During the 2022 World Cup, the legendary Brazilian star Roberto Carlos opened an account on Douyin, and his active interaction with Fan Zhiyi attracted the attention of many old fans. Carlos also introduced his life on Douyin. To the surprise of domestic fans, his car is actually a Chinese brand car Chery Tiggo 8. Carlos introduced the popularity of Tiggo 8 in Brazil in a video. In fact, in 2020, Tiggo 8 won the Best SUV of the Year award in the most traditional and fair “Top Car TV” awards in the Brazilian auto industry.
Once upon a time, in people’s minds, Chery Automobile suffered from the dilemma of lack of brand upgrading and low competitiveness of mainstream products for a long time. In fact, Chery Automobile has always had good sales in overseas markets. 2021 is the 20th anniversary of Chery Automobile’s overseas launch. They have become the first Chinese passenger car brand with an annual export volume of more than 200,000 vehicles. Chery’s 20 years of going overseas is also the 20 years of China’s auto industry taking off. According to data from the China Association of Automobile Manufacturers, China’s auto exports will increase by 54.4% year-on-year to 3.11 million in 2022, surpassing the traditional auto powerhouse Germany for the first time to become the world’s second largest auto exporter. From the time when everyone was chasing imported cars to now selling domestic cars all over the world, what has happened to Chinese cars going overseas, and where will they go?
01
Yesterday: Unintentionally cutting willows to survive
More than 20 years ago, most of the beginnings of Chinese automobiles going overseas were due to chance and coincidence, and the main destinations were mostly Asian, African and Latin countries that were not rich and had weak local automobile industries, especially Chery Automobile and Great Wall Motors. as a typical representative.
In 2001, a Syrian car dealer fell in love with Chery’s Fengyun sedan in Beijing, hoping to import 200 cars. However, at that time, Chery had no idea of developing export business due to concerns about production capacity, market and other factors. So the Syrian car dealer chased all the way from Beijing to Wuhu, the headquarters of Chery, and from Wuhu to Shanghai, and finally snatched 10 Fengyun cars from Yin Tongyue, then chairman of Chery. It was the 10 Chery cars that seemed weak and insignificant at the beginning, which opened the first batch of domestically produced cars to be exported. In the next few years, from Syria to Iran, Chery successfully opened up the market with the beautiful appearance of the “Fengyun” car and the unusually low price. After occupying a place in the Middle East, Chery has focused its overseas business on Latin America represented by Brazil. According to statistics, in 2021, Chery has been among the top 10 new car sales in Brazil for several consecutive months, surpassing Chevrolet and Nissan. In addition to being loved by ordinary people, Chery has also been recognized by high-level officials of the Brazilian government. The Brazilian president not only uses Tiggo 8 as a campaign vehicle, but also uses it to receive important foreign guests. While Chery is flourishing in the tropical climate of Latin America, Great Wall Motor, another independent Chinese auto brand, is also gaining popularity in the ice and snow of Russia. Unlike Chery, which first relied on sedans and mini-cars such as QQ to enter overseas markets, Great Wall’s success in Russia came from pickups and SUVs. After all, for Russia, which is sparsely populated and rich in oil resources, there is no need to worry about fuel consumption. Large vehicles that can carry people and load goods are both practical and cool, and meet the needs and aesthetics of fighting nations. Therefore, Great Wall Motors took various measures according to local conditions to increase horsepower, expand the interior space of the car, and improve safety on icy and snowy roads, thus gaining the favor of more and more Russian consumers. The good sales momentum has also strengthened Great Wall Motors’ investment in Russia. On June 5, 2019, Great Wall Motor invested 500 million US dollars in Tula, Russia. The world-class factory that took 5 years to build was officially completed and put into production. The heads of state of China and Russia visited the factory together. The Tula plant is the first