Dongfeng Tianlong On July 19, BAIC announced that it will establish a joint-venture automobile manufacturing company, BAW Rose Automotive Co., Ltd. with Russian AMS Group in Russia. The total investment of the joint venture company is approximately 176 million U.S. dollars, each of which holds 50% of the shares. The company plans to have an annual production capacity of 60,000 commercial vehicles. The products cover light trucks and heavy-duty trucks, all of which are under the brand name “BAW†in Russia. Sales. Opening Belt,Open Ended Timing Belt,Rubber Opening Belt Young Sunrising Machinery Co., Ltd. , http://www.86belts.com
Beiqi and Russia's AMS have established a joint venture company in Russia to produce commercial vehicles, which is capital output. Yutong has always insisted on the export mode based on technical output. The intention of Dongfeng and Turkey's Temsa Group is the transition from product output to technology output. Expanding the export method and deepening the overseas market is a trend and a necessity. Under the current situation and conditions, commercial vehicle companies must dig deep into the overseas market.
Since the beginning of this year, China's commercial vehicle companies have not been satisfied with the mere export of complete vehicles. The emergence of technology output and capital output has already begun. Does this mean that the change of China's commercial vehicle export mode is imperative?
The vehicle export advantages gradually lost
Although China’s overseas market has grown rapidly since 2011, it has even become one of the bright spots in the depressed auto market. However, in recent years, auto companies are still able to feel the increasingly serious export situation. Affected by the appreciation of the renminbi and rising production costs, export profits have been significantly squeezed.
In 2011, the debt crisis in Europe and the United States, as well as rising domestic prices and tightening fiscal policies, have caused commercial vehicle companies to feel pressure. The slow global economic recovery is also constantly reducing the profits of corporate exports.
Some media reports said that the appreciation of the renminbi will result in a relatively low profit, but the localization of a higher degree of loss of their own brand cars. The profit rate of most automotive export products in China has already fallen below 10%. If the renminbi continues to appreciate in the future, it will make it even more difficult for its own brand's already meagre profits to remain.
On the other hand, rising labor costs and the prices of raw materials such as steel have also reduced the cost advantage of commercial vehicle companies. The cost advantages of Chinese companies' exports have continued to exist in recent years or in more than 10 years. However, it is an indisputable fact that the overall vehicle export profits have been reduced. Enterprises should still make preparations in advance. “China National Electrical and Mechanical Products Import and Export Chamber of Commerce Automobile Subcommittee Deputy Secretary-General Yang Aiguo told reporters.
In addition, the automotive industry in the export target market continues to grow. Coupled with the unclear economic situation, some export target markets have built up trade barriers to protect their markets. “Pure vehicle exports will inevitably undergo homogenous competition at certain times. The increase in market barriers and rising costs will lead to a reduction in competitive advantages, and export of whole vehicles will become increasingly difficult,†said Li Guojun, assistant to general manager of Ankai International. .
"Now many exporting countries have many restrictions on the policy of vehicle import, such as complicated and strict certification and high tariffs, etc. There are even restrictions on the import of so-called SKD parts (big parts), and regulations stipulate enjoyment. Tax-rate product catalog.†Li Guoxi explained: “In the past, we could still play a handicap. There is almost nothing now. Including our country’s import of SKD parts. There is also a catalogue.†Overall, raising the threshold of vehicle imports is an export. The overall trend of the target country.
In addition, "because the vehicle export will have an impact on the local industry, it will also be more susceptible to boycotts from the target countries. Technical output and capital output will be able to avoid switch taxes, and even fewer will participate in local industry development. Encountered local restrictions." Yang Aiguo told reporters.
“The search for more export channels by domestic commercial vehicle enterprises is also forced. Technical output and capital output can make better use of local production to seek protection and favorable conditions for some export policy countries, avoid trade barriers such as switch tax and transportation. This is what Li Guofan said.
In addition, in the export market, in addition to competition between domestic companies, competitors from other countries have also begun to appear in recent years. At the same time, some countries in the export target market take the path of “market-for-technology†in order to develop the automobile industry in the early days of China, hoping that the introduction of foreign capital is also an opportunity for China’s commercial vehicle companies to further deepen their country of destination.
“The target market for exports also has the need to 'market-for-technology'. This is an active demand of the local market. Domestic commercial vehicle companies should seize opportunities.†Li Guozhen told reporters.
Chinese commercial vehicle companies have the strength to enter overseas
Following its initial 2004 BRIC study report, the Goldman Sachs World Economic Group issued a follow-up report. The report pointed out that the first is China, and India will be 10 years later. It will replace the United States as the world's largest auto market. This means that while domestic commercial vehicle companies are vigorously developing export markets, commercial vehicle companies in other countries are also eager to try. In the future competition in the export market, domestic enterprises still need to play against each other, but they cannot ignore the "outside enemies" that may grow up.
