Writing | Zheng Wen
Editing | Zhou Changxian
On April 26th, a cargo ship carrying brand-new MG vehicles arrived at the port of Koper in Slovenia. From there, they were transported by land to Serbia to participate in the Belgrade Motor Show held two weeks later. On May 12th, the show opened as scheduled, and Serbian President Vucic visited the site. He pointed out that the exhibition was the first of its kind in Europe in two years, with about 50 models making their debut, most of which were electric and hybrid cars.
1400 kilometers away from Serbia, the German car market has experienced another round of impact from a Chinese car brand. According to data from the Federal Motor Transport Authority (KBA) in Germany, the new car registration of MG, a subsidiary of SAIC Motor, in Germany in April was 1065 vehicles, achieving a 2.4% market share in the BEV and PHEV markets, surpassing many local mainstream brands in Europe, America, Japan, and South Korea. In response, the well-known German automotive magazine “Autohaus” reported on MG’s development in Germany in an article titled “MG in Germany: Monthly new car registration exceeded four digits for the first time.”
On the surface, this is a new chapter in SAIC Motor’s opening up of the Central and Eastern European markets. Beneath it, however, lies a microcosm of China’s auto industry’s evolution from “introduction” to “going global” to entering Europe’s auto industry “stronghold,” entering a new stage of globalization.
China’s auto industry enters the “Age of Discovery”
In 2013, the “Belt and Road” initiative was proposed, providing new opportunities for Chinese enterprises to cross the ocean.
After 9 years of development, Chinese enterprises have undergone qualitative changes in their participation in the international market in terms of breadth and depth. From the initial market development to deep participation in local production capacity building, from single product import to driving the internationalization of industrial systems, Chinese brands are taking advantage of the Belt and Road Initiative to grow into world-class brands with international competitiveness.
Under this background, in recent years, the rapid development of the new energy vehicle market has given Chinese auto brands new opportunities for global layout, allowing them to compete on an equal footing with world-class brands.
At the same time, as intelligent electric vehicles become more popular, many people are changing their stereotypes and biases towards Chinese auto brands. However, they may not yet realize that Chinese automakers have already created noteworthy achievements on the road to globalization. Industry insiders believe that the next 3-5 years will be a historic window of opportunity for Chinese brands going global, and since 2021, a good situation of large-scale brand internationalization by China has initially formed. The Chinese auto industry will enter the “Age of Discovery.”According to the latest data released by the China Association of Automobile Manufacturers (CAAM), China’s automobile exports exceeded 2 million vehicles for the first time in 2021, doubling from the previous year, breaking the situation of hovering around 1 million vehicles for nearly 10 years, and becoming the world’s third-largest exporter after Japan and Germany. Obviously, China’s auto exports have already moved beyond the bottom of the “industry smile curve” and are entering a golden period of upward growth. The export scale is expected to enter a period of rapid growth.
Industry insiders have analyzed that if China’s export growth rate can maintain more than 50% in the second half of the year, China is expected to surpass Germany and become the world’s second-largest automobile exporter this year. In 2021, the three best-performing Chinese car companies in terms of export sales are SAIC, Chery, and Great Wall, all with good growth momentum. SAIC Group set a new overseas sales record of 697,000 vehicles, with a year-on-year growth rate of 78.9%, creating a new record for China’s auto exports; among them, SAIC’s passenger car exports alone reached 290,000 vehicles for the whole year, with a year-on-year growth rate of 68%, continuing to maintain the position of the top-selling single Chinese brand overseas sales for three consecutive years. Chery’s export volume ranked second with 269,000 vehicles, and Great Wall ranked third with 142,000 vehicles.
As the “leader” of Chinese car exports, SAIC Group has steadily dominated the NO.1 position in overseas sales among Chinese car companies for six consecutive years, and its main force, SAIC passenger cars, has also surged in exports and remains hot-selling overseas. What are the reasons for SAIC’s passenger cars to firmly occupy the “C position” of exports? And what are some sample implications that can be learned?
