Honda: Innovation the Chinese Way

Honda: Innovation the Chinese Way

What are the motives behind Guangzhou Honda’s decision to set up GHRD to develop its new brand? What makes this business model different from Honda’s traditional business model?

In 2007, Honda joined the famous Chinese automaker, Guangzhou Automobile Group; together they established Guangzhou Honda Automobile Co Ltd. Guangzhou Honda soon became one of China's big five automobile makers’. Honda knew a successful globalization plan, starts with a well-developed localization business strategy. Honda was well aware that in order to conquer the Chinese market, they will have to change their game plan. After years of strategic planning, Guangzhou Honda Chinese marketResearch and Development Co (GHRD) was born. GHRD main goal was to create an entire new car concept for the Chinese market. Their 8 years of experience as joint venture, gave both companies the necessary experience to develop a rational and effective plan of expansion. GHRD was created as independent legal entity. This was be the first time a joint venture company of a foreign automaker develop and market a product under an original brand of the joint venture company in China.

There are several reasons for why Honda set GHRD to develop its new brand. First, this will allow GHRD to have extensive access to core technological advances as well as the necessary resources to develop an entire new model. Second, this will enable GHRD to systematically integrate the obtained research into the development process. Third, Honda was striving to create a sustainable development strategy for the company thru dual-branding. That is why GHRD was not only in charge of the design of the car, but also of choosing the entire technological features that were used on their self-owned brands and models.

The company main goal was to develop a distinctive and appealing car specifically designed to meet the expectations of the Chinese market. They wanted to capture the essence of the Chinese taste, instead of making adaptation to existing models.

2. What factors has Guangzhou Honda considered in developing GHRD?

Guangzhou took into consideration several factors while developing their research and development center in china. They first established a well-defined goal for their R&D. Guangzhou Honda main goal was to better understand the purchasing attitudes of their target market. They wanted to make technological innovations and the factors that drive the decision making process of Chinese consumers the core center of their research. Also, they took a careful look at the competitive landscape of the automobile industry in China. They learn from their competitors' mistakes. They noticed how others