BEIJING -- Volkswagen is launching a marketing campaign to build brand identity among Chinese consumers. Low brand recognition remains a problem for VW, even though it has built cars in China for 20 years.
VW has 25 percent of China's car market, the largest share of any automaker. But that share is down from more than 70 percent just a few years ago. In 2003, 2 million passenger cars were sold in China.
The Santana sedan, the first VW model made in China, is ubiquitous. But many Chinese consumers don't realize that VW also is responsible for the Bora, a newer model made with joint-venture partner First Auto Works.
VW makes the Santana with another joint-venture partner, Shanghai Automotive Industry Corp.
"We felt the two partners focused much too strongly on product only," says Walter Hanek, who until a few weeks ago was sales and marketing chief of Volkswagen Group China. Hanek now heads Audi Japan.
"We thought to unify the brands under one umbrella," Hanek says. "There is a saying: Good products come and go, but only a strong brand remains."
The branding campaign adapts the VW tag line "For the Love of Automobiles" to Chinese sensibilities. Rather than focusing on 'love,' the campaign emphasizes 'heart.' Dozens of Chinese words include the character for 'heart.' Most convey a sense of love, perseverance and loyalty.
"Chinese people don't really talk about love, so we thought heart would be a better platform," says Samuel Shi, VW brand director at the Shanghai office of Dynamic Marketing Group, which created the campaign.
Volkswagen and its partners in China agreed to use and help pay for the campaign.
"For the first time in China, the three parties have come together to do something for the brand," Hanek says.
VW's Chinese partners compete with each other. They have separate sales, service and distribution networks and build different vehicles.
In addition to the Santana, Shanghai Volkswagen makes the Santana 3000, Gol, Polo and Passat. In addition to the Bora, FAW-Volkswagen Automotive Co. makes the Jetta and Golf, as well as Audi-brand sedans in China.
Audi is not part of the umbrella campaign.
Hanek concedes that VW faces the challenge of positioning its products in the minds of its Chinese sales employees as well as consumers.
VW trains all dealership salespeople and is thinking of creating a Volkswagen Academy in China, he adds.
"We are telling [sales staff]: 'Don't fight each other; fight the market,"' he says.
Hanek has been encouraged by the partners' response. "They are very satisfied," he says. "[Shanghai Volkswagen] is saying we can take this umbrella campaign in one form or another and do our own product ads."
VW will monitor those ads to ensure that Shanghai Volkswagen stays on the umbrella message, Hanek notes.
But the common ad campaign is not a harbinger of unified sales and service networks in China, he says.
"For us to say we want to unite the network is arrogant," Hanek says. "We would show disrespect. We are talking to (the partners) about using the maximum synergy possible in communication, sponsorship, dealerships with the same color scheme and layout, so the consumer can clearly see this comes from one central headquarters."
VW plans to bring some products to both dealer networks, he says.
The automaker wants to use its sponsorship of the 2008 Summer Olympics in Beijing to build brand loyalty in China. The corporate sponsorship will feature the Volkswagen group logo. Audi will be the games' premium sponsor.
VW announced it had won the Olympic sponsorship at the Beijing auto show in June.
A slide displayed to hundreds of journalists at a VW press conference said that Audi would be the official automotive partner of the 2008 Olympics. There was no mention of the VW brand.