China's auto overseas builds factories should imitate new energy and strengthen innovation


On May 20, the announcement that Great Wall Motors H8 delayed the listing of the Great Wall Motors once again announced that the company’s high-profile announcement that it would invest RMB 3.2 billion in the largest export market in Russia will attract public attention overseas.

In addition to the Great Wall, Chinese auto companies that have established overseas plants include Chery, Geely, BYD, Brilliance, Changan, FAW, SAIC, ZTE, and Dongfeng Motor. At the earliest overseas, Jianghuai Automobile Co., Ltd., which established a light truck factory overseas, has established 13 assembly plants overseas since 2001. Changan Automobile has established five overseas factories in Malaysia, Vietnam, Iran, Ukraine, and the United States, and Chery has 15 Six countries have built 16 assembly plants.

The desire of Chinese cars to go overseas has grown even further as the world's auto giants have become more immersed in the Chinese market. But so far, "going out" has been difficult. In addition to the success of Geely's acquisition of Volvo, it began to technically feed back domestic companies, helped Geely GX7 perform 100 technological improvements, and provided technical support for Geely's electric vehicles. Volvo's product sales increased significantly. Dongfeng's prospects for injecting PSA overseas plants are uncertain. The acquisition of SsangYong caused trouble. The company that acquired Saab also vainly escorted a huge amount of silver. The thousands of euros of the youth group have not come to an end. Under the premise that no high-quality automobile resources can be acquired, overseas factories are also somewhat helpless, mainly because Chinese auto exports are too difficult.

China's auto exports are just numbers look pretty <br> <br> though China's auto exports have competitive advantage of low prices, exports looks great, in August 2013 Geely also received export exemption qualifications, but the export structure with the developed countries There is a wide gap between the comparisons.

In 2012, China's total vehicle export volume exceeded 1 million vehicles and reached 1.056 million units. In the second year, it fell below 1 million units, a decrease of 7.5% from 2012. From the proportion of exports and domestic sales, China was 5.5% in 2012. And Spain, Belgium, up to 90%, Mexico about 80%, France, Turkey about 70%, Thailand up to 42%, even India (13%) are higher than China. Calculated according to the amount of foreign trade, the total vehicle import value in China in 2013 was 48.8991 billion U.S. dollars, and the export value was 12.9198 billion U.S. dollars. The former was 3.79 times the latter, and the deficit was 360.8193. It can be said that China's vehicle trade deficit has widened China’s foreign trade deficit. .

From the point of view of export destination countries, the Middle East, Southeast Asia, Africa, Asia, and South America are the main low-end export markets for low-price, low-profit vehicles in China. Exports to Germany and the United States are almost zero. The so-called Chinese auto exports to Europe account for only 13%, of which Russia and Ukraine account for the vast majority. The so-called Chinese auto factories in the EU are nothing more than referring to the construction of the Great Wall in Bulgaria. And the export market is fragmented, and no truly dominant market has been formed.

On December 22, 2008, Brilliance China exported 3,000 Chinese Chevalier sedans to Germany for the first time. According to the agreement, Brilliance intends to export 158,000 vehicles to Germany within five years. However, the first batch of 3,000 sedans will not be exported. At the 2005 Frankfurt Auto Show in Germany, private entrepreneurs declared to the world that in the future, two-thirds of Geely Automobile will be sold overseas, but he can buy Volvo but it will not be able to realize the auto export wish of the year.

Where is it difficult to export the whole vehicle?

It is very difficult for Chinese cars to enter the international mainstream market.

Li Shufu appeared again at the North American International Auto Show in early 2006, claiming that Geely will sell the car to the United States in 2008. However, if Geely Automobile really wants to enter the United States, it must perform complicated and time-consuming self-certification procedures. It must go through dozens of necessary tests in Virginia labs before it can be accepted into the next market, even if Geely is possible. The US Department of Transportation required certification in 18 months, but how to successfully operate in North America will involve a lot of investment in law, public relations, marketing, accessories, and after-sales services. These have allowed Geely to die down and have had to reluctantly cut back on the hopes of entering North America in the short term.

Brazil was also China’s largest export destination for automobiles in 2011. After the country’s average tax rate on imported cars increased by 30%, China’s export volume to China’s exports plummeted.

It is more difficult to export without tariff barriers.

For many years in Russia, which has become China's largest automobile exporter, 2008 began to implement Euro III emission standards, and China’s commercial vehicle exports to Russia have risen from the original 11 quality standards to 55. Certification is becoming more and more difficult and costs are increasing.