First of all, most car companies will choose to develop business from a regional market as a starting point to achieve global layout, showing the characteristics of breakthroughs one by one in a single point.
For example, emerging car companies represented by NIO and XPeng chose the Nordic countries that are more friendly to new energy vehicles as the starting point for globalization. These start-ups value operations and have good reputations, but they also have natural disadvantages. Since the scale of the company is not large enough, resources are difficult to distribute overseas. Taking NIO’s Norway strategy as an example, the twelve-character policy of “thorough preparation, patience, and long-term planning” can explain some issues. As NIO founder Li Bin said, “Now entering the global market, we are a seed. Don’t hope that this seed can grow into a towering tree and bear fruit immediately.”
In contrast, SAIC passenger cars have a very broad global coverage and multiple points of sales. From the beginning, SAIC passenger cars aimed to conquer the global market, which is also a new breakthrough and new path in its transformation road.As the main force of SAIC’s self-owned brand going global, products of SAIC Passenger Vehicles have entered more than 80 countries and regions, boosting SAIC’s formation of six “50,000-unit” regional markets with different cultures in Europe, Australia and New Zealand, America, the Middle East, Southeast Asia and South Asia. It is particularly worth mentioning that the MG brand has performed very well in mature markets in Europe and is expected to vigorously promote the European market to become the first “100,000-unit” overseas market for SAIC.
Secondly, seizing the demand for electrification in overseas markets, SAIC Passenger Vehicles is making efforts to tap into the new energy market.
In the 11 main automotive consumption markets in Europe, SAIC Passenger Vehicles’ MG brand sold 33,000 new energy vehicles in 2021, ranking first among Chinese brands and surpassing Jeep and Porsche, etc.
At the same time, the latest global sales data in the first quarter showed that MG, a brand under SAIC Passenger Vehicles, has made it into the TOP10 list of single-brand sales in 18 countries including Australia, New Zealand, Saudi Arabia and Qatar. In addition, according to the European Automobile Association’s Top 60 European car sales list for Q1 2022, MG’s sales under SAIC Passenger Vehicles nearly tripled compared to the same period last year, taking 0.76% of the market share, surpassing international brands such as Land Rover and Honda, and ranking sixth in the growth list, achieving the best record of Chinese car companies in the European market.
In high-level markets such as Europe and Australia, the MG brand has once again set multiple records in April. In the European market, it achieved a monthly sales record of 4,606 units, and the brand ranked in the top ten of new energy sub-markets in multiple countries such as the UK, Sweden and Denmark. In the Australian and New Zealand market, it set a monthly sales record of 5,102 units and became the only Chinese car brand to be ranked in the top ten of the country’s sales chart.
In May, after experiencing more than two months of the epidemic’s impact, SAIC Passenger Vehicles exported 45,000 units with a year-on-year growth of 165.6%, setting a new record for the same period, and continued to be the champion of China’s overseas sales for a single brand for the third consecutive year with an absolute advantage. It is becoming one of the few truly global multinational automakers.
As a company headquartered in Shanghai, after experiencing the impact of the epidemic for more than two months, SAIC Passenger Vehicles’ outstanding performance in overseas markets proves the resilience and endogenous force of its resumption of work and production and industrial chain layout.
This is a very hard-earned achievement.
The Ballast Stone of the “Great Navigation” Era
As we all know, automobile manufacturing is the pearl on the crown of modern industry. For automakers, automobile manufacturing is more like planting a tree, and solid technical strength and an effective support formed by a sound industrial chain layout are the roots, which need to grow deep before the leaves can flourish.# SAIC Passenger Cars Expand Rapidly and Fully in Europe, Backed by Consistent Pursuit of Global Quality in Quality, Safety, Technology, and Environment
Recently, SAIC announced its “Seven Major Technology Platforms”, which provides strong technical support for the innovative development of SAIC Passenger Cars. The seven platforms include: “SAIC Nebula” Pure Electric Exclusive System Platform, “SAIC Zhufeng” Electro-mechanical Integrated Architecture, “SAIC Xinghe” Hydrogen Energy Vehicle Architecture, as well as four key system technology platforms: “Bluecore” Powertrain System, Platform-based “Magotan” Battery System, “Green Core” Electric Drive System, and “Galaxy” Full-stack Intelligent Vehicle Solution.
