1. Group 6

2.  Est. 1948 with headquarters in Tokyo, Japan
 Moto cycles, automobiles, power products
 Principles- Respect for the individuals and three Joys

3.  Great market potential, automobile industry was booming in
china
 Rapid increase in-
Internal demand
Vehicle production
Exports
Imports

4.  Equity participation by foreign automakers was restricted to
50%
 Separate sales channels for vehicle made in china, for those
imported, and those manufactured by joint ventures
New Rules:
 Equity participation was same
 Min investment in a new project: US$ 292 million
 Min investment in R&D: US$ 73 million

5.  Highly fragmented market
 80% were buying their first car
 In tier one cities- sporty and hatchback automobiles were
preferred
 Other cities-branded automobiles were preferred
 Emotional factors
 Intangible attribute rather than tangible attributes such as
fuel efficiency or engine equality

6.  An automobile that appealed not only to buyers with
traditional brand association but also to modern consumers
looking for individuality in their cars
 Word of mouth marketing through internet portal
 Chinese government subsidies- fuel prices in china were
low, so luxury cars were affordable
 Strong cultural link between automobiles and social status

7.  Joint venture between Chinese companies & internationally
recognized automakers
 Local automakers producing proprietary branded cars
 Competition from Toyota, GM and Volkswagen
Success of Volkswagen- success of its joint venture in china
- Product mix of not only traditional
models but also modern models
Success of Local automakers- They received a big boost from
the Chinese government

8.  Invention and new Product development centre to honda’s
culture
 Almost 5%revenue budgeted for R&D
 Honda R&D co. founded 1960, had been separate org.
 True sources of Honda were technology and innovation and
hence independent financing for R&D.
 Same white uniform, for all to symbolize equality.
 Honda segmented its markets for growth, exemplified by
Element Project, targeted for growth in Light truck market.
 Concept development team in US, in 1998, to create designs
for target users at affordablw price.

9.  Observations from X-games supplemented traditional
Market research for producing coherent profile of target
users, with strong cohort identification, social behavior
support for social ad environmental causes.
 Observations translated to designs, converted to products
and tested.
 Driving performance, safety and value as themes were
converted into key subsystem.
 To meet needs of local customers, R&D centers set up in
various parts of world I Japan, North America, S. America,
Europe, China and Asia. Headquartered in Japan.
 Set up HSV, Honda Strategic Venture Invested in technology
venture companies to which had synergy with long term
R&D strategy.

10.  Since economic development from 1980, JV and Wholly
owned companies had 2 conflicting interests. JV relied on
Foreign capital for branding and technology, while whole
ownership provided full control on R&D, and branding.
 Phenomenon seen globally. Japan and S. Korea refused the
JV model, Latin American countries allowed for the same.
 Top auto makers like VW, ford, GM who entered market, set
up R&D labs with high education inst.
 GM was Leader among global automakers in R&D.
 However all RD facilities by international carmakers, focused
on either improving specific technologies or tailoring
international models to Chinese market, as opposed to
CORE TECHNOLOGIES.

11.  Establishment of GHRD, and Li Nian, Honda was first
automaker to develop products under original brand through
JV in china.
 Guangnzhou Honda automobile
 Guangnzhou automobile and Honda, a JV, with
50%partnership, for 30 years.
 5 other Honda affiliates, Japanese suppliers and additional
11 honda related factories opened up in Guangnzhou.
 Principle was “less input, faster output, and rolling
development.

12.  Guangzhou Honda developed GHRD, as JV as independent
juridical entity in china.
 Independent legal identity so as to create favorable R&D
environment, free from daily sales and production activities.
 Hoped to become INSPIRING , free energetic, and open
research environment.
 Purpose was to become a whole car R&D centre.
 Public interest had risen to develop proprietary brands.
GM, VW and others pledged for the same, and developed
many improved and MADE in CHINA models.

13.  But core technologies were still controlled by foreign
manufacturers rather than Chineese partners.
 Hence GHRD was pioneer in china.
 GHRD had 2 R&D systems:: technological research and
Product Development.
 R&D staff would step in shoes of Customer and to examine
development trends, lifestyle, and preferences,
 GHRD planned to recruit talents from china and overseas to
create advanced technologies, and products for Chinese
society.
 Environment characterized by open and free discussion was
encouraged to develop hih quality and creative products.
 Entertainment facilities built for leisure o staff.

14.  Li Nian represented a brand that will continue to pursue lofty
ideals with a challenging spirt.
 Li Nian meant a dynamic, stylish and high quality life for a
new generation.
 GHRD responsible to develop Li Nian, with Honda
Motors, Japan.
 Core technologies of Li Nian was of GH, and sold via GH sales
network in contrast to oters,
 Though Li Nian targeted to Chinese customers, but it sought
to be a top international automobile brand.
 Li Nian was to be supported by honda’s technologies and
meet its quality standards.