Beijing, China – Chinese automakers are riding the wave of globalization, according to a recent report by Z. H. Studio, a media and marketing consultancy headquartered in Beijing. While most of the major automakers are racing to China to cash in on the world’s most revved-up auto market, some Chinese car companies are not content to just stay at home. A growing cohort of indigenous firms are flexing their muscles, having new model blitzes and pushing their cars onto the world markets.
In 2005, exports of vehicles from China exceeded imports for the first time, with exports climbing to almost 165,000 units, more than twice the number in 2004. In 2006, exports escalated to 230,000 units, up more than 40% year-on-year.
China’s biggest private carmaker Great Wall Motor (GWM) started exporting autos first to the Middle East, then North Africa, South Africa, Russia, South America, and Eastern Europe. In 2006, GWM became the first Chinese car brand to appear in the European Union markets. Today, GWM has exported to a total of 121 countries, of which 81 countries see the establishment of stable distribution channels of GWM cars. As well, GWM has set up factories or assembly lines in eight countries including Russia, Ukraine, Vietnam, Iran, Indonesia and Nigeria.
”We are not content to extend our far-off reaches just by geographic terms,” says Xing Wenlin, Vice President of GWM who is in charge of overseas business. ”From a purely sales perspective, it’s not hard to trade our vehicles in a new territory. But the key is to dig deep and sustain profitable business from that territory long term.”
Cracking developed Western markets like the EU/US, won’t be easy, according to Hou Yankun, an auto industry researcher from Lehman Brothers (HK). “It’s tremendously costly and time-consuming for China carmakers to design a vehicle from scratch to meet safety, emission and other regulation requirements in the EU/US before a vehicle may be mass produced. Another huge challenge will be a leap of faith among Western customers to trust Chinese autos.”
”We cannot find a sweet spot for Chinese automakers except ‘high performance/price ratio’,” remarked Hou Yankun, ”that is also how Americans and Europeans perceive ‘Made in China’. However, we believe that it’s hard to justify profitability if (the brand is) only targeting budget buyers.”
In some industry analysts’ view, however, the progress Chinese auto firms make toward challenging European, Japanese, Korean and US auto makers among price-sensitive buyers is a first step toward becoming the next Hyundai Motor in developed markets.