Shenyang Brilliance Jinbei Automotive Co., once a pioneer among own brand Chinese automakers, is now losing market share in the fast growing domestic market.
Worse still, the state-owned company is also losing the support of the central government.

Time is running short for Brilliance.

Brilliance started making cars in the late 1990s, about the same time as other own brand Chinese automakers such as Chery Automobile Co. and Zhejiang Geely Holding Co.

At that time, Chery and Geely were complete greenhorns in the auto industry. Brilliance, meanwhile, already had many years' experience in making vans, small buses and light trucks.

And it had gained access to the stock market long before its domestic peers. It was listed on the New York Stock Exchange in 1992.

Yet if it was way ahead ten years ago, Brilliance's lead has since been squandered.

Between 2002 and 2006, Brilliance was distracted by frequent reshuffling of its top executives.

In 2002, due to his dispute with the local Liaoning provincial government over the ownership of the company, its founder Yang Rong was forced out and later fled China after being charged with unspecified economic crimes.

Yang's expulsion left Brilliance in the firm grip of the Liaoning government. Since then, the company has seen the departure of another three top executives.

Strong local government control has slowed the company in its responses to market shifts, while its period of constantly changing management left it directionless.

Brilliance makes cars under its Zhonghua brand and builds vans, small buses and light trucks under the Jinbei brand.

In 2006 and 2008, Brilliance tried to enter the European market with its Zhonghua-badged cars. But it failed as they fared poorly in European crash tests.

In 2008, its Zhonghua-branded car sales dropped 19 percent year-on-year to 92,354 units on the domestic market, while its Jinbei-badged vehicle sales slumped 25 percent to 11,558 units, according to Automotive Resources Asia, a unit of J.D. Power.

So far this year, Brilliance has launched three new and redesigned cars and one MPV in China.

Thanks to the new model launches, sales of its Zhonghua-branded cars and Jinbei-badged vehicles have increased 28 percent and 21 percent, respectively, from a year earlier in the first nine months, according to Power.

But such high growth rates are still below the market average of more than 30 percent during the period. As a result, Brilliance's share on the domestic light vehicle market has dropped to 2.3 percent from last year's 2.9 percent.

To make matters worse, due to heavy debt burdens and its products' lack of competitiveness, two of Brilliance's three subsidiaries have been losing money since 2006.

Above these losses, the biggest blow to Brilliance in the eyes of its existing management has been a falling from favor with the central government.

In March, the central Chinese government drafted a blueprint on the restructuring of the domestic auto industry.

According to the blueprint, the domestic passenger vehicle manufacturing industry will be consolidated into seven state-owned passenger vehicle companies. These are: China FAW Group Corp., Dongfeng Motor Corp., Shanghai Automotive Industry Corp., Changan Automobile Co., Beijing Automotive Industry Holding, Guangzhou Automobile Industry Group and Chery.

Much to the dismay of its executives, Brilliance is not included in the seven companies.

Yet things are not all bad. Propped up by the local Liaoning government and profits from its joint venture with BMW AG, Brilliance can surely stay on for a while.

If they act fast, this could buy enough time for Brilliance's management and the Liaoning government to turn the company around.

In my opinion, this can be achieved in two ways. They can either decide to privatize the company. The government's blueprint seems mainly concerned with the state-owned auto industry and makes no reference to companies like BYD Auto and Geely.

Or they can downsize Brilliance and make it into a strong player in a niche market.