokyo, Japan and produces motorcycles, automobiles, and power products. Honda emphasizes respect for individuals and three principles of joy. Honda established its Guangzhou Honda Development Research center (GHRD) in China as the first automaker to develop products under an original brand through a joint venture. The goal of GHRD was to become an inspiring and energetic research environment to develop whole car research and development, including the Li Nian brand which aims to be a top international automobile brand supported by Honda's technologies.

1. Group 6

2.  Est. 1948 with headquarters in Tokyo, Japan
 Moto cycles, automobiles, power products
 Principles- Respect for the individuals and three Joys

3.  Great market potential, automobile industry was booming in
china
 Rapid increase in-
Internal demand
Vehicle production
Exports
Imports

4.  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 ventures
New Rules:
 Equity participation was same
 Min investment in a new project: US$ 292 million
 Min investment in R&D: US$ 73 million

5.  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

6.  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

7.  Joint venture between Chinese companies & internationally
recognized automakers
 Local automakers producing proprietary branded cars
 Competition from Toyota, GM and Volkswagen
Success of Volkswagen- success of its joint venture in china
- Product mix of not only traditional
models but also modern models
Success of Local automakers- They received a big boost from
the Chinese government

8.  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.

9.  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.

10.  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.

11.  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.

12.  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.

13.  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.

14.  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.