Author | Zhu Shiyun

On September 13th, at Shanghai Haitong Port, tens of thousands of MG MULAN slowly drove onto the roll-on/roll-off ship and will arrive in Europe in 30 days, to be delivered to local consumers. “Going Out” for twenty years, Chinese car companies have begun to make the fourth level leap to become a multinational car company.

Positioned as China’s first global car in the automotive industry, the MG MULAN was simultaneously launched in 20 major European countries on the same day as its shipment. The overseas model is named MG4 ELECTRIC. The post-subsidy price range in China is from CNY 129,800 to CNY 1,868,000, and the starting price in Germany is €31,990, equivalent to more than CNY 220,000.

The global sales target for the MG MULAN in 2023 is 150,000 units, and the cumulative global sales target for the MG MULAN in 2025 is expected to reach 500,000 units.

Chinese car companies have been going abroad for 20 years. Does the positioning of MG MULAN as “China’s first global car in the automotive industry” live up to its name? What kind of transformation has happened to the “selling cars” of Chinese car companies when MULAN goes to Europe? Most importantly, how will Chinese car companies cross the threshold to become a global car company in the context of China’s four modernizations?

From Santana to MULAN, how far are Chinese cars from European standards?

“MG MULAN is the latest product of SAIC’s ‘Starnova’ pure electric exclusive systematic platform, which will be ‘globally launched’ in more than 80 countries across 6 continents in 2023. It is the first truly ‘global car’ in China’s automotive industry”, said Wang Xiaoqiu, President of SAIC Group.

As an international traded product, the prerequisite for marketing in more than 80 countries is full compliance with the automotive regulations and standards of each country.

At present, there are dozens of technical regulations and standard systems for automotive in the world, but the true “discourse power” is dominated by the three major systems in Europe, the United States and Japan. Japan’s automotive technical regulations are also converging towards European standards.

Being able to adapt to European standards means being able to adapt to more global automotive markets, and more importantly, it means that Chinese car companies represented by SAIC have the technical and manufacturing capabilities to meet the most advanced and stringent automotive legal standards in the world.

“36 years for the most stringent European standards in the world”, SAIC and China’s automotive industry have invested in achieving this goal.

There is such a story in “Cheji” by Li Anding, a senior reporter and former editor of Xinhua News Agency’s Economic News Department.

In 1986, Shanghai Volkswagen had only a localization rate of 2.7% after being established for more than two years. Only the wheels, radio, and antenna of a Shanghai Santana were domestically produced. Meanwhile, the media extensively reported that Beijing Jeep and Guangzhou Peugeot had a surging localization rate in almost the same period.According to the contract requirements, the localization of the Santana’s parts had to be certified by Volkswagen in Germany. But how could the first batch of components suppliers in Shanghai Volkswagen, most of which were small factories in alleys, meet the Volkswagen standard within two years?

Nowadays, China’s auto industry and consumers who are familiar with the importance of “enduring loneliness for 20 years” and “positive research and development” can certainly understand this gap clearly.

However, at that time, there was a voice saying that “Chinese people have no say in joint ventures,” “power is left behind,” and even the accusation of “foreign compradors” was endless.

Even some comments believed that Germans deliberately constrained us and forced us to always buy Volkswagen’s scattered parts and assemble them by ourselves.

Some people also had the view that “the Volkswagen standard is unreachable for most Chinese parts suppliers. The Santana sold in China can be more flexible in terms of quality, and the standard doesn’t have to be so high.”

But the “doers” did not think so.

“Doing sedans, we are still ‘primary school students,’ and we need to introduce advanced contemporary technology and learn by doing. The original intention of establishing a joint venture is to strive hard to force out a world-recognized high standard,” said Rao Bin, the former Deputy Minister of the First Ministry of Machinery Industry (later merged and integrated into the Ministry of Industry and Information Technology), who talked to Li Anding many times.

Wang Rongjun, the second general manager of Shanghai Volkswagen at that time, was more direct, “If we don’t achieve international standards for localization, why bother to introduce Santana? Our old ‘Shanghai’ has always been completely localized. The country only approved the importation of 89,000 Santana scattered parts for assembly, and after the domestic parts were assembled, production could not keep up with demand, and the Germans had to pack up and leave. They were as anxious about localization as we were.”

After many twists and turns, “Santana parts localization must adhere to Volkswagen’s standards, and it must be 100% qualified. We won’t accept even a 0.1% reduction.” became the final orientation of the Santana localization project.

