I was reading the blogs today and one article caught my attention.

Volvo Struggles in Questionable Chinese Business Market

It says that the Chinese dealers in China reported the wrong sales just to get bonus in 2011. And once those dealers got the money, they then sold the cars in 2012 (the report showed a 11% drop in sales in 2012).

Moreover, the image that Volvo tries to convey is different from the image perceived by Chinese consumers. The author in the above blog criticized the way Volvo’s cars were being evaluated in 2012 Taipei Auto Show, that the dealers used some “dolled up models” and moose to advertise the cars, which downgraded Volvo’s image. However, I think this is just the way those shows are. In Taiwan, when we talk about those auto shows, or those 3C product shows, there are always many “dolled up models” (because that’s the way to attract more people, at least in TW I think). However, it sure is a significant issue If Volvo still wants to be treated as a higher-end product, it needs to find a way to re-position itself from Chinese consumers.

Dolled up Models and moose in 2012 Taipei Auto Show

Volvo is having a vertical channel conflict in its supply chain (between the China dealer chain and Volvo) because both are seeking for different goals. (China dealers wanted to boost sales (so they could get bonus) and Volvo wanted to maximize the firm’s profit). If Volvo wants to solve this dilemma, it needs to try to establish a goal that is attractive and attainable to both parties.