How do Chinese Automobile Enterprises survive in the Changing Era?


At present, China is pushing the transition and upgrading strategy made core in the “Made in China 2025”plan. In the “Development and Planning Suggestions of the Automobile Industry” section put forward by China Automotive Industry Association in the 13th Five-Year Plan, developing intelligent, internet-connect car technology has become a development goal of China’s automobile industry.

On the afternoon of June 6, dozens of industry experts and executives gathered at the seventh Global Automotive Forum to conduct a workshop about the strategy that Chinese enterprises should employ to facilitate the rapid development of NEVs and intelligent vehicles.

The automobile industry is one of ten key industries identified in the “Made in China 2025” plan. Intelligent vehicle technology plays a crucial role in the plan with “integration of informationization and industrialization” representing the direction of automobile industry transition and improvement.

From a broad industry perspective, new energy vehicles (NEV), featuring electric, intelligent and lightweight designs, are in rapid development. NEVs also represent a main focus of the global automobile industry; China will continue to increase its investment in related science and research. NEV technologies represent strategic innovation for the transition in and upgrading of the automobile industry and are a crucial measure for enterprises to improve their global competitiveness.

Liu Hui, Vice President of the Technology Center at Jianghuai Automotive Company (JAC), said that JAC will adhere to an innovation-based strategy and master core technologies to keep its advantage in pure electric vehicles. JAC will also develop plug-in hybrids with the strategic target of increasing the production and sale of NEVs to 30 percent of total volume.

With encouragement and promotion through relevant NEV policies and increasing standards of the required supporting infrastructure, the NEV market has significant potential for rapid development. Liu noted that JAC will fully develop its NEV platform resources and technical reserves, particularly in the pure-electric segment by taking advantage of the “Focus on the Market Segments plus Integration of Dominant Resources” strategy.

JAC will continue to develop its vertical-integrated model in core components, such as battery, motor and electronic control, making the transition from the technical control to resource control. In the future, the company will further increase its investment and resource support in NEV field and is expected to expand its market advantage.

However, Dang Zengjun, the manager of the Zhong Yuan Nei Pei Company, thought that although NEVs are an irresistible trend in industry development, the conventional fuel engine will not lose its place in the market.

“At the end of last year, I went to the headquarters in Beijing, and then visited America during the Spring Festival. I found that the fuel engine still has its market. Now, our cooperative projects with domestic companies will last until 2025.”Dang further expressed that the path of development for traditional fuel vehicles revolves around the technological innovation and has to seek new growth points. “We have made the strategic transition and are planning in automobile electrics and intelligent manufacturing. We also are developing intelligent driving, which provides a sound foundation for healthy and sustainable enterprise development.”

Dang conceded that there is little possibility for significant increase in conventional fuel engine sales, making the need for strategic transition urgent.

Liu Yanchang, another panelist, highlighted that regarding vehicle intelligence, each domestic company has their own strategy. “But I think except for the promotion of technology to sustain the present trend, we have another choice, that is to promote our high-quality products to the global market.”

Liu cited his first cooperation, in 2009, with a family firm that produced chrome-plated parts in Ningbo, Jiangsu province, as example. The firm is still rather small in scale but has with good strategic vision, according to Liu. “From 2009 to 2014, the firm supplied 60 percent of Renault’s demand, with over 25 projects. Sales volume increased from zero to almost 100 million RMB,” Liu said. The example highlights that although a large gap in technology exists between the domestic conventional and intelligent automobile industry and its global advanced counterparts, the opportunity for exporting competitive products to foreign markets remains, and has allowed enterprises to survive despite the pressure of rapid development of NEVs and intelligent vehicles.

-Published on page#21, June-2016 edition of MOBILE WORLD Magazine