Technical barriers to technology, performance, and environmental protection are difficult to break through. Import tariffs and non-tariff protection are the external causes of difficulties in exports. The internal cause is that China's auto exports have been scattered and unregulated, with prices declining each other and vicious competition.

According to statistics from China Customs, as early as 2004, there were already 1,114 companies operating automobile exports in China. There are 45 companies with a business scale of 3 million yuan, accounting for 4.04 percent of the business. Not only is the power dispersed, but they also push down the selling price of each other. The price of the Great Wall Saifuge SUV is about 35% lower than similar Asian products. Chery has claimed that the products entering the United States are 30% lower than similar products. Long competition results in the loss of common profits and cannot be a win-win situation. The inherent deficiencies in product exquisiteness, safety gaps, raw materials, special process levels, manufacturing equipment, and product design are also exposed when exporting. Many domestic companies do not have the ability to export large quantities of vehicles, most of which are exported. The company has not yet established after-sales outlets and systems, and the so-called after-sales system of enterprises with large export volume is far from the high standard of high-speed and multi-network.

Can foreign factories build up foreign exports?

Although setting up factories overseas can reduce costs and reduce shipping costs, it is slightly less difficult than exporting, but it is difficult to be smooth because of lack of internal strength.

At the end of 2011, Russia’s accession to the World Trade Organization means that Russia’s tariffs will be reduced, and it will also push down the overall prices of imported cars, assembled cars and local cars in Russia. The Chinese automobile price space will be squeezed and the low-price advantage will be gradually lost. .

American economist Posner M. A. Posner’s “technology gap theory” holds that when a country develops new products through technological innovation research, it can export such new products to other countries on the basis of comparative advantages formed by technological gaps, while foreign countries gradually acquire new products or technical cooperation through import. After the advanced technology was able to use its cheap labor to imitate production and export the product, the technology gap gradually disappeared. The innovative country will continue to create a new round of technological gaps.

China's automobile exports and overseas plant construction all utilize the poor technology and spatial disparity, and the low-end, low-cost, well-adapted, low-end market gap created by strong brands of multinational companies can no longer be established. However, Chinese cars follow technology, lack innovation, and are easy to imitate. As the level of consumption in export destination countries increases and imitation capabilities increase, the gap in technology that is temporarily formed will soon disappear.

"Going out", the ideal is full <br> <br> as China Automotive internationalization strategy an important component, "going out" overseas factories is a necessity, both to avoid vehicle exports of high tax rates, access to low-cost advantage It can also make full use of local open policies, market environment, and resources to expand overseas business. It has a positive effect on faster occupation of foreign markets, improvement of export profitability, and promotion of internationalization of enterprises. Even if it is exported to foreign low-end markets, it will also help enterprises increase their strength, improve their internal strength and adapt to international economic and trade needs. With the globalization of the economy, Chinese cars cannot bypass the challenges of globalization, and it is only a matter of time before a strong player joins the foreign market in the short-term and should take precautions.

China Automotive has established its own unique advantages overseas. After many years of exploration and refining, the company’s anti-risk capabilities have increased. Overseas factories have acquired rich experience and trained their overseas operations talents. Some competitive companies have also gained substantial profits while gaining high domestic sales. The overall strength has increased. The level of technology has also improved. No matter whether export or factory assembly, overseas distribution, internal or external repairs, internal and external cooperation, and mutual complementarity, there are no problems in satisfying the low-end market demand within a few years. After all, Chinese cars have passed in more than 10 years. For decades, the auto powerhouse has been able to compete with India, Thailand, and Turkey for market share as it matures with future technological advancements.

It is worth looking forward to China's electric vehicles to enter the overseas market. By now, BYD electric bus K9 has been in trial operation in the United Kingdom, Spain, Hungary, Austria, Italy, Belgium, Turkey, Germany, Poland, Israel, Denmark, Romania and other European countries. Its performance has been obtained by operators and passengers. Affirmation and praise. In July 2013, BYD brought 35 electric buses and 10 years of after-sales service orders from Schiphol Airport in the Netherlands. In February 2014, a fleet of 20 BYD e6 taxis were launched in London. Geely, BAIC and Chang’an’s new energy vehicles also matured. Once the success of China's new energy vehicle "turning overtaking" is successful, it will have the ability to enter overseas markets, which will increase the weight of the Chinese automobile industry in overseas markets and boost the overall image of China's automobile overseas.

