Red Flag On the Road Again.doc

1、Red Flag On the Road AgainThe end of May 2013 was considered a day worth remembering for Chinese automakers. Red Flag， a local Chinese high-class auto brand made by First Automotive Works （FAW） ， saw its newest member Red Flag H7. The new car has three models. One is sold at between 300 and 380 thou

2、sand yuan while the other two， with larger displacement， are sold at between 400 and 480 thousand yuan. The new Red Flag made Chinese local-made cars break away from the embarrassment that very few local-made cars are categorized as high-class models. The new model directly targets two well-establis

3、hed foreign brands， Toyotas Crown and Volkswagens Audi A6. “The long-term dedication of FAW to the resurgence of Red Flag， and our profound understanding of high-class brands give us the confidence to label Red Flag H7 as a match with Crown and Audi A6， ” said the spokesman for FAW. “Red Flag has be

4、en considered car of the nation for 55 years， and now it is time to come back.” Neighboring Bentley The confidence of FAW about Red Flag has definitely been transferred to its dealers. 48 hours before the debut of Red Flag H7， Zhu Zhonghua， sales director of FAWs Longze Store in Beijing， came to the

5、 newly-opened outlet， to review the preparation for the new car. This new store is located in Jinbao Street， one of the most prosperous commercial areas in Beijing. As one of the nine display halls of Red Flag， the new store is unconventionally standing with the stores of Bentley， Royal Royce and Ma

6、serati. Opposite the store is a high-class department store where Gucci and other top luxury brands set up their counters. “I do not know how much money has been invested into the new store. This is my bosss business， ” said Zhu Zhonghua. But he could tell how much his boss loved the Red Flag brand.

7、 According to him， his boss Wang Longfang once worked for FAW as the sales manager of Red Flag. After departing from FAW， he once invested in the dealerships of Mazda and Toyota， and also worked as the agent for Chinese local brand Pentinum. It is the first time that he invested into the high-class

8、auto brand. “My boss is very loyal to Red Flag， ” said Zhu Zhonghua.“He almost took the dealerships of all FAWs brands in the past 20 years and has a profound understanding of this company.” “It is a very good choice for a previous director of FAW to become the dealer for Red Flag， because it can ke

9、ep the stability of the dealer team， ” said a general manager of a Pentinums 4S store in Beijing. “I have known Wang for a while. He is a person always knowing what he is doing， and he has the confidence to do well in it.” It is known that most of the managers in charge of the sales and after-sale s

10、ervices in the Longze Store come from FAW. It is not exaggerated to say that the store is a direct derivative of FAW. The outlet covers over 470 square meters and is decorated with two main hues： black and red， showing out a grand atmosphere that matches the style that FAW wants Red Flag to have， as

11、 well as the companys vision to restore Red Flags image as a high-end auto brand. The Dream of High Class The efforts of Wang Longfang envision FAWs dream of standing along with BMW， Audi and Mercedes Benz in the field of high-class autos. In order to do this， Red Flag must have its own independent

12、distribution channels. However， as the outlook of Red Flag remains unclear， most investors are cautious enough to refuse a large amount of money into the outlets of Red Flag because of the potential risk. Having no power to raise enough funds to start the nationwide distribution network， FAW made a

13、compromise ? it chose to set up nine typical outlets， including Wang Longfangs store， in Beijing， Shanghai and Guangzhou， the most developed cities in China， to show the customers the profile and determination of Red Flag. These nine outlets are called “Red Pavilion” inside FAW， a typical name in Ch

14、ina. On the day of H7s debut， the nine outlets are open to customers at the same time and with the same style， as FAW required. Ordinary customers can get into the“Red Pavilions” and get the first-hand feelings of Red Flag H7 with the help of professional salespersons. Apart from Beijing， Shanghai a

15、nd Guangzhou， Changchun， headquarters of FAW， Zhengzhou and Nanjing are also important cities in FAWs blueprint of Red Flags expansion. Zhang Xiaojun， general manager of FAW Sedan Sales Co.， Ltd， kept talking to the dealers that Red Flag is sharing the same market with Mercedes Benz， BMW and Audi. “

16、Weve emphasized on it in our internal meetings， ” said Zhang Xiaojun， “In practice， we require the Red pavilionsto provide the perfect experiences for consumers through products， sales， and services， letting them know our position of high-class and luxury.” As for how to define the high-class auto b

17、rand， Zhang Xiaojun， who had been the sales director of Audi in FAWVolkswagen for six years， explained it from the customer experiences to services. “The style of our outlets must let consumers feel the high-class atmosphere at the first sight. For Red Flag， the simple combination of black and red，

18、as well as the ceremonial design of the hall， is enough to do this， ” he said. “We also require our Red Flag outlets to provide above-average services for our consumers， making them feel more respected and protected when they choose Red Flag.” “We are positioning us as a rival against Audi， ” he add

