Fengde Mechanical & Electrical Manufacturing Co., Ltd. , http://www.dieselgeneratores.com
Just two years ago, China’s auto exports to overseas countries, especially Europe and the United States and other developed countries, were still an unattainable dream. Now, this is being realized by more and more manufacturers.
Following Geely’s production of a taxi for London and the entry of Huachen into Germany, Chery, another well-known Chinese car manufacturer, announced in 2007 that it had signed an OEM agreement with DaimlerChrysler, which produces “Benzâ€. This agreement has attracted widespread attention from public opinion at home and abroad. Although the parties have not announced the details of the transaction, the Chrysler workers who are worried that they are unemployed are already protesting through the union.
Statistics from the import and export of automobile products provided by the General Administration of Customs show that as of the end of 2006, China's total vehicle exports (including chassis) reached 342,400, an increase of 98.13% year-on-year; exports earned US$3.135 billion, a year-on-year increase of 96.62%. Even more striking is that China’s most vulnerable passenger car exports have tripled in 2006 to more than 90,000 vehicles.
These cases and figures are imaginative wings for those who expect China to become a major automobile manufacturer, but industry officials and experts are only cautiously optimistic. It is not difficult to see from the detailed data of 2006 that the annual increase in the number of Chinese auto and auto chassis exports has exceeded the increase in export value – this continues the trend of Chinese auto exports since 2002.
Capacity pressure
Privately speaking, the voice of the industry about China's auto exports to "poverty growth" is gradually increasing.
“Low-price sales and disorderly competition are the main reasons that caused the growth rate of domestic auto exports to continue to fall below the quantitative increase in 2006.†Rao Da, secretary-general of the National Passenger Vehicle Market Information Association, interpreted the statistics on auto exports in 2006. At the same time, comments from the British "Financial Times" also said, "Chinese-made cars are more ridiculed in western countries than they are exclaimed."
Wei Jianguo, vice minister of the Ministry of Commerce, aims to increase China’s auto and auto parts exports to 120 billion U.S. dollars in the next 10 years, accounting for 10% of the global auto trade volume. However, these newly released customs data and the troubles encountered by Chinese autos in foreign markets still show the difficult prospects of this future auto country on the export road.
In 2006, China’s auto production and sales volume historically exceeded 7 million vehicles, making China’s domestic market begin to show a structural surplus, and at the same time, it further increased the pressure on automakers to export their production capacity to overseas markets.
According to the prediction of the China Association of Automotive Engineers, China's auto production will reach 10 million in 2010. Overcapacity will be inevitable and the pressure for auto companies to “go out†will only increase. However, as China's exports are mainly based on mid- to low-end vehicles targeting emerging markets, most of the manufacturers do not have a clear export strategy, and the overseas sales service system is not perfect. These manufacturers mainly adopt price warfare as a means in the international market competition. As a result, the export volume is small and the unit price is decreasing.
Under the surface of prosperity, the chaos of Chinese auto exports is worrying. According to customs data, of the thousands of automotive exporters, 600 are under 10 vehicles, accounting for 60% of the total; 160 manufacturers export only one vehicle each year, with the proportion exceeding 15%. The quality of some of the exported automotive products and the infringement of intellectual property rights have occurred from time to time.
The recent rectification of the order of automobile exports by decision makers also confirms the industry’s concern. On December 31, 2006, the Ministry of Commerce, the National Development and Reform Commission, the General Administration of Customs, the General Administration of Quality Supervision, Inspection and Quarantine, and the five ministries and commissions of the CNCA jointly issued a notice deciding that from March 1, 2007, on the entire automobile products (including passenger car use) Cars, commercial vehicles, chassis and complete sets of spare parts) implement export license management. At the same time, the company implements export qualification management for auto vehicle production enterprises, and implements production enterprise authorization management for auto export business enterprises.
Automobile exports are still regarded by the domestic public opinion as a sign of the strength of auto manufacturers. In order to cooperate with the propaganda, some manufacturers have registered overseas companies overseas and the realization of auto “export†has become known to the industry. In addition, the “timely†announcement of obtaining export orders overseas during the monetary tightening period is just a good way to create a relaxed financing environment. It is these complicated considerations that have promoted the introduction of the above-mentioned data that are almost heaven-like.
“On the surface, the order of the five ministries to jointly reorganize vehicles is to remove those “distribution, chaos, and poor†auto export traders, which is actually a warning to the entire auto export industry,†said Li Chunbo, auto analyst of CITIC Securities.
The industry generally believes that the export of Chinese cars is increasingly turning to the export situation of Chinese motorcycles. The situation that the Chinese motorcycle manufacturers waged a price war overseas in the past made many people feel sorry for it.
In 2003, China had issued relevant measures for the vicious competition in motorcycle exports. However, it did not achieve the expected results after its implementation. The reason is that many motorcycle companies are under the control of local government forces. The industrial structure of the Chinese auto industry is just like this.
