South Korean media: Why must global automakers stay in China?
On November 9, the South Korean media "Global Economy" published an article stating that for global automakers, the Chinese market was once a "goose that lays golden eggs." In the early 21st century, China rapidly rose to become the world's largest car market, attracting automakers from the United States, Europe, Japan, and South Korea. However, over the past five years, the situation has completely reversed.
As of 2020, international brands accounted for more than 60% of the sales of light vehicles in China, but last year, this proportion plummeted to about 35%. The remaining market share is dominated by domestic brands, including traditional automakers such as Chery and Geely, as well as cutting-edge electric vehicle companies such as XPeng, NIO, BYD, and Li Auto.
Global automakers now face a critical moment: stay or leave? In fact, many brands, including Suzuki, Mitsubishi, Renault, Jeep, and Fiat, have already exited the Chinese market or significantly reduced their operations.
Some companies, such as Nissan and Honda, are reducing production in China, while General Motors is converting underutilized Chinese factories into export centers.
Chinese consumers are also beginning to favor domestic products, not only out of patriotism, but also due to their desire for local brands that better suit their tastes and needs. Under this impact, even foreign brands like Tesla, which are very popular, are losing market share.
Hans Gremmell, editor of "Automotive News" Asia, said, "International manufacturers who hope to maintain global influence should think carefully. Chinese brands have won market share by entering overseas markets such as Europe, South America, and Southeast Asia, and may eventually enter the U.S. market."
He pointed out that surrendering to the Chinese market carries significant risks, and when Chinese brands finally flood the global market, established brands may be unprepared.
Gremmell believes, "The automakers who stay in China are best prepared because they have learned a lot."
In fact, Nissan and General Motors initially tried to sell electric vehicles designed for overseas markets to Chinese consumers, but failed. However, they learned from their mistakes and adjusted their strategies. Now, Nissan and General Motors rely on local partners to launch electric vehicles designed by Chinese engineers for Chinese consumers. This revised strategy shows promising prospects.
Nissan's sales in China have declined by more than half since 2018, but this year it created a "miracle" by reversing its decline after launching a locally developed all-electric sedan.
General Motors also tried the same strategy, creating a new localized electric vehicle platform for its Buick Electra sub-brand; Toyota also achieved success with a domestically developed electric compact crossover. Many companies, including Audi, Renault, Volkswagen, and Ford, have joined this localization strategy.
These new products, based on local experience, are not only cost-effective but also use cutting-edge technology. Their time to market is also very fast, and some foreign companies can now launch new products in less than 20 months, far faster than the traditional several-year delivery cycle.
Some companies even plan to build global products based on this China-inspired architecture.
When global automakers first entered China, they were like "teachers," imparting technical know-how to Chinese competitors. But now, the students are becoming the "teachers."
Although it is still unclear whether this technology transfer will become a long-term solution for global automakers, Gremmell emphasized, "Wise traditional brands will continue to fight. Ultimately, if they can successfully compete with Chinese competitors in China, they can compete anywhere."
This indicates that the Chinese market is gradually surpassing a huge consumer market; it is a "fierce battlefield and learning place," which will determine the competitiveness of the global automotive industry in the future.
Original: www.toutiao.com/article/1848302076917760/
Statement: The article represents the views of the author.