Brilliance China Automotive Holdings Ltd.
Overview: Success with Minibuses and Sedans
Brilliance China Automotive Holdings Ltd. is a subsidiary of Huachen Automotive Group Holdings Company Ltd. and engages in the manufacture and sale of minibuses and automotive components in China. Brilliance was founded in 1949 and is headquartered in Shenyang. The company is listed on the Hong Kong and Frankfurt Stock Exchange. It offers its minibuses under the brand names JinBei and Granse.
The company's automotive parts and components include window stripping, moldings, seats, axles, safety and airbag systems, as well as diesel and gasoline engines for use in minibuses, sedans, SUVs and light duty trucks. It is also involved in the manufacture and sale of sedans under the BMW brand, as well as in trading automotive components. The company has strategic relationships with Toyota, Mitsubishi Motors, FEV Motorentechnik GmbH, BMW, Johnson Controls, and TRW Automotive.
Brilliance had an output volume of around 523,000 vehicles and was ranked as the 8th biggest Chinese car manufacturer in 2011. The main competitors of Brilliance are Chinese car manufacturers such as Cherry (China), General Motors (US) and Honda (Japan).
Internationalization Strategy: With BMW and Toyota on the Fast Track
Brilliance's main focus lays on joint ventures instead of acquisitions. In the beginning, it exported cars to overseas markets such as Europe. This strategy however was not successful.
An important joint venture for Brilliance is the one with Toyota. It was established in the early 1990s and has the goal to maintain the market leadership position in the minibus sector.
In 2003, BMW and Brilliance established a joint venture for the production of BMW-branded sedans in China. The goal of this cooperation is to attain market leadership in the premium sedan market in China.
The BMW-branded cars are manufactured at a factory in the Northeastern Chinese city of Shenyang, which provides an annually production capacity of 200,000 cars. Brilliance and BMW manufacture the BMW 3 Series, the BMW 5 Series, and began producing the BMW X1 Series in 2012. The BMW-branded cars may differ slightly from those sold in other markets.
Exports to Europe were ended in 2010 with no plans for resumption
In 2007, Brilliance's BS6 sedan performed poorly in a crash test conducted by Germany's ADAC. As a consequence, Brilliance redesigned the car, changing at least sixty components. However, the price also rose considerably, and the importer HSO Motors went bankrupt in November 2009. Brilliance then tried to do it alone, but with high pricing and considerable market reluctance after the well-publicized crash test failures, the export to Europe were terminated in April 2010 with no immediate plans for resumption.
R&D and Intellectual Property: Know-How from Joint-Ventures
Brilliance operates one R&D center which is responsible for product development and designing of all Brilliance and Jinbei models. Until October 2010, the R&D department had employed 1,100 people. Additionally, Brilliance tries to promote its R&D efforts through cooperations with Chinese Universities.
In the following graphics, the patent and utility model applications are represented. While the first two graphs depict the distribution over the years and across countries, the last two graphs illustrate the distribution across technology areas.
The main difference between a patent and an utility model is the durability and the strength of protection. Patents are protected for twenty years, while utility models are only protected for ten years. Thus, an utility model can be described as a weaker form of patent.
The first chart illustrates the distribution of Brilliance's patent and utility model applications over time. From 2000 to 2004, Brilliance filed none or just a few patent or utility model applications. In the following two years the number increased from nearly zero to more than ten applications per year. While there has been a strong decrease in 2007, Brilliance filed more than fifteen patents and utility models in 2009 again. This marks the maximum to date. Compared to other Chinese car manufacturers, Brilliance has just a few patent and utility model applications. A reason for that could be the operation of just one R&D center. The company receives its technical know-how from other car manufacturers such as BMW and Toyota.
The main focus of Brilliance is still on its domestic market. This is reflected by the fact that the company has filed its applications exclusively in China. Brilliance increased its number of applications from less than five from 1999 to 2004 to more than 40 between 2008 and 2010.
The following two charts show the patent and utility model applications across technological sectors. Sectors of highest importance for Brilliance are transportation and motors, engines, pumps and turbines. Around 65 percent of all applications are filed in these fields. The remaining four sectors are of less strategic importance for the company.