49%: It’s a number that makes Dearborn, MI smile.
A number dear to me as well because I like to see businesses in my home state thrive. Ford Motor Company, a late comer to the Chinese market, reported that it increased sales in China by forty nine percent in 2013. What is fascinating to me is how numbers like this jump and the basis for these numbers. In this particular case, behind the numbers may be a very strong global strategy. I’ve dug into the topic a bit and found that two crucial components of Ford’s China strategy seem to be the revised product offering and investment in other motor companies in China.
Ford took a transnational approach to make this increase as a strategy of global expansion. This approach is a happy medium between multidomestic and global strategies. Multidomestic approach is one in which a company decides to tailor its products to the specific country in which it is doing business. On the other hand, a global strategy is one in which product offering does not vary and a standard product is maintained in each country that it does business. With transnational, Ford is choosing to revise some parts of it product offering in order to fit the culture in which it does business. For example, the company came out with a Chinese version of the Fusion called Mondeo (see image above) which is designed which for Chinese roads and gasoline. In Ford’s case, this smart strategy to think global yet act local seems to have been successful last year.
The next facet of Ford’s approach is its investment in JMC or Jiangling Motors Corporation which specializes in commercial vehicles. This investment helps spread risk of global expansion across other channels. Specialization in the commercial vehicle seems to be even more brilliant because it helps bring balance with a different segment. Current joint ventures with dealership networks have brought similar results.
Nevertheless, there is another critical question to ask about this 49% growth as it greatly affects the trade of Ford. Simply put, is this growth sustainable? Was the increase in sales due to a well crafted strategy, a little bit of luck, ability to react fast, or a combination of all of them? Ford knows the rising demand for small cars in Asian countries, especially China and India. One thing that could have affected the growth for Ford is the political unrest in Japan. Maybe Chinese consumers are choosing not to buy Japanese cars because of the violent protests and boycotts happening in that industry. Maybe we benefited from the political turmoil of another company? Possibly.
Regardless, 49% is a strong step in the right direction for Ford’s goal of 6% market share in China by 2015. In 2013, market share was just over 3%. I’m a fan of BHAGs (Big, Hairy, Audacious Goals) but this seems quite aggressive. I hope to see Ford collaborate more with dealerships in China and grow the dealership network for sustained growth.
Keep on driving growth Ford.