Based on the seven major technology platforms, SAIC Passenger Cars has once again made progress this year. With the SAIC Zhufeng Super Architecture as the basis, the all-new third-generation Roewe RX5 was launched, destined to continue the glory of the “Internet Car” among millions of global Internet car owners. On the other hand, as a global car, the MG MULAN has emerged on the market based on the SAIC Nebula Pure Electric Exclusive System Platform, becoming the new starting point for SAIC Passenger Cars’ efforts to break into the global market. Therefore, Roewe and MG present a clearer development trend.
On June 11th, the blind pre-order price of the all-new third-generation Roewe RX5/Plug-in Hybrid model eRX5 was announced, and the order broke 10,000 in the first hour of the pre-order opening, with orders exceeding 20,000 in 10 days. Six years ago, Roewe RX5 opened a new era of intelligent cars in China with the title of “the world’s first Internet car”, and its series models gained the trust of over one million consumers in different market segments. Today, the all-new third-generation Roewe RX5 makes progress again, inherits the classics, recreates the exemplary, and presents its strength with “two major innovations and three major advancements” to meet users’ constantly evolving needs.
On June 13th, MG MULAN was officially released with its technical highlights, which, in addition to being based on the SAIC Nebula Pure Electric Exclusive System Platform, also includes the latest CTP technology applied to the Magotan battery. In 2022, SAIC Passenger Cars will continue to break into the European market, which is also based on confidence and determination in the market of MG MULAN on the continent of Europe.Up to now, SAIC has established 3 R&D innovation centers in London, Silicon Valley, and Tel Aviv overseas; 4 production bases and KD factories in Thailand, Indonesia, India, and Pakistan; and over 100 production and R&D bases overseas for its subsidiary, Huayu Automotive Systems; PT SGMW Motors Indonesia, SAIC’s multinational financial company, provides auto finance loans and insurance services; and Anji Logistics has successfully established 6 international routes covering Southeast Asia, Mexico, South America West, and Europe, covering over 100 countries overseas.
Thanks to these anchors, SAIC Passenger Vehicle has the support of global resources including global innovation, global R&D, global production, and global services, to meet the grand and magnificent globalization “era of great sailing”.
The password to open the door of globalization
Globalization is a complex system project and a long-term away game. Some even describe it as a “Shu Road where the Yellow Crane won’t fly and monkeys worry about climbing”.
Former UN Secretary-General Kofi Annan once told Baoshan Automobile CEO Li Chunrong, “The world is very complicated, but 95% of the problems are issues between people.” If there is no systematic solution, it is difficult to move towards a multinational enterprise.
Indeed, markets, consumer demands, geographical environments, business environments, language and culture in different countries have huge differences. It not only involves the bare commercial competition but also complex political environments and different cultural ideologies. These issues, which are difficult to straighten out with commercial logic, will repeatedly question the decision-making wisdom of Chinese automakers.
Therefore, understanding local values, thinking about problems from the perspective of locals, solving problems in a local way, and then persisting in implementing a “long-termism” strategy are probably the only correct password to open the door of globalization. This method has been repeatedly proven successful in the globalization process of Japanese automakers. For example, in the Southeast Asian market, Japanese cars never followed the “copy and paste” approach but developed specific product demands based on the consumption habits of different countries’ markets, enjoying a market share of up to 90%.