overseas vehicle manufacturing plant of a Chinese auto company covering the four major production processes of stamping, welding, painting and final assembly. This is qualitatively different from component assembly factories (KD factories) and pure product trade exports. However, to be honest, most of the time in the past, Chinese cars did not rely on strong product strength to go overseas. Instead, they were criticized for their high failure rate and lack of after-sales service. However, by avoiding the traditional mainstream auto markets such as Europe, America, Japan, and South Korea, Chinese auto companies are finally struggling to become bigger and stronger in the cracks of competition from unpopular countries such as Asia, Africa, and Latin America. All of this is inseparable from the localization achieved by flexible Chinese car companies in the target market. The success of so-called localization comes from the product level on the one hand, that is, to select suitable specific models according to the target market, and at the same time adjust product characteristics according to local conditions. Conditions to change the corresponding details in a timely manner, so as to better meet market demand. At the same time, behind the visible product localization, there is a deeper level of distribution/production localization. For example, Chery successfully entered Syria at the beginning, mainly due to the Syrian car dealer Samir who was chasing after the chairman to order 200 cars, and his AL BUROUJ company. The company is Chery’s only dealer in Syria. It invested a lot of energy in promoting Chery cars in the early days, which was the first step to dispel the worries of local consumers about unfamiliar Chinese cars. Chery’s success in Brazil is inseparable from the joint venture Cayo Chery, which was established in 2017 with Brazil’s largest car manufacturer and distributor, Cayo. The joint venture brand is not only the fastest-growing automaker in Brazil, but also created more than 40,000 direct or indirect employment opportunities for the local area, becoming a pivotal force in the Brazilian auto industry. Domestically produced cars are bringing the successful experience of Sino-foreign joint ventures such as FAW Toyota and SAIC Volkswagen to the wider third world. It’s just that with the passage of time, more and more Chinese car companies have discovered that the world is so big, and it is not limited to Asia, Africa and Latin America.
02
Today: Farewell to low prices and global flowering
At present, the development of new energy vehicles is changing with each passing day, beginning to challenge the dominance of fuel vehicles. Following the wave of new energy, China’s auto exports have undergone all-round upgrades in terms of quality, price, and major markets.
First of all, domestic new energy vehicles have changed from the problems of the era of fuel vehicles, and have made rapid progress in product quality. The industry usually uses the number of problems per 100 vehicles (PPH) to directly reflect the quality of vehicles. One of the advantages of this data is that it has nothing to do with the number of vehicles, production and sales, and is very suitable for horizontal comparisons between brands. According to the 2022 China Vehicle Reliability Study released by J.D. Power, a world-renowned evaluation agency, the average number of problems per 100 vehicles of Chinese independent brands is 194; The number of car problems is 242. The improvement of quality has also driven Chinese cars to go overseas to enter the acceleration mode. Data show that in 2021, my country will export 2.015 million complete automobiles, a year-on-year increase of 104.6%, of which 310,000 new energy vehicles will be exported, a three-fold increase year-on-year. In 2022, my country’s auto exports will reach 3.4 million, a year-on-year increase of 55%, of which 1.12 million new energy vehicles will be exported, a year-on-year increase of 190%, accounting for 33% of total auto exports. While upgrading the basic quality of products, domestic new energy vehicles also focus on building “intelligence” and strive to get rid of the long-standing “low price” label of Chinese cars. According to statistics from the Passenger Passenger Association, in recent years, the average export price of China’s automobiles has continued to rise from US$12,900 in 2018 