Joint ventures cannot be moved
Compared with the increase in the export of Chinese autos, it is the numerous joint ventures that are the “regular forces†of auto manufacturing.
According to the automobile industry policy, foreign automakers wanting to obtain a permit for automobile production in China must have a joint venture with a domestic company. Therefore, at present, major international automobile manufacturers have completed joint ventures with the top five automotive groups in China. The five major auto groups have ranked first in the industry in terms of both national policy support and financial and technological strength.
Statistics from the China Association of Automobile Manufacturers show that in 2006, SAIC, FAW, Dongfeng, Chang'an, and Beiqi sales were still significantly higher than other companies. In 2006, the five companies sold a total of 4,715,800 vehicles, accounting for the total sales of automobiles. 65.34%. Among them, the vehicles produced by the joint venture accounted for the vast majority.
At the same time, however, “the joint venture’s contribution to the number of domestic automobile exports is less than 10%, and only Guangzhou Honda has established an export base for more than a dozen automotive joint ventures.†General Secretary Rao Da, General Secretary of the National Passenger Vehicle Market Information Association Tell the "Finance" reporter.
Sun Jian, vice president of Kearney Shanghai Co., Ltd., interpreted this as saying that foreign auto giants are willing to take a 50% stake in a joint venture with domestic automakers. The fancy is the domestic market. Before the domestic market is extremely saturated, it is impossible to Focus on the export.
“Multinational corporations adopt the strategy of building factories locally when they enter emerging markets. Even if the cars produced in China have an advantage in cost, they will not rush to adopt their own global strategy. If they say, if the joint venture produces cars When exporting to overseas markets, multinational corporations must also distribute profits to the Chinese side. This is what they do not want to see," said Sun Jian.
Rao Da believes that the strength of the trade unions in the European and American auto manufacturing industry has also made it difficult for foreign auto giants to shift their production bases to China. In response to the competition from Toyota, GM and Ford have closed a large number of factories in North America. "If we transfer more production capacity to China, there will be a fierce rebound in the United States."
Even if the political and strategic factors are left behind, the cars produced by the joint venture companies in China may not necessarily have international competitiveness in terms of cost.
In accordance with the requirements of China’s automobile industry policy, multinational corporations must enter the domestic market in a joint venture, and the core technology is completely in the hands of multinational corporations. The collection of technology transfer fees for each vehicle produced by the joint venture company becomes a multinational company’s profit. The main source. In addition, foreign parties also require critical parts to be purchased and imported from specific suppliers. The main reason why the cost of autos produced by the joint venture companies remains high is that there are even "strange things" that domestic cars are more expensive than the same type of vehicles produced in foreign countries.
In February 2004, Dai Xianglong, mayor of Tianjin City, met with Mr. Bai Shuihong, Vice President of Toyota Motor Corporation of Japan, and mentioned the issue of whether the price of the Corolla was too high. At that time, the domestic price of Corolla was between RMB 178,000 and RMB 203,000. In Japan, the price of Corolla was converted into RMB 120,000-130,000.
Li Chunbo, an automotive analyst at CITIC Securities, found out that the high-strength paint on the ground was used in the Shanghai-Volkswagen and European-American joint venture factories because the manufacturing workers in developed countries have high requirements on the production environment. Low-noise, comfortable air-conditioning, large lounge areas, huge spare parts and finished product warehouses are basically copied directly by the models of European and American automobile factories.†These arrangements naturally weakened the joint venture’s cost advantage in China.
On the other hand, most of the Chinese cars represented by the Big Five Group have established two joint venture factories with auto companies from Europe, the United States, Japan and South Korea, and mainly focus on the introduction of foreign investment products. Each cooperation unit carries out product planning according to foreign investment plans. The five major groups do not have the ability to control the overall situation. China's own product plans are difficult to achieve and increasingly become the “China Automobile Asset Investment Group†dubbed by the industry.
The consequence of the deformed automobile industry structure is that most of the profits are taken away by foreign capital, and the Chinese only earn some processing fees. Li Zhenling, an engineer at the China Automotive Technology and Research Center, told the Caijing reporter that an expert report she saw showed that 80% to 90% of the profits of the joint venture companies were accounted for by foreign capital in various ways. "In this case, whether or not the car produced by the joint venture company is exported is not of much significance."
Where is the road?
The result of the joint venture's full release of the vehicle's production capacity to the domestic market is to squeeze the domestic brand's living space and force it to compete for the market overseas. However, automakers with their own brands are in the initial stage of both financial strength and technology, and their homogeneity of products is serious. Under this background, price competition becomes inevitable.