19、ed.“But we still hope to borrow the pattern through which Audi succeeded in China.” The “Car of Nation” The pattern Zhang Xiaojun referred to is the “governmental purchase”. For long， Audi is considered the most common car for governmental departments. Statistical data shows that 60% of Audi cars so

20、ld in China are actually bought as the governmental cars. Little is known to foreigners that this position used to belong to Red Flag. In 1958， FAW received the order from the central government to develop a Chinese self-owned sedan. Later in the same year， the first Red Flag 770 was driven to the C

21、PC Committee of Jilin， marking the birth of Chinese own high-class auto brand. However， it was required that all components for Red Flag should be made in China and there was not enough development capital at that time. The low output and slow technological upgrade all become negative factors for th

22、e continuous development， even though it was then the car for“central government leaders”. In 1981， the central government halted the production of Red Flag. By then only 1，500 units had been produced and most of them were sold to the governmental departments. In the early 1990s， the Chinese governm

23、ent began to deal with the overuse of foreign cars in the governmental departments which caused the servere outflow of national capital. There are voices about the reappearance of Red Flag. Then， FAW began to work with Volkswagen. It introduced and altered the production line of Audi 100， based on w

24、hich it began to produce sedans branded as “Century Star” and “Nobility”. This time， the governmental departments were no longer the sole consumers， while private consumers were allowed to buy Red Flag. However， even though Red Flag was considered the “car of nation” and “the sedan carrying Chinese

25、peoples dream of prosperous industry”， very few people chose the new Red Flag because of the high petroleum consumption and frequent errors. The unpopularity gradually led to the elimination of Red Flag in the market. The second rise of Red Flag was ended even before it fully started. In 1999， Yan Z

26、hufeng， now the Vice Governor of Jilin， was appointed the general manager of FAW. After saving the company from the nightmare of losses， Yan Zhufeng turned to resurrecting Red Flag， hoping to bring back the glory of “car of nation”. Upon his instruction， FAW imported the platform of Toyota Crown Maj

27、esta to build the new Red Flag HQ3. When the HQ3 came out， FAW announced the return of FAW and its “luxury and high class” in a high profile. However， the high prices and the small sales volume made the third attempt of bringing Red Flag back to life end up with failure too. An Tiecheng， general man

28、ager of FAW， said that Red Flag impressed Chinese people in the early period of its development as the only national car of China. However， after the initial glory， it was gradually forgotten by Chinese people because of the comparatively stagnant technologies and the outdated brand image. Therefore

29、， the resurrection of Red Flag needs to rebuild its brand image as a high-class and luxurious car. Only in that way could it compete with Audi and BMW. The Uncertain Outlook Even though the manufacturers and dealers are confident in the successful return of Red Flag this time， can this Chinese local

30、-made high-class auto brand remake its glory several decades ago？ The situation seems to be a strong proof for the positive answer. Early in 2012， the central government has already taken orders to reduce the number of foreign auto brands used by the governmental departments. Then， the government ca

31、lled for the “thrift”， which further required governments of all departments and at all levels to reduce the use of foreign cars. The “ban of foreign cars” was accompanied by the news that the new Red Flag was coming out soon. From last July， an unseen battle began in the market of governmental cars

32、. Dealers of FAW that have got the dealerships of Red Flag H7， began to promote the new car to the governmental departments. The H7， whose lowest price is 300 thousand yuan per unit， is said to meet the requirements of “cars for governmental officials” in the shape， quality， displacement and price.

33、In the parliamentary sessions this March， the new Chinese leaders once again put forward the suggestion of “using domesticmade cars more often”. The effortful promotion of the dealers and the assistance from the government led to the increasing number of orders of Red Flag H7， which is another reaso

34、n for many people to have faith in its future. “By now （May 30） ， there have been over 1，000 orders of Red Flag sent to our store， ”said Zhu Zhonghua. “The Central CPC Committee， the central governmental departments and the state-owned enterprises in Beijing have contributed over 500 orders.” Zhang

35、Xiaojun said that the brand of Red Flag， which was 55 years old and appeared as the sedan for Chinese presidents in three parade ceremonies in 1951， 1984 and 1999， could give consumers the different feeling of driving. From the viewpoint of FAW and government， Red Flag seems to have a good future. B

36、ut how about the ordinary private consumers who form the rudimentary force of the rising Chinese auto market？ “We also received about 50 orders from private consumers， ” said Zhu Zhonghua， a number not worthy of boasting compared with the more than 1， 000 orders in total. In addition， quite a certai

37、n number of private buyers are working for state-owned enterprises. The Southern Daily made a survey about how ordinary consumers think of the future of new Red Flag. The result shows that 18.9% of respondents believe that the new Red Flag H7 is very competitive in the market； 16.1% of respondents t

38、hink that the time is needed to review the performance of the new car； 26.2% say that the governmental market will boost the development of Red Flag while 12.69% attribute the success to the market spread. However， 26.09% of respondents say that the new Red Flag will fail anyway. Interestingly， when the Chinese government issued the order of reducing the use of foreign cars in the governmental departments last July， an ordinary consumer applauded this in