About unleveraged strengths
To this end, Chinese OEMs should lead on their biggest strength: customer-centricity. They must understand European customers, how they differ from Chinese customers, and most importantly, how European customers differ among themselves. Based on these customer insights, targeted promotion programs need to be developed along with a pan-European roll-out plan. In parallel, points of sale and the entire ecosystem need to be established, so hard-earned buzz and leads get picked up in the transition from digital to physical sales efforts.
That being said, we appreciate this is easier said than done. Chinese OEMs typically send whatever they have available in China to Europe, without adaptions. So, whether it’s product spec, sales model, apps or customer experience, Chinese OEMs tend to provide the same range of solutions in Europe as they do back home. This again neglects their core strength in customer-centric product and solution design.
For example, OEM-led customer communities work well in China, as seen in the case of all new players. It is assumed that they will work well in Europe, too. But OEM-community activities in China are a mixture of auto and non-auto events, while traditional grassroots communities in Europe are mostly fully auto-focused. Although there is nothing wrong with community building, the purpose and content must be adapted toward European customers’ preferences and expectations.
Interestingly, what we are seeing in Europe is now also happening in China – but to Western OEMs. Many of those have a long success story in China, but they are facing trouble with their EV portfolios. While domestic brands including Xpeng or GAC Aion are enjoying strong sales, this is not the case for Western marques. What is missing is the tailoring of design, digital services and other features to suit Chinese tastes. The one-size-fits-everywhere concept – selling the same models to the entire world – doesn’t work anymore. It doesn’t work in China for Western OEMs and doesn’t work in Europe for Chinese OEMs.
So despite the fanfare that has accompanied the entry of Chinese players into Europe, they have relatively little to show for it so far. What are reasons for this discrepancy? Is it only cultural, or are there more significant reasons, such as a lack of understanding of European business practices, and how different markets and customers behave? What are the real challenges for Chinese OEMs?
In the weeks to come, we will dig deeper into these issues and discuss possible ways for Chinese OEMs to succeed in Europe.
This is the first in a new short series on Chinese OEMs’ performance in Europe. Stay tuned in the upcoming weeks for further insights. Up next: Dinner is served – why the new market entrants from China have only themselves to beat.