Starting from the localization project of Santana’s parts, Shanghai Volkswagen and SAIC Group incubated the ability to manufacture passenger cars and a supply system for Chinese auto parts with “world-recognized high standards” and “international-level localization.”

This laid the foundation for high-end luxury brands such as BBA to be produced in China, and even for “cabbage prices” of 200,000 yuan to be sold domestically. It also paved the way for the rise of domestic car brands that “surpass cars costing millions or even five million yuan” today.

MG MULAN, China’s technology export

36 years later, based on European automotive standards and market demand, SAIC MG MULAN began to export China’s automotive manufacturing and electric, intelligent technology to Europe.# MG MULAN: A Global Car That Meets International Safety Standards

MG MULAN is aimed at developing the five-star safety standard of the international mainstream safety evaluation systems in Europe, North America, South America, Oceania and Asia. To comply with the European five-star safety standard EURO-NCAP, MG MULAN uses flat-pushing anti-collision structure design and CPM supercapacitor design, while meeting the highest requirements for REACH environmental protection and E-MARK certification among the world’s automobile manufacturing systems in Europe.

However, meeting the highest international standards for vehicles is just the first step towards becoming a global car. The ability to adjust and fine-tune vehicle performance characteristics based on different consumer preferences in different global markets tests the accumulation of the core Know-How parameters of the company’s automotive credentials, reflecting the level of SAIC’s 40-year car manufacturing ability.

In Europe, MG’s global car interior design is simpler and its chassis tuning is more robust than in China. Some European consumers have a habit of “rural racing,” which improves the stability of the product’s chassis. In the hot weather of the Middle East, MG strengthens the air conditioning to ensure quick cooling. In mountainous regions such as Chile, vehicle climbing ability is improved by 20%.

It is worth noting that in China’s more dominant and advanced fields of electric and intelligent technology, Chinese automakers represented by SAIC have begun to export Chinese technological capabilities overseas.

In terms of electrification, MG MULAN is built on SAIC’s Yunyun pure electric exclusive system platform, featuring “Zero Fuel Technology” ultra-thin 110mm cubic batteries. The innovative LBS ultra-strong lying type battery core and advanced CTP battery pack technology line save cabin space while achieving a range of 520 km.

In terms of intelligence, the current overseas sales of SAIC’s vehicles have many intelligent cockpit capabilities such as voice intelligent assistants according to local market demands.

Currently, most domestic intelligent cockpit systems are based on secondary development of the Android system, which poses potential intellectual property and cost risks overseas. For example, in 2018, Google announced that it would charge hardware companies using its application (Android system) up to USD 40 per device in the European market.

Therefore, SAIC’s models sold overseas do not directly adopt “ready-made” systems such as Zebra, but rather are rewritten by its overseas car networking team to avoid potential risks and provide continuous iteration and upgrading of systems for local markets.

The Long-Termism of MULAN Operations

Creating a global car that meets global standards and meets the needs of global markets is just the first step for Chinese automakers to become a globalized multinational automaker.In the past 20 years, Chinese automakers’ overseas expansion strategy was mostly based on appointing overseas agents. They would find a local distributor in the market and entrust them with the entire vehicle sales operation. This approach lacked branding, market feedback, and continuous product updates, resulting in a one-time transaction.

However, with MG MULAN as a representative, Chinese automakers’ sales approach has undergone a complete transformation.

SAIC has established SAIC International sales subsidiaries in the 20 core automobile production and sales countries throughout Europe, such as the United Kingdom, the Netherlands, France, and Germany. It has implemented a strategy with Chinese leadership and foreign employees to carry out targeted brand building and sales service in accordance with different market characteristics.

For example, MULAN will adopt both traditional dealership models and direct sales models in France and Germany, respectively.

“In 2021, the dealership model in France broke through rather quickly, and we established 100 dealerships at once, and sales quickly increased. But the completely new direct sales model in Germany was very challenging and painful,” said Zhao Aimin, the secretary of the SAIC International Party Committee and deputy general manager, to the “Electric Vehicle Observer.”

“So, we must take a different approach from other competitors or traditional powerhouses to succeed in different markets,” he added.

Through a difficult ground promotion process, SAIC has already established over 100 direct sales outlets in Germany.

Establishing a brand’s self-owned sales network shows SAIC’s determination and willingness to stay and develop in the local market.