First of all, SUVs and pickups with lower technological content are the products that compete with domestic counterparts in foreign markets. An industry veteran in an interview with Caijing told reporters: “The price of pickup trucks exported to overseas markets is around RMB 50,000, which is even lower than that of Japanese pickup trucks.†An executive from Great Wall Motors It was revealed that in the Russian market last year, the pickup trucks of the Great Wall exported were blocked by the price of other domestic brands of pickup trucks.
As a result of price wars, some brands have almost no profit and are forced to withdraw from the market. SUV exports are also roughly the same. Based on the market price of the final importing country, China's SUVs exported are often reduced by 500 to 1,000 US dollars in one year.
Song Bingkun, an auto analyst at CSC, said that currently most of the domestic exports to overseas markets are low-end models. The general situation is lack of brand, less service, products can not be premium, and ultimately can only fight prices.
The recent OEM contract signed by Chery and Chrysler was considered by some industry players as a new model for domestic auto exports. According to an agreement signed by Chrysler and Chery, it will be partially retrofitted on Chery's existing models. After the Daico Group's requirements for commissioning and reconstruction, it will use the Dodge brand under Chrysler, using DaimlerChrysler in North America or Western Europe. Sales channels for sales, Chrysler paid Chery Automobile OEM and R & D expenses.
According to the “Finance†reporter, even within Chery, it has not placed great expectations on the long-term development of the OEM model. When talking about the cooperation with Chrysler, the deputy general manager of the Chery Group, Jin Yibo, said: "The two parties just take what they need."
From the development history of Taiwan's IT industry, the foundry model may be honey in the short term, but it is a poison for a long time. The late stage of development must be a meager profit, subject to human beings, unable to achieve the breakthrough of its own brand, and become a processing base for foreign investment products.
The development of the international automotive foundry industry is also uncertain as China and India join. India’s recently announced “2006 Automotive Development Plan (Draft)†from 2006 to 2016 clearly stated that “India will strive to become a global automobile manufacturing center in the next 10 years.†The Chinese and Indian competition for OEM orders will be Make OEM profits fall further.
An industry insider approaching Chery said in an interview with Caijing that Chery will never be satisfied merely with Chrysler as an OEM. Instead, it hopes that OEM can further understand the North American market and make North American consumers realize it gradually. To Chery's brand, lay the foundation for the next step into the North American market." The agreement with Chrysler is not the first attempt of Chery to enter the overseas market. In 2005, Chery announced that it would launch a Chery-produced car in North America through a car dealer named Dream, which was announced in November 2006.
Far away from Chery, Brilliance Automotive, which is far from the northeast, chose to export intermediate models to the European market to avoid the price traps of exporting overseas markets. The export agreement signed between Brilliance Automotive and German HSO Company is: In the next five years, Brilliance Automotive will export 158,000 Chinese cars to Germany and Europe.
However, most people in the industry are not very optimistic about the sales prospects of Brilliance Automotive in the German market. The reason is that domestic brands have not yet reached the requirements for large-scale entry into mature markets in terms of technology and brand awareness.
After the first batch of Brilliance Chichi arrived in Germany, the German local "Automotive News" published the test evaluation of the BS6 Omnibus as quickly as possible, and the evaluation result showed that it had achieved three and a half stars (out of five stars).
The evaluation pointed out that "on the whole, the BS6 is a mid-range model. The minimum price is 18,000 euros. In fact, this price is already comparable to other models of the same class. At this price, the BS6 looks more luxurious inside. Some, but some parts do not feel good. The engine's power configuration is a bit inadequate, the same price to buy a small European car, the power may be better than it."
Sun Jian, vice president of Kearney Shanghai Co., Ltd. pointed out that at present, the domestic auto companies' exports have not started from the aspects of quality, service, brand, etc., but they always use the domestic cost advantage to rapidly expand their overseas market share. This "doesn't necessarily turn into a tragic situation in the export of the motorcycle industry before, but it is likely to repeat the mistakes made in Korean auto exports."
During this year's Detroit auto show, General Motors Chairman and Chief Executive Officer Wagner had warned Chinese automakers entering mature markets to learn the lessons of Korean cars that year.
He said, “When we first entered the US market, the quality reliability of Korean cars was not high, and after-sales service was not perfect, giving consumers the impression that Korean car prices were low but the quality was not good. Once the impression was difficult to turn around, it was later The South Korean car had to stop exporting to the U.S. market and re-export to the U.S. after quality and after-sales service were guaranteed for a long time."
Sun Jian believes that Chinese automakers should study the successful experience of Japanese automakers' overseas expansion. "Not in one step, but after solving bottlenecks in production, sales, and service, and carefully studying the tastes of consumers in exporting countries Large-scale entry."
The "Finance" reporter learned that export control will become the focus of the next step in the domestic auto industry. A feasible solution is to promote the industrial upgrading of the automotive industry's exports by taking steps to substantially reduce the export tax rebates for vehicles and components.