One partner alone will not do the trick
Based on the challenges of the different business and sales models alone, it’s obvious that a market entry cannot be done successfully without partnerships.
From our perspective, to cover the high variety of customers, there are at least four partner types a Chinese OEM needs to consider:
- The Market Intelligence partner, is the key partner to understanding the core challenges and patterns of the European market
- The Distribution partner (e.g., automotive dealers), as the sales executive, plays an important role in the physical customer interface
- The Financial Service partner, the important influencing factor for the various purchase transaction types
- The New Sales Model partners in particular, Subscription Service Providers
As we described in our previous articles, understanding the European Markets is the key to unlocking the success story of the respective market entrants. For that the right Market Intelligence partners are required. It is of utmost importance to acquire critical knowledge in the decisive market factors, such as:
- Creating awareness of all legal and macro influence factors
- Aligning with key trends
- Understanding the customers and their needs
- Creating transparency on market players
Based on this holistic understanding only, the right strategy and guard rails can be set for success.
While the Distribution partner topic seems to be obvious, it’s important for Chinese OEMs to find reliable and large dealers who are willing to invest (e.g., retail marketing). Considering the ongoing shift towards agent models by Western OEMs, dealers are squeezing their respective profit margins of their current business. Hence, we believe that most retailers are eager to cooperate with Chinese players.
As a matter of fact, we strongly recommend Chinese OEMs to set up a dealer partnership. This should be the first step when entering such a complex market as the European one. It enables physical showroom construction which provide the space for the decisive product experience and most significantly, customer experience services like test drives and consultation.
Besides traditional dealerships, Chinese OEMs ought to consider opening experience points, such as Brand Experience Centers, Flagship stores, or Pop-up stores, just to create market presence and touchpoints with customers.
Physical presence with respective customer experience (within the entire Customer Journey) is the door opener to the European markets. And an experienced dealer partner can significantly accelerate the penetration in terms of physical presence.
Financial Services partners are also of utmost importance due to the described B2B/B2C market segments. Customers are attracted by products presented online and in physical outlets, the conversion to a real sale requires offering the right financial solution. Customers, for instance in the Southern European markets, mostly will only acquire their new car if the right financing product is offered. Without these financial services, B2B sales and a substantial portion of the B2C business won’t be possible. European customers will expect the same availability of various financial options compared to the offering of Western OEMs’ (i.e., flexible leasing, combinations of leasing and financing, etc.)
In addition, we recommend New Sales Model partners such as subscription expert companies aligning to the new market trend of short-term ownership. Committing to a product from an unknown brand for ten thousand of Euros is certainly not an easy decision, but a short-term subscription (let’s say: 1-3 months) with adequate monthly fees can provide the first step into experiencing these new products on the market.