“Competitors of China’s commercial vehicle exports abroad are stepping up to catch up. It is necessary for competent companies to begin early deployment in a conditional target market,†said Yang Aiguo. After years of rapid development, many commercial vehicle companies in China have already had enough strength to go abroad for technical and capital output. At the same time, when investing in foreign markets, many years of joint venture experience with foreign brands can also be used for reference and use.
“One is that all companies have a certain basis; second, the countries that are entering are also developing countries.†Tan Xiuqing, an expert from China Automobile Association and the vice president of Shandong Heavy Industry Group Co., Ltd., analyzed: “Especially the foundation of commercial vehicles in China is relatively good. In developing countries, there are advantages. If you enter the developed countries such as Europe, America and Japan, the emission of the engine will put us in a blind frame."
“Although the Chinese enterprises’ share in the international market is still not large enough, the overall influence is not as good as that in Europe and the United States. However, the huge market has allowed our enterprises to accumulate strong strength in the country, and technology absorption and introduction are also much better than before. Domestic car companies have more energy and financial resources to go deeper into the international market," Yang Aiguo told reporters.
At the same time, more and more commercial vehicle manufacturers are participating in the export destination market, which is related to the increasing awareness of domestic brands and the increasing influence of Chinese commercial vehicle brands in the export target market. "Now China's commercial vehicle brands have achieved a certain degree of influence in some target markets with higher market share," said Yang Aiguo. For instance, Yutong Bus, which insists on technology export as the main export model, has already accounted for more than 90% of the Cuban passenger car transaction share. The CKD plant established in Cuba has pioneered the establishment of the CKD plant in the Chinese bus industry.
Li Guolu believes that deepening overseas markets is also seeking to increase the brand's international influence. The experience and brand effect accumulated by commercial vehicle enterprises in the domestic market can be promoted in overseas markets through the long-term planning of the company. “Ankai has always been advocating winning with a brand and winning with quality instead of winning with price. We have also instilled this concept when we communicate with overseas customers and distributors.†Li Guoxi added.
Industry insiders' view is "trend is inevitable"
"Since the output of simple products, we are working hard on technology output and capital output. This is the only way for Chinese cars to go global." Xu Heyi said that for the joint venture between Beijing Automotive and Russia's AMS. He believes that before the Chinese auto overseas exports more focus on simply getting more sales, and now the Chinese car is the pursuit of deepening the overseas market, seeking brand improvement. The positioning of overseas factories will gradually shift from simple assembly workshops to production bases, sales and brand distribution centers.
Li Guolu believes that the transition from the output of products to the export of technology and capital is "this road must be taken and is a way out. The precipitation of commercial vehicle technology in China is not enough. More is still concentrated on labor-intensive products. With low-level cooperation, it is difficult to deepen technical cooperation, but can only stay on a single model and product. "When it comes to technical output, China's autonomous auto manufacturing technology is still relatively limited. â€
Yang Aiguo believes: “This is a stage of development for exports, and it is also a short cut, and the timing is also very good.†At the same time, he also believes that China’s commercial vehicle exports are still in their infancy and they must achieve a strategic investment phase. A long way to go, but the transition to export mode has begun to take shape.
Yang Aiguo also believes that although export profits have decreased in recent years, they still have higher profits than the domestic market. "There must be some consideration for sales. Commercial vehicles have developed well in the domestic market in the past two years, and the demand in overseas markets is also very large." Li Guozhen affirmed this view: "Since the past two years, many manufacturers have begun to consider overseas target markets. Locally built plants, some high-profile announcements, some low-key operations, everyone is in the process of breaking the bottleneck of sales growth and a single export model.â€
"China's commercial vehicle companies are now and will come to set up factories abroad, technology exports, foreign acquisitions, are normal. Especially in the 'Twelfth Five-Year' period, the planning of all companies must have an international plan." Tan Xiuqing told reporters, "This is a trend, but also a kind of inevitable." In addition, Tan Xiuqing also believes that domestic commercial vehicle companies to seek more ways to export, but also the domestic market overcapacity, the future of excess production capacity to transfer part of the consideration of foreign markets. "This is a possible and inevitable channel."
However, overseas investment must not be blind, and it is necessary to understand the local environment. The analysis of the social and humanistic aspects of the target market is of the utmost importance. First, there is a need for society. Second, the society must be relatively stable, and laws and regulations must be relatively sound. Social stability is very important, social instability, laws and regulations are not perfect, and the threat and loss of personal and property security in the future will not be worth the candle. â€
After setting up factories overseas, management is the biggest problem. The operations of overseas factories need talents who understand both the local language and management and who also understand market operations. Such talent is extremely scarce. "Many companies have reflected this issue more than once at the meeting of the Motor Branch of the Electromechanical Chamber of Commerce. Many companies report that it is difficult to recruit suitable talent after overseas acquisitions or joint ventures.
January 22, 2019