The risk of overseas plant construction cannot be underestimated . The high risk of “going out” is the second “bone feeling” reality that must be faced.

The greater the amount of overseas plant investment, the more uncontrollable the risk. The first phase of Great Wall Automotive Russia Plant intends to invest RMB 2.1 billion. The second phase of the project construction will be determined based on the operational results and economic expectations of the first phase. This phased investment can, of course, reduce risks, but the risk for early stage investment is still large.

The survey shows that most Russians tend to buy foreign brands of cars, while the image of Chinese cars is not yet well established, and their brand appeal and loyalty are poor. The auto industry has always been the pride of the Russian government and the people. Putin has become more and more interested in their cars and has personally promoted their cars. The purpose of Russia’s opening up of the market is to exchange technology, and Russia has always believed that China’s auto industry does not have its own core technology, preferring to open up the market for technology to auto manufacturers with advanced technology in exchange for technology. The overlap of the Chinese auto market price with the Russian domestic brand car also makes it The people were shocked. At least, in the future, the size of Russia's car imports from China is not certain. Russia's manufacturing industry is also making significant progress. With its automotive technology foundation, it is not difficult to use cars that are comparable in quality to the Great Wall or use imported or joint venture technologies to produce practical vehicles and narrow the technological gap.

Uncertainties are indeed increasing. Although Great Wall Motor’s sales in China are very high, the issue of H8 quality improvement has been difficult to achieve. Based on this basis of technological innovation, changing the trend of Russia's decreasing demand for China's automobile imports is becoming less and less, and the Great Wall is also powerless. In 2013, Great Wall Motor's total vehicle sales volume was 74,900, which was significantly higher than that of domestic export vehicle companies, but it was 21.52% lower than that of 2012, and it has shown a declining trend. Once Russia has joined forces with other strong car brands that have always been optimistic about it. In the joint venture, the Great Wall will pay more to cope with the “splitting” challenge of its stronger opponents and reluctantly squeeze its products into Russia. It may also have to pay other costs such as reducing prices and reducing profits. Once the lack of market demand affects the investment in the second phase of the project, it will inevitably reduce the overall effect of the previous phase of the project. Whether the limited return rate of previous large investments can fill the investment deficit is also worrying. As far as the domestic market is concerned, the upward shift in consumption levels will lead to high-end demand, the joint venture of low-cost compact SUVs and the launch of self-owned brand new low-priced SUVs to subdivide the market for SUVs, and competition in low-end SUV products will become more intense. How long can the heat continue to be suspense, and the Great Wall product structure is single, lack of support for cars, high-end products is difficult to attack on the upside, once the domestic market is frustrated, facing the dilemma of internal and external difficulties, may not be alarmist.

Risk mitigation should do what
<br> <br> any investment has risks, not to mention overseas alone in-depth, unfamiliar, difficult to integrate into the legal environment. The premise of resolving risks is to do what they can. Major investments need to be cautious, risk assessment must be rigorous, and fully consider various uncertainties. The state should establish a normative mechanism at the macro level, moderately control the establishment of overseas plants, increase financial, technological, and talent support for advantageous enterprises, strengthen the production concentration of exporting companies, impose appropriate restrictions on enterprises that do not have bulk exports, and make the order of automobile exports possible. specification. Export auto companies strengthened their joint efforts to achieve information exchange in foreign regulations and policies, share experiences in overseas development, jointly study and discuss issues concerning law, finance, taxation, market, employment, etc., interpret together, and analyze investment environment, laws and regulations, and investment risk assessment jointly. At the same time, a differentiated competition will be formed to avoid homogeneity and internal wounds. Strengthen the docking of talents between universities and enterprises, deliver high-end talents who have a strategic mind, understand modern enterprise management and know international marketing, and promote the overall level of national overseas investment and the quality of the internationalization of the auto industry.

The fundamental problem is to strengthen enterprise innovation, grasp the core technology of automobiles as soon as possible, and enhance the ability to compete directly with multinational corporations. The enterprises are extensively united to realize the domestic popularization of state-owned technologies, implement paid transplants for China's all-owned Volvo technology, share high-quality products with independent intellectual property rights, and share common components with core components, and consistently compete with each other to further reduce costs. Then, the mature new energy products will be pushed overseas as soon as possible to enhance the internationalization level of the new energy industry and take the lead in seizing the foreign market.

As long as the investment security is guaranteed, the risks are minimized, and Geely has acquired the successful experience of Volvo. Chinese cars should have promising prospects regardless of overseas bids, overseas construction and product exports.


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