The United Kingdom’s Jaguar Land Rover (JLR) is a well-known luxury car brand is well-known around the world. JLR still states its British nationality even though the company is owned by Tata Motors. Out of many countries, China has been identified as one of JLR’s primary markets. To ensure JLR’s strong foothold in the country, several strategic initiatives have been implemented. In this segment, we will discuss some of the strategies that JLR employed in China and the reasons why the company also trades internationally.
What is JLR’s strategy?
Jaguar Land Rover, a name synonymous with luxury and performance, faced a daunting challenge in one of the world’s largest automotive markets—China. With fierce competition and shifting consumer preferences, navigating this terrain was no easy feat. However, instead of retreating or sticking to conventional methods, Jaguar Land Rover devised innovative strategies that not only helped them survive but thrive in this dynamic environment. From local production initiatives to embracing electric vehicles, their approach is a masterclass for foreign companies looking to make their mark in China. Let’s delve into the clever tactics employed by Jaguar Land Rover to conquer its challenges and redefine success on Chinese soil.
Strategy 1: Manufacturing JLR Cars in China
- Reason: Due to the high tariffs placed on imports, which made vehicles from JLR extremely expensive within China, the company sought to improve the situation by building a manufacturing facility locally. These costs were extremely unfavourable, as the cost of purchasing JLR vehicles in China as well as having them imported was almost double the cost in Britain, making business very difficult for the corporation.
- Action: In 2012, JLR made a deal with one of the most recognised automobile companies in China, Chery Automobile, for the construction of a manufacturing plant in China for £1 billion. This deal enabled the brand to locally manufacture cars, which would lower costs as well as taxes on imports.
- Benefit: JLR was able to produce vehicles better suited to the tastes of Chinese consumers due to the local manufacturing facility and was also able to make them more affordable because of the lowered tariff cost. This aided JLR in maintaining competitiveness in the growing luxury vehicle market in China.
Strategy 2: Establishing Good Working Relations with Local Partners
- Why: China has a very specific approach to business and has specific domestic needs and preferences. A thorough knowledge of the market such as having a well established network is very important for success.
- Action: In 2010, JLR created a National Sales Company (NSC) to oversee the development of its dealer network in China. The collaboration with Chery enabled JLR to take advantage of Chery’s dealership network throughout China.
- Benefit: This partnership with Chery helped JLR to market their locally produced vehicles at cheaper prices, as well as take advantage of Chery’s already established dealer network which increased brand presence and market share in a competitive environment.
Strategy 3: Concentration on Luxury and Modernization
- Why: The market for cars for the rich in China is one of the fastest growing in the world. In order to keep up with that growth, JLR emphasized their brand as high end by concentrating on luxury, design, and technology.
- Action: JLR launched new models of their cars that featured modern technology and aesthetics that underscored British luxury and craftsmanship which appealed to the motives of the Chinese consumer. They also forayed into the EV market with the luxurious Jaguar I-PACE SUV, which is a fully electric vehicle, in response to the increasing population of people wanting eco-friendly vehicles.
- Benefit: By focusing on quality, innovation, and sustainable practices, JLR was able to win over China’s wealthy middle class, a significant portion of whom view expensive automobiles as a mark of prestige. Furthermore, JLR gaining attention from environmentally inclined consumers was boosted with the adoption of electric vehicles due to their alignment with China’s environmentally friendly objectives.
Strategy 4: Using Local Knowledge and Consumer Preferences
- Why: It is important to note that having knowledge and understanding of the local population’s preferences and tastes form an integral part when it comes to operating in a foreign market. Car buyers in China have their own set of specific needs regarding a car’s body and features.
- Action: JLR extensively studied their customers’ preferences in China, focusing on the need for large cars with superior technology, luxury, and modern styling. It changed certain models as well to suit the features of China’s market.
- Benefit: JLR’s ability to provide what Chinese people wanted, for example, sleeker cars and spacious interiors, allowed it to win more Chinese customers and bolster its stake in one of the most competitive markets.
Strategy 5: Eco-Friendly Strategies and Social Responsibility Engagement
- Why: A growing number of Chinese customers, especially younger ones, prefer companies that engage in eco-friendly branding and philanthropy.
- Action: JLR showcased its green mobility efforts by participating in the China International Import Expo (CIIE) and emphasising its sustainability commitments with electric vehicles like the Jaguar I-Pace. Furthermore, JLR’s Dream Fund, together with the other funds, also provided support for education and social welfare projects in China.
- Benefit: In addition to improving JLR’s brand image, the company’s focus on sustainability connected it with the expanding eco-friendly demographic in China. Moreover, the company’s CSR initiatives generated goodwill, enhancing its position in the market.
Reasons for JLR’s International Trading
Jaguar Land Rover engages in international trade for the following reasons:
Greater Market Size Is Advantageous
JLR’s high-end vehicles, including its electrified models, are much praised. With its international rebranding, JLR is able to reach more customers, particularly in emerging areas like China and India as well as developed ones like the US and Europe.
Decrease in Dependency on a Single Market
Because of its global reach, JLR is less reliant on any one area in this regard. Strong sales in other locations might offset economic, regulatory, or other challenges in one market. China dampened, for example, but JLR had the US and UK as backups.
Taking Advantage of Competitive Benefits
- The markets in China, India, and other parts of Asia offer the most potential for growth for JLR. With rising incomes, more consumers in these areas are likely to desire luxury cars. JLR can cater to that demand with region-specific products like its electric vehicles without losing its brand identity.
Economies of Scale and Production Cost Management
- JLR’s electric vehicles, along with other products, can be manufactured more affordably because the company can produce in China and China is a major consumer market. It also allows JLR to shift its production to the region in which the customers use the company’s products, thus increasing the popularity of the company’s vehicles.
Conclusion
JLR’s international trade strategy, particularly with China, has helped the company achieve success globally and aids in sustaining it. The company has targeted local markets with strategies such as local production, strong relations with other firms, along with focus on sustainability and innovation to JLR’s advantage in one of the most competitive markets. Furthermore, it enables the company to mitigate risks while venturing into emerging markets worldwide, thereby assuring JLR’s growth and strength in the automotive industry.
