Geely Car Entry into AU Market
Entry Strategy to Australia's Automobile Market
Demographic/Product Market
Australia's automobile market is among the most developed in the world and would make an ideal market for Geely to target given the relative proximity from the company's headquarters in Hangzhou and Australia. The company moved its headquarters there in 2003 to strategically position for international exports (Jiacai, 2002). However, there are many regulations that exist in Australia that are not present in the Chinese market that Geely will have to adapt to. Australian Design Rules (ADRs) are national standards for vehicle safety, anti-theft and emissions (Department of Infrastructure and Transport, 2012). It's recommended that they pursue a low cost entrant strategy in the urban markets.
Regulations and Incentives
Australia is one of the few countries that are yet to offer incentives for efficiency in vehicles. However, they are many regulations for safety. For example, the Australian government recently passed a new law stating that electronic stability control (ESC) will have to be equipped on most models of cars that are sold in the market. Electronic Stability Control (ESC) helps drivers to avoid crashes by reducing the danger of skidding, or losing control as a result of over-steering (How Safe is Your Car, N.d.). Preliminary research has indicated that Geely would not meet these standards with their current production model however they were allowed to export cars to Western Australia in a temporary arrangement (Hammerton, 2011). Therefore, both Geely could even potential enter the market, it might need to retool its manufacturing facilities as well as redesign some of its models so that it is compliant with Australian standards as the company has had previous trouble with meeting the ADR certification (Hammerton, 2012).
Positioning and Supporting Industries
However, once this obstacle is overcome, Geely will have a multitude of possibilities of positioning itself...
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