to US$18,900 in 2022, of which the average price of pure electric vehicles is US$25,800. Compared with the increase in the average export price, various car companies that have experienced fierce competition from domestic new energy vehicles obviously have greater ambitions for “high-end” and began to intensively attack higher price bands. As an early entry into the European market, Wei Lai focused on the subscription model of “direct rent, not for sale” at the beginning. After adding the ordinary sales model later, its price is generally more than 100,000 yuan higher than that of the same model in China. It surpasses the benchmark models of brands such as BMW and Mercedes-Benz. For example, the ET7 75-degree version costs 81,900 euros, about 601,000 yuan, the 100-degree version costs 90,900 euros, about 667,000 yuan; the ET5 75-degree version costs 61,900 euros, about 454,000 yuan, and the 100-degree version costs 70,900 euros, about 520,000 yuan. If Weilai is still a high-profile brand in Europe, Lynk & Co is now qualified to compete with Tesla in Europe. Lynk & Co implements a “subscription system” business model with monthly payments in Europe. Users can choose two ways to use Lynk & Co cars: one is to directly purchase an existing car; the other is to use it as a monthly subscription member (the minimum subscription is one month, no Monthly limit, can be canceled at any time), pay a monthly subscription fee of 550 euros, you can enjoy the service including maintenance and insurance. Now Lynk & Co has more than 150,000 subscription users in Europe, and it is no news that monthly sales in market segments like the Netherlands exceed those of Tesla model Y. The trend of Chinese car companies saying goodbye to low prices and moving towards high-end has become increasingly clear, and the next few years will become a critical period for success or failure. Benefiting from the double increase in quality and price, the main target market for Chinese cars going overseas has naturally shifted from Asia, Africa and Latin America to developed countries, especially Europe. According to the data released by the Passenger Federation, the top 10 countries for the export of domestic passenger vehicles in 2022 are:
In 2022, the top 10 countries for the export of China’s new energy passenger vehicles are:
It is not difficult to see that domestic fuel vehicles are still mainly exported to Asia, Africa and Latin America, while the export market of new energy vehicles is dominated by developed countries represented by Europe. In addition to the official total data, the information disclosed by some car companies also shows the good development momentum of China’s new energy vehicles in the European market. For example, the January sales data disclosed by Geely some time ago shows that overseas multi-regional sales have increased significantly. The Middle East market has increased by 35% year-on-year, the Latin American market has increased by 36% year-on-year, and the pan-European regional market has increased by 393% year-on-year. The popularity of China’s new energy vehicles in the Southeast Asian market can be seen in Thailand.
In recent years, Thailand’s electric vehicle market has entered a period of rapid growth. In 2022, nearly 10,000 pure electric models will be registered in Thailand, and the Nezha V right-hand drive version, which officially landed in the Thai market in August, will deliver more than 1,800 vehicles in 2022. At the beginning of the new year, the Nezha V right-hand drive version has a market share of more than 20% in the Thai new energy market, and the results are gratifying. Entering the European market also shows that the Chinese car market has entered a new stage. Europe is not only the birthplace of modern cars, but also has many world-renowned car brands such as Volkswagen, Mercedes-Benz, BMW, Audi, Peugeot, and Citroen. If you can chew on the “hard bone” of Europe, it will be the most effective global advertisement. In general, today’s Chinese cars going overseas can be summed up in 12 words: quality is king, bid farewell to low prices, and blossom globally.
03
Tomorrow: Facing up to the risks, going steadily and far
Although China’s automobiles have made great achievements today, but as the saying goes, “born in trouble, die in peace”, we will never turn a blind eye to various risks on the road in the future.
