New Strategies for “Going Out”


Under the auspices of Zhao Yang, vice chairman of the Automotive Committee of the China Council for the Promotion of International Trade, a new status quo and new expectations of Chinese auto companies had attracted countless audiences. The attended guests include Jia Yaquan, Deputy General Manager of Chery Automobile Co., Ltd. and General Manager of Chery Marketing Co., Ltd., Xia Hongbo, Vice President of Phoenix Satellite Television Co., Ltd., Chen Wei, General Manager and Executive Director of Sinotrans Anhui Co., Ltd., Wang Shuo, Director of Taxation and Business Consulting in Deloitte, China and Liu Xiaozhi, founder & CEO of ASL Automobile Science and Technology (Shanghai) Co., Ltd.

The Key to Building “Going Out” Brands

Jia Yaquan, Deputy General Manager of Chery Automobile Co., Ltd., and General Manager of Chery Marketing Co., Ltd. “Three-Step Strategy”

After decades of development, China’s auto brands have made remarkable progress and achievements, and they fortunately face a new development opportunity. It is an unavoidable trend to move toward the global market to create international brands. Brand is not only a company’s unique core assets and core competitiveness, but also an important embodiment of national competitiveness and international status. If Chinese auto companies want to become world-class companies that lead the global value chain and shoulder the mission of building a strong brand, they must go out, and Chery Automobile has been the leader in export sales for consecutive years. As for that, Jia Yaquan stated that the development of China’s automobile economy has slowed down at present. In this situation, brand internationalization is imperative. Chery Automobile’s exports have ranked first in auto industry for 15 years. Our “going out” strategy can be divided into three steps. The first step is to make products go out based on the form of trade; the second step is to adapt to the local environment. Localized operation and management can make a foundation for the brand, support local development, and integrate with local policy guidance; the third step is focusing on the brand’s “going out” strategy in 2020. Taking the events in 2017 as an example, Chery’s export sales increased by 26 percent year-on-year, and gross profit increased by 34 percent. All of these figures have improved the competitiveness of Chery’s products. In addition to product quality, sales services are also crucial. Now, Chery Automobile has 10 production bases abroad, five overseas subsidiaries and more than 1,500 sales service outlets to protect the demands of pre-sales, on-sales, after-sales services.

Imbalanced Product Power and Brand Power

Xia Hongbo,

Vice President of Phoenix Satellite Television Co., Ltd.

“At present, the business globalization of Chinese state-owned enterprises is going well, but the brand globalization is rather weak.” Xia Hongbo, Vice President of Phoenix Satellite Television Co. Ltd. pointed out the pain point for Chinese brands in the first place. He cited data from Fortune: among the world’s top 500, China had 110 in 2016. While there are more and more Chinese companies in the top 500, no Chinese company appears in the world top 50 most-admired companies list. Because the world’s top 500 is ranked by sales revenue, and it is an indicator of scale; while the most-admired company in the world refers to brand power, it’s a selection of reputation. How can we solve this problem? Based on the global brand project of Phoenix Satellite TV, Xia put forward the following points:

  1. Strategic service The Centre for Brand Analysis of Phoenix TV in China and worldwide is equivalent to a think tank, which can provide enterprises with strategic services of global brands.
  2. Offering a Global Brand class. For example; when we are in the face of western media, how to think, how to express, in what language, and with what kind of performance etc., are very specific and practical for us.
  3. Providing services of global content for the enterprises Phoenix Satellite TV owns internationalized production teams around the world, which can provide multilingual content creation and production services for enterprises going abroad.
  4. Global communication services

We should adopt different communication strategies for different regional markets and provide different channels of media communication for a more effective communication service.

At the end, Xia said, “We should tell the brand story of Chinese companies in the world language.”

Brand globalization

Liu Xiaozhi, Founder and CEO of ASL Automobile Science and Technology (Shanghai) Co. Ltd.

If Phoenix TV has explained how to spread and shape global brands from the perspective of media globalization, then Ms. Liu demonstrated the importance of global brands with data. In the first place, China produced more than 28 million cars in 2017, most of them sold domestically. In Japan, 18.72 million cars were made, but only 4.87 million were consumed in the country, and the rest, of course, were sold worldwide. The U.S. produced 17million cars in 2017, but sold just about 6million at home. Korean cars are in the similar situation, with just over a million sold in their own country. Germany made 15 million cars, but only 2 million are consumed by its people. So how on earth can we realize globalization?

Technology remains the foundation for a bigger and stronger company. Many Chinese enterprises took the path of merger and acquisition, through which they can achieve technology purchasing and market purchasing. Although China’s automobile industry is the largest in the world, our most urgent task is to strengthen it. The experience of the mainstream automobile enterprises tells us that globalization is the only way for the automobile industry to grow from strength to strength, and that personnel training and team management are our top priority.

Chen Wei,

General Manager and Executive Director of Sinotrans Anhui Co. Ltd., believes to improve the efficiency of Sinotrans and reduce the logistics cost:

The efficiency and Cost Control of “Going Out”

Under the big background of going out, the logistics is always an important part and connector of “Going out”. What role does overseas logistics play in the end-to-end lines and in the process from the products production to export? Chen Wei gave this answer: there will be many problems before no cooperation between Sinotrans and customers, such as severe fluctuation of the sea freight, unstable shipping spaces and supply of empty containers, long time on customs clearance, high overdue storage rate, the capacity shortage of Inland transport, and unstable and too long shipping time, etc. However, after Sinotrans and customers establish cooperation, the whole situation has changed dramatically, such as the stable shipping price, 30 percent decrease of freight, the sufficient shipping spaces and empty containers and very fast customs clearance in only two days.

Put Emphasis on Tax Costs

Wang Shuo, Director of Tax and Business Consultation in Deloitte China.

At present, Chinese enterprises are eager to export. And it tends to produce tax problem after the operation based on the aggressive strategy. Wang Shuo firstly said: one important thing for overseas investment is tax costs.

Suppose that a Chinese company set up a holding company in a foreign country, and then invest on it. Income tax rate of the destination country is 30 percent, the dividend income tax is 26.875 percent, and the country shares no bilateral agreements with China. In this case, if the company makes 100 Yuan in the destination country, what is the net profit in China? About 56 Yuan. But if the company set a holding company in a third country which shares common tax agreements with both, China and the destination country and levies no income tax for overseas revenues, what’s the result? In this case, if the company makes 100 Yuan before tax in the destination country, 63 Yuan will flow back to China. And here is another solution: the same 100 Yuan can be invested out as dividend, and it can also be lent to overseas companies. For example, if Chinese companies build factories in Vietnam, an input of 100 Yuan in the form of registered capital can also be lent it to the company, and there is not much difference to the Chinese company, but in this way it can receive interests, so it has a difference on net profit.

-Published on pages#22 to 24 June-2018 edition of MOBILE WORLD Magazine