Western throw "China's automobile theory"

Fiat and Chrysler Group CEO Malchowi was unable to sit still. At the recent annual seminar on management of the US auto industry, Malchowi threw out the "Chinese automobile threat theory" and expressed that the Western and Chinese car companies Competition will be unavoidable.

When Marccione made his remarks, Fiat and Chrysler were facing a "high fever period" in China. In the first half of this year, the two companies sold less than 15,000 vehicles in China. This is a very embarrassing performance for Malchowen, so that in the face of Western competitors, but also began to focus on the Chinese auto market share of nearly 40% of the independent brands. He believes that it is time to examine the "dangerousness" of the overseas expansion of Chinese car companies.

As a company that has experienced failures in China and is eager to enter the normal development track, it is not surprising that Fiat has a very cautious attitude towards Chinese car companies. In Malchone’s view, China is already the world’s largest auto market. Although cars produced by Chinese companies are almost all sold in the Chinese market, their future plans for the export market are very important. “Even if we assume that China only exports 10% of its production for export, it will also put us in a huge risk in the domestic market.”

At the seminar, Malchoney told more than 800 corporate executives on the scene that if Western car companies are not ready to cope with the rise of the Chinese market, it will be difficult to bear the consequences. "We can't fight the rising Chinese manufacturers. We should continue to work hard to make our industrial base more competitive because 'determinism' will be inevitable."

What is Malchie internally worried about?

Before Malchone's "China Motor Threat Theory" was released, it had also made similar comments in Brazil and reminded its western counterparts to remain vigilant for Chinese cars. Because the development of Chinese car companies there has affected Fiat's market dominance.

In Brazil, the top four car market shares are Fiat, Volkswagen, GM and Ford. In recent years, Chery, Changan, Jianghuai and other car companies have entered the Brazilian market and gained a good reputation. What annoyed Malchone was that Fiat, which had the largest share of the Brazilian market, did not surpass its Chinese brand.

Not long ago, the Brazilian market's 10 entry-level models selected by Brazil's mainstream car media "CARRO", Chery QQ scored the first overall results, while Fiat's Palio came in second. The evaluation scored 13 indicators such as acceleration time, braking time, average fuel consumption, internal space, trunk volume, second-hand vehicle price, installment rate, comfort configuration cost, and security configuration, with a maximum score of 130 points. Chery QQ won the championship with a total score of 100 and a score of 16 points ahead of the second place. Changhe Edil ranked fifth, ranking above Fiat UNO.

From January to July this year, Chery Automobile exported a total of 22,395 vehicles to Brazil, an increase of 316% over the same period last year. On July 19, Chery Automobile officially started construction in the Brazilian state of Sao Paulo with a total investment of US$400 million. It is expected to be completed and put into operation in September 2013. The annual production capacity will reach 150,000 vehicles and the first batch of Chery A1 will be put into operation. Summarize picture forums] and situation 2 [review picture forum] and other models.

In the first half of this year, Fiat sold about 290,000 vehicles in Brazil, maintaining its leading position with a market share of 22.4%, but this advantage will gradually be surpassed by Chinese auto companies. According to CBS reporter Matthew DeBord, Chinese auto makers will force Japan, the United States, Germany, and Italy to squeeze their automakers out of the Brazilian market.

It is not just Marccione who is afraid of the hearts of Chinese cars. Prior to this, overseas media focused more on China's low cost advantage, arguing that this is the most favorable condition for Chinese car companies to participate in global competition. Nowadays, the Chinese car companies whose product quality has significantly improved are showing people a side other than cost control. This is exactly the same situation as when Korean car makers first entered the West. This is also a big background for the establishment of the "China Motor Threat Theory."

SAIC MG6 [Review Picture Forum] is a vivid example in the UK. The MG brand, which has 87 years of history in the UK, was rebuilt in SAIC Motor’s hands and was widely praised by the British. MG6 was designed by SAIC's British model team and developed by the British Technology Center. It was jointly manufactured by Shanghai Automotive Lingang Factory and the Birmingham Factory in the United Kingdom, and was eventually marketed in the UK. In the SAIC plan, the United Kingdom is only the first stop. In the future, there are markets in Eastern Europe, the Middle East, North Africa and Latin America waiting for the MG brand to develop.

