This article appeared in the March 2019 (Vol.14, No.3) issue of China Automotive Review (CAR), our monthly publication in English exclusively focused on the Chinese auto industry. If you would like to read this information-packed monthly report on the Chinese automotive market (in PDF format on a paid basis), please send your subscription to us at: sub@cbuauto.com.cn

It used to be "In China, for China."

Then it was "In China, for China and the world."

Now it is "In China, for China and the world, and be Chinese."

The golden rule for foreign automakers to be successful in China has changed with the times.

Two of them – Volkswagen Group and Daimler, represented by its Mercedes-Benz brand – are ahead of the game as far as preaching that new motto is concerned.

And it's no surprise that they are your leading foreign automaker and premium brand in the world's largest auto market, respectively. It's no surprise then, that they are probably the most "Chinese" among foreign automakers operating in China: Volkswagen Group's top selling model in China is the Lavida developed and sold exclusively for China, its Jetta model will soon become the China-only Jetta sub-brand targeted at the economy segment below the ¥100,000-sticker price, while Mercedes-Benz probably has the best Chinese-speaking expatriate CEO – in Nicholas Speeks – at the helm among CEOs leading foreign automakers' China operations. The way branding, sales and marketing is done for these two brands are so localized sometimes it makes you feel that they have already become local "Chinese" brands. The current CEO of Volkswagen Group China, Dr. Stephan Wöllenstein, rose through the ranks after having spent many years in the country at the German automaker's JVs and also speaks near-fluent Chinese.

For Volkswagen Group, success over the last 35 years in China does not guarantee success over the next 35 years. The Chinese market is so important that starting this year, Group CEO Dr. Herbert Diess has taken on simultaneous responsibility for its largest market. Part of "being Chinese" is being in China, making his presence felt and personally learning the intricacies of doing business – at the rate of very month, so far. It would not be surprising to see him in China every month this year which would be unprecedented for a CEO of a global automaker.

"As the Volkswagen Group's CEO, I see it as my duty and my responsibility to oversee the China business and to drive its strategy forward. Turning Volkswagen into an even more Chinese company is our most important task in 2019 and beyond – and the most relevant to make Volkswagen future-prove," Dr. Diess said in a LinkedIn post in early January after starting work in the New Year in Beijing.

Similarly, Mercedes-Benz has enjoyed rapid growth in sales in China over the last few years thanks to strong products, great relationship with and satisfaction from dealers and taking care of its customers right. But as the volume base rises it understands that double-digit growths in years past won't be sustainable, as reflected through the downturn in the overall market. It's no longer the products or services that will win customers. Those are musts, but it's about meeting customers' needs when they need them and providing them a seamless buying and servicing process, in a more digital way. Because Chinese consumer requirements are completely different. This is why Speeks says that Mercedes-Benz is a foreign brand but a Chinese company, and he is personally preaching that motto.

Life won't get any easier in 2019 and beyond as competition gets tougher and market environment becomes more complex. But "being Chinese" probably will be a prerequisite for success and Volkswagen and Mercedes-Benz are already embarking on that path.

The above article appeared in the March 2019 (Vol.14, No.3) issue of China Automotive Review (CAR), our monthly publication in English exclusively focused on the Chinese auto industry.