China’s Auto Joint Ventures Failing to Build Local Brands

http://www.bloomberg.com/news/2012-08-22/china-s-auto-joint-ventures-failing-to-build-local-brands.html

Liu Yu said he was making a generous offer: a $1 million subsidy to entrepreneurs willing to build a dealership for BAIC Motor Corp.’s Beijing car brand. Though that covers about three-fourths of the cost of each outlet, the BAIC deputy sales chief has struggled to recruit the 150 candidates he wants by year-end, whereas BAIC’s parent company has no trouble finding dealers for its joint ventures with Daimler AG (DAI) and Hyundai Motor Co. (005380), even without subsidies.

“China’s indigenous cars are the lowest in the food chain,” said Liu. “Many consumers are biased against them.”

Three decades after China implemented rules requiring foreign automakers to form joint ventures with domestic manufacturers to build cars in the country, the strategy appears to be failing in one of its key goals. While the policy has attracted investment and created millions of jobs, it has done little to help the Chinese build strong brands.