With SAIC becoming the majority shareholder of the GM India plant, SAIC and GM have started to conduct business together in India to share a share in this emerging market. Hu Maoyuan, chairman of SAIC, once said that SAIC will promote competitive products with low prices in the Mainland, such as the New Sail [Summary Picture Forum] and Wuling Micro-car to the Indian market, and will also develop new products for the local market. The new Sailo, led and developed by the Chinese, is a small car specifically designed for the Chinese market. In India, which has just started in the sedan market, the positioning of the new Sail fits well with the needs of the local middle class.

“There is no company in the world that sells more than 3 million vehicles like us, but the export volume is so small.” Hu Maoyuan said, “In 2015, our production and sales target is 6 million vehicles. Among them, 800,000 are produced overseas and 5.2 million. Vehicles are produced in the country."

Chery and SAIC Motor, the former use their strong R & D foundation and product accumulation to enter the overseas market, the latter through the acquisition or cooperation with foreign partners, to accelerate the pace of independent brand internationalization. For such multinational CEOs as Malchone, the former made them jealous, while the latter made them panic. And private enterprises like Geely may be even more of a threat to them.

Last week, Geely Automobile and British Manganese Bronze Holdings Co., Ltd. signed an agreement to sell cars to the British market. It is understood that the Emgrand brand will first land in the United Kingdom. In the next year, the Emgrand EC7 [Review Photo Forum] will conduct adaptive tests in the UK to meet the local standards. At present, Geely holds 19.97% shares of manganese copper, which is the largest shareholder of manganese copper.

Through the acquisition of Volvo, Geely Automobile officially entered the world top 500 list. In the second quarter of last year, Volvo turned a profit, and this year's earnings growth will achieve a higher level. In the first half of this year, Volvo’s global sales increased by 20% year-on-year to 230,746 units. The wisdom of Chinese car companies is combined with the multinational brand culture. While fully integrated, they can still maintain the independence of the acquired brands and guide them to develop in a more stable direction to form a more clear corporate development strategy. This is exactly what China is The strengths of private car companies.

In the first half of this year, Geely exported a total of 13,300 cars, an increase of 115% over the same period last year. To achieve two-thirds of product exports is the highest goal of Geely. Like SAIC, Geely and Chery’s exports have also started to shift to the developed countries of the United Kingdom and the United States, and they are no longer stuck in developing markets.

"China made" to bet on reputation

Malchone said: “We need a clear understanding of the status quo and the future of the Chinese automotive market. Many people think that China is only part of Asia. But in reality, China itself is a real, independent and highly competitive economic entity. China will do as much in auto manufacturing as the United States. If some people think that they can ignore the Chinese market, they will certainly pay a heavy price for it."

In Malchone’s view, Western car companies cannot rely on the rapid growth of the Asian market to drive their own prosperity. They must strive to make their businesses in the North American and European markets more competitive. Otherwise, these original "home markets" will soon become the base for Chinese car companies.

The cautious attitude of Malchoney shows that Chinese auto companies have already had sufficient influence in the world, but can this prove that we already have the strength of individual combat? Malchone's remarks may not be to express some kind of awe. Instead, this may just be a reminder to his peers. After the western car companies experienced the financial crisis, Baotuan’s psychology was already extremely obvious. For them, the Chinese car companies that were unscathed in the crisis were naturally the biggest threat.

In 2006, the United Nations Development and Reform Commission of the Ministry of Commerce identified 8 cities including Changchun, Shanghai and Tianjin as “national automobile and parts export bases” and identified 160 companies including FAW, Chang’an, and Chery as “national automobile and parts export base companies. ". The two ministries and commissions also jointly established a leading group and plans to introduce policies in 10 areas to support automobile exports and set up special funds to support them.

