After the split with the Shuangqin shares, Michelin has realized the purpose of wholly-owned Shanghai Warrior, but Michelin will also face the risk of losing the back brand. According to the agreement between the two parties, Michelin’s right to exclusive use of the Warrior brand is only two. In two years, if two-dollar stocks take back the brand, how is Michelin's strategy in the low-end market? A few days ago, He Liye, CEO of Michelin Group, said in an interview, “We really have (low-end market) plans, but we haven’t yet said that.†He Liye admitted that the difference between China and the West is that many people in China only own the first car, and Western countries are more of a replacement market. In China, the mainstream model is the 1.6-emission economical vehicle. This part of the market is currently dominated by products from South Korea's Hankook, Kumho, Taiwan’s new and other second-line camps. For Michelin who is in the first-line camp, it has always focused on creating high-end markets. Once China enters the substitution market, it will not be neglected. In April 2001, Michelin Group and Shanghai Tire & Rubber Co., Ltd. (Shuangqin 600623) and other shareholders jointly formed the Shanghai Michelin Warrior Tyre Co., Ltd. (hereinafter referred to as the joint venture company). Michelin invested US$170 million in 70% of the shares of the joint venture company. Shuangqian shares hold 28.5%. According to the agreement, Shanghai Tire & Rubber Co., Ltd. provided trademark rights to Shanghai Michelin Huali Tire Co., Ltd. The main purpose of Michelin's purchase of Warriors was to enter the mid- to low-end market. However, due to the continuous huge losses of the joint venture company over the years, Shuangqin Shares transferred all the shares it held to Michelin in the second half of 2009, making it a wholly-owned controlling shareholder. . After the transaction is completed, Shuangqin Group will continue to license Michelin's exclusive use rights in the tire business of passenger cars and light trucks within two years. After the expiry of the two years, the license will be terminated. Shuangqin Group will have its own use or autonomy to permit others to use it. "All rights to the trademark. “Once losing the back-to-back brand, Michelin is also likely to use the Michelin brand, top-down to seize the low-end business.†Gasgoo.com CEO Chen Wenkai analysis, but this may affect Michelin's brand image in the high-end market. There is a precedent for the Michelin brand to enter the low-end market. As early as in 2005, the Michelin Group announced the first to launch the EnergyXM1, a high-tech tire for the economy car, to the Chinese market. Michelin has also been considered the main reason for the separation of Michelin and Double Money by launching mid- to low-end products and cutting prices to enter the low-end market. "Chinese consumers mostly love the original tires." Chen Wenkai analysis, which means that Michelin's best strategy to seize the low-end market is directly to become the middle and low-end models of the original tires, and in the manufacturers increasingly reduce parts costs At present, if Michelin does not make its own price, it is difficult to enter the vision of the manufacturers. However, there are also industry analysts, does not rule out the double money will allow Michelin to continue to use the exclusive force brand, and charge a certain brand use fee, after all, pull back and double money belong to the same grade competitors, pull back is not important for double money. However, this result is also worth scrutinizing. The purchase back to date, Michelin's marketing costs spent on the back brand is almost negligible.
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