Like what Chinese consumers are used to, MULAN, which was launched in Europe this time, is just the first-generation model. In the German market, it offers two products: a 51 kWh/350 km of lithium iron phosphate-based battery and a 64 kWh/450 km of nickel-manganese-cobalt-based battery that could provide longer driving range.

In the future, a 77 kWh/500 km range model and a four-wheel-drive version with more than twice the power increase will be introduced.

Liu Xinyu, CEO of SAIC Mobility Europe, said that they will launch ten new models by the end of 2025. In 2023, to celebrate the centenary of the MG brand, they will also launch the MG Cyberster electric sports car.

This long-term vision is not only embodied in continuous product iteration, but also in entering the local market, integrating into the local society, and exporting SAIC and China’s brand and product concepts globally, thus realizing the globalization from products to brands.In France, SAIC MG sponsored the influential Lyon football team; the European after-sales team is able to solve specific issues such as inconsistent standards and failure to charge in the three-border area; the SAIC factory in India employs a large number of female workers to provide scarce job opportunities for local women, and has broken the curse of “Indian workers are difficult to manage” through full integration with local workers. Even in 2021, when the European epidemic was raging, SAIC exported Chinese epidemic prevention experience to the local team to ensure the team’s healthy and sustained operation.

“We communicate with customers in Europe as China SAIC, China manufacturing, and Chinese people’s face,” said Liu Xinyu to Electric Vehicle Observer. “When you communicate sincerely, you will find that the local market and customers can accept our products, services, and brands.”

From China SAIC to SAIC

In the current era when the Chinese automobile industry is relatively perfect and mature, many Chinese auto companies have the ability to benchmark global standards for global models or delve into local distribution models. The Lynk & Co 01, Chery Cowin, and Great Wall Cannon and many other products are also developed and marketed to multiple countries according to global standards. Among them, Lynk & Co has opened brand experience stores in the Netherlands, Sweden, Belgium and other places.

But why is SAIC the first to achieve a climate overseas sales cumulative breakthrough of 3 million vehicles, forming six “50,000 units” regional markets in Europe, Australia and New Zealand, the Americas, the Middle East, South Asia and ASEAN, and achieving ” For every three Chinese cars sold overseas, one is made by SAIC”, and MG has won the “Chinese single brand overseas sales championship” for three consecutive years.

The reason behind SAIC’s leapfrog development overseas is not the success of one product or strategy, but the complete layout of the global supply chain covering R&D, production and manufacturing, and parts industry from 2015 to 2022.

This “systematic, planned, and systematic” international operating system has become the foundation for SAIC’s systematic and long-term operation in major mainstream markets around the world, promoting SAIC’s transformation from selling products to the overall output of the Chinese automobile industry system.

Currently, SAIC has established an automotive industry chain facing the global market, which integrates R&D, marketing, logistics, parts, manufacturing, finance, and used cars. It has three major R&D innovation centers in Silicon Valley, London, and Tel Aviv overseas, and three major design centers in London, Munich, and Tokyo. It has four production bases and KD factories in Thailand, Indonesia, India, and Pakistan, more than 100 parts production and R&D bases, and more than 1800 marketing service outlets, and has opened 7 self-operated international routes including Southeast Asia, Mexico, South America West, Europe and so on.In the face of fierce competition and change in the global automotive industry in the field of electrification and intelligence, SAIC Innovation and Research Center was established in March of this year to support SAIC’s seven major technological platforms, including three vehicle technology platforms (“SAIC Nebula” pure electric exclusive system platform, “SAIC Zhufeng” mechatronics integration architecture, “SAIC Xinghe” hydrogen energy exclusive architecture) and four major key system technology platforms (“Blue Core” powertrain system, platform “Magic Cube” battery system, “Green Core” electric drive system, and “Galaxy” full-stack intelligent vehicle solution).

During the 14th Five-Year Plan period, SAIC will invest 300 billion yuan in innovation areas such as intelligent electrification to continuously strengthen its technical defense. This will enable SAIC to stand shoulder to shoulder with Volkswagen, Toyota, Mercedes-Benz, and BMW, becoming a multinational automotive company, and is also the future that many Chinese car companies are striving to achieve.

The Chinese automotive industry, represented by SAIC, is also taking the opportunity of transformation through electrification and intelligence to complete the transformation from a Chinese enterprise to a multinational car company.

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.