China's Automakers Find Warmer Welcome in Emerging Markets

Tiny, Private Car Company Lifan Seeks Customers in Iran, Russia and Uruguay

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It would seem ironic that Chinese automakers are enjoying a warmer welcome in emerging markets such as Brazil and Russia than in China. Even as they struggle to defend their market share against global rivals in China, domestic companies like Geely and Chery are racing to build new plants overseas.

Perhaps the cheekiest of them all is Lifan Industry Group Co., a Chinese motorcycle manufacturer based in Chongqing. Lifan didn't even build automobiles until 2004, and it is still a tiny player. Last year, the company sold less than 84,000 cars, microvans and light trucks -- about one-fifth as many as rival BYD Co.

Yet, Lifan has built assembly plants in Iran, Russia and Uruguay.

This year, exports will account for as much as 55% of Lifan's total sales. Lifan also has gained a foothold in China's light commercial vehicle market, selling more than 40,000 microvans and light trucks in the first eight months of this year.

The dynamo behind Lifan is its founder, company President Yin Mingshan. In contrast to some of his automotive peers, Yin is low key and approachable. He smiles when he speaks, and he candidly acknowledges the challenges that his small company faces.

But what is most striking about him is his unswerving belief that Lifan will survive and grow. This belief stems from his wisdom as an older man, his realism and his personality as a tenacious fighter.

Mr. Yin knows that Lifan's small size is a serious impediment. And he knows that his own age has become an issue. Healthy and energetic as he is , Mr. Yin turns 74 this year, and he must work out a succession plan.

Mr. Yin has a son and a daughter, but the son appears to be more interested in hot cars than in running a car company. Last year, he was fined by police in Lifan's home city of Chongqing for exceeding speed limits in his Lamborghini.

This week, Mr. Yin's 24-year-old daughter accompanied him when Lifan broke ground for its new auto plant in Chongqing. The appearance triggered speculation that Mr. Yin's daughter will become Lifan's new leader.

But the biggest challenge for Lifan, as with all other Chinese automakers, is its poor brand image and weak technology. Because of this, Lifan's vehicles sell for only $5,500 to $13,300.

To make things worse, global automakers are introducing low-priced models to gain market share in inland China. For example, General Motors has launched the Chevrolet New Sail compact car, which has a starting price under $9,400.

Mr. Yin acknowledged all of these challenges to me during an interview at a recent industry forum in the southwest China city of Chengdu. But he also noted that Lifan has a survival strategy -- a plan that he is carrying out.

Aside from its expansion into overseas markets, Lifan will move upscale in China with better equipment, quality and technology. "That's the only right strategy we should take," Mr. Yin stressed.

Can Mr. Yin succeed? Given his experience and survival instincts, I would be happy to give him the benefit of the doubt.

Born into a family that owned some property, Mr. Yin was proclaimed a counter-revolutionary by the Chongqing government in the early 1960s and subjected to hard labor in a local plastics plant. For a long time, his chief goal was simply to stay alive.

Shortly after the Cultural Revolution ended in the 1970s, he started a small publishing house and in 1992 established Lifan to make motorcycles. Within a decade, Lifan became one of China's largest motorcycle manufacturers.

Mr. Yin was inspired by Honda and Suzuki, which had expanded from motorcycle manufacturing into automaking. At the age of 67, he decided to make cars, too.

What lessons has he learned?

"One has to be patient," he said. "We should persist under harsh circumstances. It is like running a marathon. As long as you keep running and do not stop or fall down, you still have a chance to get ahead of the others."

Automotive News China

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