China’s commitment automobile industry It relies on technological innovation as well as government support. Thanks to the state’s participation in capital, Chinese brands are not subjected to the constant need to make money. This, together with the development of batteries and electric cars, has allowed the country to develop an industry now comparable to European and North American giants. As Josep María Recasens, Groupe Renault strategy director and Renault’s president in Spain, puts it, “it’s about technology” and they are ahead of us in that regard too. There is nothing about R&D centers that would make those in Europe jealous. They are familiar with the software and all developments. “They are a full generation ahead of us,” Renault chairman Luca de Meo said recently. A small example BYDThe Chinese manufacturer produces one in every two iPads sold in the world and provides technology for one in every five smartphones. As I said, technology. Shenzen is the city of the future, and China’s leading technology companies are there too.
In addition to dominating the value chain and being a leader in electrification, the Chinese auto industry has a huge advantage. Except for cases like BYD, the vast majority of companies “They belong to the state… so there is no need to meet the need to make money. Equality is already good for them.”A key executive of a French manufacturer says: In this scenario the need for European brands to always win at all costs is clear. At this point, the Chinese have a lot of advantages. As long as they don’t lose too much money, they will continue to be there, albeit secretly, with the support of their own government. They’re coming to stay.
Zhang Guibing, president of Chery International, commented to Prensa Ibérica a few days ago: “We want to introduce ourselves to the public in Europe and present our products so they can check their quality.. We know that Spain is a very competitive, challenging and very interesting market for us. It is important to understand the demand mindset in Europe and we believe Spain is a good starting point. We’re not here to jump in the pool and then leave because it would be disastrous for buyers. “This is a minimum requirement.”
Europe reacts but not convincingly
European manufacturers, led by the French industry, have managed to get the European Commission to launch an investigation to determine whether Chinese brands have received assistance from their country’s government and thus violated fair competition laws. This is a reaction that will not have much impact because, after all, Europe is also trying to subsidize domestic industry through bailout plans (so-called PERTE). among other measures. “We love competition, but we want everyone to play by the same rules,” says Luca de Meo, president of Renault and European manufacturers (ACEA).
Meanwhile, China is waiting for them to arrive. Zhang Guibing, chairman of Chery International, said in Wuhu a few days ago that it is normal for Europe to want to protect its domestic industry, but this will not affect them: “We have been exporting since 2001 and have seen all kinds of tariffs and regulations… and we continue to operate the same way.”. It looks like the investigation won’t go anywhere because more tariffs won’t stop them from growing. The ability to create volume is on your side.
Exit your market
The spread of the automobile in China was very rapid. Supported by the government and driven by the growth of the middle classes, the Asian giant’s automotive industry has grown from producing nearly two million vehicles in 1999 to delivering a total of 27 million vehicles in 2022.. It broke its record with 28 million vehicles in 2016. When it comes to cars, China was producing just 600,000 units in 1999, but was already producing almost 24 million units last year.
The domestic market grew very quickly; It grew from almost six million in 2005 to 29 million registered in 2017.but it began to show certain signs of stagnation shortly before the coronavirus pandemic. The spread of electric cars benefited by the state and the postponement of the production of internal combustion cars left 26 million units on the market. This caused brands to want to step out of their comfort zones and open themselves to other markets; One of their next targets was Europe.
New Chinese manufacturers are posting million-dollar sales. Thus, BYD targets a turnover of 90 billion Euros and sales of 3 million cars, an increase of 56% compared to the previous year.. These figures confirm that they need to leave the domestic market and look for new horizons. And Chinese brands have been expanding for several years. Not only do they export completely finished vehicles, they prefer a formula that is much more economically beneficial for them. Chery is China’s leading car exporter, and its figures for 2023 point to 900,000 cars… almost equal to the entire Spanish market. As we mentioned, in addition to filling the boats with cars, the assembly formula is also preferred. CKDs (short for complete demolition) are production facilities, most often owned by a European or American manufacturer, where cars arrive in parts in containers. These are manufactured in China, shipped from one point to another in the logistics chain, and assembled in another country. To do this, they introduce multiple local suppliers for some parts so fewer tariffs are paid, and they can even choose to be recognized as brands that manufacture in each end country.
clear bet
This CKD system is what Chery, for example, has used to supply foreign markets for years. Currently, Chery has 12 CKD centers outside China; This is a formula that supports market penetration at low production costs.. Chery’s worldwide centers are located in Brazil (2), Venezuela (2), Egypt (2), Syria (2), Russia, Malaysia, Iraq and Indonesia (1), with another center in Turkey to be added soon. . In addition to Europe showing that everything will happen in Barcelona. This arrival at the premises of the former Nissan factory in the Free Trade Zone will take place in the second phase, following the implementation in the Spanish and European markets. In the coming weeks it will become clear whether they will finally settle in Barcelona. Maintain these names as we continue to grow: FAW, Dongfeng, SAIC, GAC, BAIC, Changan, Chery, JAC, Geely, BYD, Great Wall, Seres, Nio, Xpeng, Lepmotor, Hozon, Li Auto, Baidu, Lynk&Co, Polestar, Omoda , Jaecoo, Aiways. They are the kings of the new era of the automobile, the Chinese and the expansion.