In different regional markets overseas, SAIC Passenger Vehicle’s product landing is based on location-adjusted differentiation development strategies. According to different countries’ and regions’ vehicle preferences and demands, product customization is implemented, and technical advantages are turned into product advantages to meet the differentiated needs of different market users. In developed markets such as the UK, the Netherlands, and Norway, SAIC Passenger Vehicle takes advantage of new energy vehicles, such as ZS EV, eHS, and MG5 Electric, to enter the European market. In emerging markets, it focuses on exploring differentiated intelligent networked technologies. With precise positioning, SAIC Passenger Vehicle’s products have been well received by consumers in markets such as the UK, the Netherlands, Thailand, and India.In fact, many Chinese automobile companies choose to open up globalization in Southeast Asia and other markets because they are wary of the strict admission standards in mature markets such as Europe. For example, higher strength frontal collision and pedestrian protection, as well as side pillar collision tests that do not exist in China. In addition, Europe has also developed strict E-MARK certification for noise and waste pollution issues. Only after the vehicle obtains relevant certificates issued by the national traffic department in Europe can it be sold in the European market, in order to ensure the safety and environmental requirements of driving.
It is worth mentioning that in terms of product quality and reliability, SAIC passenger cars’ models, relying on the leading technology in the ” new four modernizations” field, almost all meet the strict “European standards” in the world’s automobile manufacturing system, such as REACH and E-MARK. In terms of safety, which is particularly valued by users, it has also received the European ENCAP and Australian ANCAP five-star safety certification, achieving the recognized “double five-star” quality worldwide.
As for the MG MULAN, which was designed from the beginning to be a “global car,” it was developed according to the strictest European standards such as REACH and E-MARK in the world’s automobile manufacturing system. It is the first Chinese automobile industry’s global car in the true sense.
With the introduction of the world’s highest standards, SAIC passenger cars will use the MG MULAN to open a new chapter in the globalization of the Chinese automobile industry by possessing multiple global qualities such as global aesthetics, global safety, global environmental protection, and global performance.
Conclusion
According to the “2021 Made in China Development Index Report,” China’s development index for manufacturing as a strong country in 2020 was 116.02, which still lags behind industrial powers such as the United States and Germany.
As the wave of transformation and upgrading of global manufacturing industry intensifies, strategic concepts such as “German Industry 4.0,” “American Industry Internet,” and “China Manufacturing 2025” all remind us of the importance of occupying advantages in the new round of industrial competition.
For China, automobile manufacturing companies play a pivotal role in this round of strategic competition. If Chinese companies want to become world-class enterprises that lead the global value chain and take on the mission of building a strong brand nation, they must “go out” and develop internationally.
This is the way out for China’s automobile industry. Therefore, Chinese automobile companies must learn from excellent companies that have been struggling in overseas markets for many years, have gradually gained brand premium, and even obtained some pricing power in some overseas markets, and started to move towards the high-value-added sector to the right of the smile curve. Among these excellent companies, Huawei and DJI are the most successful examples.With the support of technological power, Huawei’s journey to go global covers a set of logic that includes a global perspective, global layout, and local operation. Its process of globalization is worth pondering and learning for Chinese enterprises. According to Dell’Oro Group’s data, Huawei ranked first with a 28.7% market share in the global communication equipment market in 2021, increasing 7% compared to the previous year.
From the very beginning, DJI, which aimed to become an international enterprise, has taken a different path to go global. With first-class technology, excellent products, and a profound understanding of overseas markets, DJI gained recognition in Europe and the US before returning to the “Chinese” market. Nowadays, it has taken a leading position in multiple fields such as drones, handheld image systems, and robotics education, not only redefining the connotation of “Made in China” but also providing new perspectives for Chinese enterprises to go global.
SAIC Motor Corporation Limited, a typical case of the automotive industry going global, is a sample that cannot be bypassed when studying the globalization of Chinese car companies. In the past decade, it has adhered to the global development strategy and fully utilized its strong system and global supply chain advantages, rapidly connecting industrial chain resources around the world, and deeply cultivating the local market. With its unique technological advantages, it creates differentiated products and services to meet the needs of users at home and abroad.
To a large extent, SAIC Motor, as the main force and leader in the Chinese car brand’s globalization strategy, is worth discussing and learning from in the industry’s process of globalization.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.