The first risk comes from the increasingly uncertain international situation. Nowadays, the global anti-globalization trend is intensifying, economic and trade frictions represented by the Sino-US trade war are becoming more and more frequent, and direct geopolitical conflicts such as the Russia-Uzbekistan war have caused great disturbance to global trade, including automobile exports. Take Great Wall Motors as an example. Russia is the country with the highest overseas income. However, Great Wall Motors also seems quite helpless in the face of violent fluctuations in the ruble exchange rate. Great Wall Motor specifically pointed out in its 2021 annual report that since the conflict between Russia and Ukraine broke out in February 2022, the exchange rate of the Russian ruble has fluctuated sharply. The company will continue to follow up on the latest developments in related matters to assess possible future impacts. The second risk comes from policy risks in major market countries, especially in developed markets where Chinese car companies currently want to focus their efforts. This will be a big challenge. As mentioned earlier, “intelligence” is an important attraction for China’s new energy to enter developed countries such as Europe. However, intelligence is highly dependent on the high-frequency collection and analysis of user data, which is precisely where most developed countries are extremely sensitive. As early as 2018, the European Union introduced the General Data Protection Regulation. In mid-2022, the U.S. has also launched the legislative agenda for the U.S. Data Privacy Protection Act. This has undoubtedly increased compliance costs for many car companies that have grown up in a more relaxed domestic environment. The third risk mainly comes from the enterprise itself. Shopping malls are like battlefields, changing rapidly. Although it is not so that “one will succeed and all will die”, there is never a shortage of examples of “one mistake will cause eternal hatred”. Whether the internal organizational structure of the company is reasonable, whether the cooperation between domestic and foreign teams is smooth, whether the relationship with overseas local employees and labor unions is harmonious, etc., are all unavoidable problems for Chinese car companies that have gone abroad. After all, even a well-established car company like Volkswagen has been educated by the trade union in its hometown. Recently in Beijing, Zeng Yuqun, the founder of Ningde Times, received earnest instructions after reporting on this year’s industry development: “The joy is that our industry has come to the forefront of the world; the worry is that there will be a big shout. Crowd together, finally break up.” On the one hand, car companies should not only coordinate the two major domestic and foreign markets, but also coordinate planning and coordinated development between different regions in overseas markets. On the other hand, enterprises should also strengthen communication to avoid excessive introversion and cannibalism in individual markets. For example, when almost all Chinese car companies regard Europe as their most important overseas destination and try their best to expand their territory, local consumers with different cultural backgrounds and driving habits, as well as the late start of electrification Home-grown local brands, even large and small overseas auto media, self-media, etc., have never been just silent background boards. This point, a few years ago, the Chinese Internet companies that pushed India had a deep understanding. In 2015, the words “Are you OK” by the founder of Xiaomi at the press conference in India quickly went out of the circle. Comparable to the speed of spreading memes is the investment and development of Chinese Internet giants in India. Not only did WeChat, Alipay, Baidu, Youku and other local Chinese apps quickly occupy India, but the giants also rushed to spend money on Indian local Internet companies. For example, Ali has repeatedly invested in Paytm, an Indian payment tool, and its online retail website Paytm Mall, online grocery store BigBasket, restaurant review and takeaway delivery platform Zomato, and Tencent has led the investment in India’s largest e-commerce platform Flipkart and other start-up companies, such as online car-hailing companies Company Ola, learning app BYJU, football platform Dream11, B2B trading platform Udaan, etc. The “dumping” expansion of Chinese Internet companies in India has caused dissatisfaction among Indian conservatives, related industries and the government. So in June 2020, the Ministry of Electronics and Information Technology of India announced that it had decided to ban 59 apps including TikTok, Kwai, UC Browser, and WeChat for the sake of India’s sovereignty integrity, national defense, national security, and public order. On September 2, 2020, the Indian government once again announced the ban on 118 Chinese mobile apps, including Alipay, Enterprise WeChat, Baidu, Youku Video, etc. Tencent’s popular Indian game “PUBG” was also banned. It is true that India’s retaliation against Chinese Internet companies for “killing them all” is inseparable from the territorial disputes between China and India and the overall economic turmoil in India, but the rapid advances of outsiders have always been easy to condense the anger of the locals, and it is easier Become a scapegoat for the local government. Therefore, for many Chinese car companies striving to develop overseas business, how to let distinctive Chinese brands truly take root overseas, achieve mutual benefit and win-win results with the local area, and then create a good image of Chinese cars as a whole is very important. After all, only steady progress can lead to long-term success. Zeng Yuqun received the second half of the concern when reporting work, “To participate in international competition, we must do a good job in overall planning. How big is the market? Where are the risks? It is necessary to prevent being invincible all the way, going deep alone, only to be caught in the end. We must see that international competition is extremely fierce and international struggles are changing. In the case of a zero-sum game against us, we have to leave a way out for ourselves! “The so-called always have foresight and be prepared for danger in times of peace. At the moment when Chinese cars are going overseas, there is profound traditional Chinese wisdom behind this guidance, which not only summarizes the past but also guides the future.
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