The kick-off ceremony of the 2023 China-ASEAN International Consumer Season and the smart Southeast Asian market press conference took place, where smart and Proton Cars officially signed a memorandum of deepening cooperation. During the event, we engaged in discussions with Tong Xiangbei, the global CEO of the smart brand, and Zhang Mingxia, the Vice President of Sales, Marketing and After-service, on smart’s strategies in Southeast Asia.
Here are the key highlights from our conversation with Tong Xiangbei and Zhang Mingxia, edited while maintaining its original context.
Q: Why has smart chosen to upgrade its strategic position in the Southeast Asian market?
A: Smart’s fundamental strategy is “Dual-core in Central and Eastern Europe, global layout”. As part of the global blueprint, smart officially evolves the Southeast Asian market into the first step of the “Southward expansion, West venture”, with Malaysia serving as the beachhead. The new energy sector in the Southeast Asia market is at an embryonic stage. For instance, the annual new energy vehicle sales in Malaysia hover around 3,000 units, indicating significant market potential.
There are challenges faced by smart such as the competitive oil prices in Malaysia and inadequate infrastructure for charging stations, which would hinder the explosion of the entire market. Proton Cars recorded a sales volume of 140,000 units last year in Malaysia, suggesting the sizable gasoline vehicles market ready for transition. Amidst the global wave of new energy, the smart team sees more opportunities than challenges in Southeast Asia.
Entering Malaysia, smart has certain advantages as part of China’s new energy trend, coupled with brand heritage and innovative business models; it can offer competitive products. Importantly, as Proton Cars is transitioning from gasoline vehicles, smart will become the core brand it builds in the new energy sector. Hence, in the Malaysian market, smart will receive substantial resources, allowing both parties to integrate resources for mutual benefaction.
Q: How does smart adopt localization in research and development and layout in Malaysia?
A: Smart’s globalization strategy includes manufacturing global cars, which are customized per market needs. Smart and Proton Cars have implemented a series of measures in Malaysia’s localization, including but not limited to software design and ecosystem development. This implements a one-stop E-Commerce APP design for bank loan payments and explores business models through digital businesses. With Proton Cars’ understanding of the local market, the adjustments can meet local consumer needs better.
Besides, smart operates under global standards, with Proton Cars being smart’s general distributor. In terms of localization in Southeast Asia, smart will collaborate with Proton Cars to establish and implement characteristic operations. Precisely, this comprises current pre-sales in the Malaysian market, early test drive activities, and the brand’s 25th anniversary celebrations.
Furthermore, the experiences accumulated from global markets, including German and Chinese markets, will empower the Malaysian market subsequently. In terms of operational model, smart uses Mercedes’ channels in Europe and independent stores in China, infusing more flexibility in smart’s operational model outside Central and Eastern Europe. The focus lies in whether the team can respond timely under the said model.Q: What is the significance of recent financing actions by Smart?
A: This round of strategic investment by Smart comes at a time when the brand itself is financially robust, boasting tens of billions in proprietary funds, and enjoys the banking sector’s faith. Therefore, Smart can draw upon its own capital and loans to roll out three models. Smart’s investment drive is a strategic gambit framed by the brand’s evolution.
Transitioning from the startup phase into rapid growth, Smart’s algorithm to brand expansion rests on widening its network of associates. For instance, Tianqi Lithium led the investment in Smart’s A round, enabling Smart to make strides across the supply chain spectrum. Tianqi Lithium, as the upstream player, aligns with Smart’s downstream role in the supply chain, resulting in a mutually beneficial arrangement.
Q: How will Smart counter pressure and challenges in competition this year?
A: Amid fierce challenges this year, Smart holds true to its pre-established rhythm. A state of full-speed operation will characterize Smart this year, which entails the introduction of new products, brand promotion, and channel distribution. Arguably, under the D2C model, Smart, with more than 40,000 delivered users, must excel in areas encompassing user operation and team evolution.
Looking forward, Smart will harness data through network openness and channel down-drilling for operational enablement, expedite operational feasibility, and work out a more user-friendly operational environment to advance conversion.
Q: Under global layout, how will Smart quickly respond to market flux?
A: In the first instance, Smart’s core executive team benefits from high efficiency in communication, ensuring prompt execution of routine decisions. Regarding team affairs, including R&D, supply chain, production, logistics, and downstream marketing, Smart established excellent business logic and normative procedures years ago that enable business iteration within the company’s internal system. Quick decision-making at the management level and talent enablement contribute significantly to Smart’s transition from 0 to 1.
In different countries, Smart encounters unique legal norms and customs. As a globally-oriented company, Smart firstly complies with global regulations and has set up a supporting framework, secondly, it is bolstered by a robust team ranging from top-level executives to operational staff, lastly, strong partnerships, such as with Malaysia’s Proton Motors, equip Smart with familiarization of Malaysian market at a faster rate.
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.