From today's point of view, the implementation of policies is not satisfactory. While encouraging the export of automobiles, there is no unified guiding ideology. The lack of corporate experience and their own actions have caused many mistakes in overseas markets. A particular example is that Russia used to be the largest exporter of Chinese cars. In 2007, China exported nearly 57,000 cars to Russia. However, from the end of 2008, the market share fell sharply, and in 2009 it fell to the “bottom height”, when the export vehicle fell to several hundred vehicles.

“Everybody knows that Russia’s car brand is left with only Lada, and that’s what people’s “national treasures.” Cars from Europe and America and cars from Japan and South Korea are good. Their cars are exported to Russia, and they definitely don’t have positive effects with Lada’s products. The competition is to give it a living space. This is why Chery Cowin sells hot in Russia, but because of a security crash test, the reasons for exiting the local market.” Vice Minister of Foreign Trade Research, International Trade and Economic Cooperation Research Institute, Ministry of Commerce Director Kim Bo-song, when talking about the reasons why Chinese car companies defeated Russia, used the metaphor of the image of “Strong dragons are not overwhelmed by snakes”.

According to Lu Luxun, deputy director of the Department of Mechanical and Electrical Industry of the Ministry of Commerce, the premium ability of Chinese companies is very poor. At present, China exports nearly 60 kinds of mechanical and electrical products in the world, but 80% of electromechanical companies are themselves and their own people. Competition is the internalization of international competition.

Lu Lun believes that China's auto exports are still extensive growth methods, companies are relying on fighting prices, fight expansion. In particular, many products are homogenized seriously, too many products are exported, the company’s brand is missing, the overseas marketing network is missing, the quality is not guaranteed, and the export order is chaotic. "We have a lot of cars and have caused complaints in the African market. There are embassies giving us electricity reports, reflecting the opinions of African friends and asking us why good products are exported to Europe and poor products are exported to Africa."

It is not difficult to see that the disorderly price war between Chinese car companies and speculative psychology have caused them to ruin themselves in some overseas markets. The export of randomness, such as exporting thousands of units at a time, is not of great strategic importance, but it may cause a greater negative impact. Because after the product is sold out, no service outlets can support it, which makes the Chinese auto companies lose their credibility.

According to Wei Jianjun, chairman of Great Wall Motors, the exported cars represent “Made in China” and must have corresponding product quality and perfect after-sales service. The bad reputation of Chinese car companies overseas is precisely this kind of pressure, which makes Great Wall very cautious in product creation, and develops and produces products adapted to international markets in accordance with the highest international standards and regulations of various countries. At the same time, the company has also set up a special law and regulations department, invested a lot of money, and asked a foreign consulting company to study.

“Overseas, we do not evade recall. In the first half of the year, we had recalls in Italy and Australia. The quick recall and good handling are the enhancement of the image of Chinese products. Chinese cars must go through low quality, low price, and good price. The three stages of honesty and value for money, said Wei Jianjun.

China's auto exports have started from 2001 and have now undergone three stages. From 2001 to 2007, it was a period of rapid growth. The average annual growth rate of vehicle exports was nearly 60%; in 2008 and 2009, it was a period of rapid decline, after a financial crisis. As a result of the impact, vehicle auto exports have seen negative growth for 15 consecutive months, and since 2010, they have shown a trend of recovery.

In fact, self-owned brands have been under heavy pressure from foreign brands since they were born. In a highly competitive market in China, independent brands that can survive have their own strong anti-risk capabilities. However, when it comes to dealing with foreign markets, especially European and American developed markets, this set of competition laws in the Chinese market does not apply. In 2008, the rapid decline of independent brands in overseas markets was actually a painful lesson.

At present, there are still many defects in the quality and service of independent brands. The sharp decline in market share in the first seven months of this year reflects many problems in its rapid development. For Malchone's "China Motor Threat Theory", there is no need to care. In the process of Chinese auto companies' development towards internationalization, they maintain the attitude of being extremely cautious and quality service first. One day, Malchone’s “threat theory” will evolve into “reverence theory”.