Recently, policies to boost the automotive industry have been frequently introduced. On one hand, these policies focus on stimulating domestic demand and promoting automobile consumption. On the other hand, they emphasize enhancing the comprehensive strength of automakers and encouraging them to explore international markets. This year, China has surpassed Japan in automobile exports and become the world's largest automobile exporter. The rapid growth in new energy vehicle exports has had a significant promoting effect. From January to April, China exported 348,000 new energy vehicles, a year-on-year increase of 1.7 times. In the same period of 2022, this growth rate was also 92%. Has China's automobile export entered an 'era of gold'?
What competitive advantages does the transformation of manufacturing and intelligent industries bring to automakers? What data and indicators can intuitively reflect a car company's competitiveness? To break through the global sales channels and supply chain systems established by foreign automotive brands long ago, domestic automakers still face several pressures. What areas of effort are needed to enable Chinese automakers to hold the definition and pricing power of new energy vehicles? Yang Xiaocheng, Partner and Managing Director of Frost & Sullivan Greater China, was interviewed by Securities Daily to discuss the development of China's automotive industry.
Securities Daily
Securities Daily Reporter: With the trend of export recovery this year, products such as photovoltaics, lithium batteries, and new energy vehicles have performed particularly outstandingly. What are the reasons behind the 'new three items' driving this year's export growth? What competitive advantages does the transformation of manufacturing and intelligent industries bring to automakers?
Yang Xiaocheng
Partner and Managing Director of Frost & Sullivan Greater China Region
In the first quarter of 2023, China's exports of photovoltaic, lithium battery, and new energy vehicle products performed very strongly. The reasons for the outstanding performance of the 'New Three' products mainly include policies, technology, cost, international cooperation, and more. For example, in terms of policies, many countries and regions have taken active measures to promote sustainable development and emission reduction targets, providing broader markets and export opportunities for photovoltaic, lithium battery, and new energy vehicle products. In terms of technological leadership, China has developed a number of new energy enterprises in fields such as photovoltaics, lithium batteries, and new energy vehicles that are at the world's leading level in technical strength, such as LONGi, Zhonghuan, CATL, BYD, etc. Their leading photovoltaic and power battery technologies have already formed certain technical barriers in the global market. In terms of cost, with continuous technological progress in areas such as photovoltaics, lithium batteries, and new energy vehicles, and leveraging mature industrial chains and established economies of scale, the production costs of China's new energy products continue to decrease, making them more competitive in price and attracting more international market demand. In terms of international cooperation, Chinese new energy vehicle enterprises have developed rapidly, accumulating rich production experience and technical strength. Through active market expansion and international cooperation, Chinese enterprises have further expanded the scale and market share of their products exports. At the same time, Chinese enterprises are also continuously improving product quality and brand influence, making their products more competitive in the international market.
In addition, the transformation of manufacturing and intelligent industries has also brought certain competitive advantages to Chinese automakers. This includes introducing advanced automation and intelligent equipment to improve production efficiency and reduce costs; highlighting technological innovation and product differentiation, providing more competitive models to meet consumer needs; vigorously developing intelligent driving and connected functions to enhance interaction with consumers; actively expanding business models and value-added services, offering value-added functions such as connected vehicles, intelligent driving, and remote control.
Securities Daily Reporter: Behind the apparent data on China's automobile exports lies the related technology exports by Chinese automakers and the construction of overseas industrial chains. Chinese automakers are upgrading from simple goods export trade to output in terms of industrial chains and supply chains. What new requirements are these posing for Chinese automakers? Which data and indicators can intuitively reflect a company's competitiveness?
Chinese automakers are currently upgrading from simple goods export trade to output in the industrial chain and supply chain. To achieve a comprehensive upgrade and evolution, Chinese automakers need to enhance their capabilities in multiple aspects, including innovation, quality management, market insight, and global assistance. In terms of innovation, companies need to strengthen technology research and development and cultivate high-quality talents with foresight; in quality management, Chinese automakers need to focus on product quality management and production processes that meet international standards; in market insight, they should deeply understand the differences between domestic and international market demands and formulate targeted market entry strategies; in assistance, Chinese automakers should strengthen cooperation with suppliers and partners to promote efficient supply chain operations.
Some data and indicators that can reflect the competitiveness of automakers include not only past export volumes, but also the countries and regions from which they export, as well as the amount of exports. It is also necessary to comprehensively examine the sustainable competitiveness of automakers by analyzing multiple dimensions such as their technological innovation capabilities, quality management levels, market promotion strategies, diversified product lines, globalization strategies, pricing strategies, brand image, global R&D capabilities, and after-sales service systems.
Securities Daily Reporter: If domestic automakers want to break through the global sales channels and supply chain systems established by foreign automotive brands, what other pressures do they need to face? What areas of effort are required to enable Chinese automakers to hold the definition and pricing power of new energy vehicles?
Domestic automakers face many challenges when entering the global market. In addition to establishing global sales channels and supply chain systems, they also need to cope with pressures in technology, brand, manufacturing quality, and competitive environment. In terms of technology, internationally renowned automotive brands possess outstanding technical teams and leading R&D capabilities. Therefore, domestic automakers need to increase investment in technology research and development, improve their technical level and independent innovation capabilities, and continuously innovate and upgrade new energy vehicle technologies. Brand building is also crucial; domestic automakers need to create an influential and recognizable brand image, enhancing consumer awareness and trust through brand communication and market positioning. Manufacturing quality is a key factor in international competition; domestic automakers must continuously improve their manufacturing quality and cost control capabilities to ensure that products meet high international market standards and customer expectations. Finally, the international market competition is fierce, and internationally renowned automotive brands have strong brand influence and a wide customer base. Therefore, domestic automakers need to formulate effective market entry strategies and competitive strategies to enhance their competitiveness.
To enable Chinese automakers to grasp the definition and pricing power of new energy vehicles, efforts need to be made in multiple areas. Firstly, technological innovation is key. By increasing investment in research and development, improving technical levels and independent innovation capabilities, we can promote continuous progress and upgrading of new energy vehicle technology. Secondly, resource integration is necessary, especially the integration of industrial chain resources to enhance the controllability and competitiveness of the supply chain, especially in core components such as batteries and motors. In addition, brand building is also crucial. We should focus on creating and spreading brand images, establishing influential new energy vehicle brands, and increasing consumers' awareness and willingness to purchase Chinese brands. Finally, establishing partnerships is also key. By establishing close partnerships with international automakers, technology companies, energy companies, etc., we can jointly promote the development and innovation of new energy vehicles, strengthen industry cooperation, and jointly face global market competition challenges. Through efforts in these areas, Chinese automakers will be able to gain greater voice and market competitiveness in the field of new energy vehicles.
*This interview was published in 'Securities Daily', with reporter Guo Jichuan. The original title was: 'Boosting the Auto Industry with Frequent Policy Releases to Further Release Consumption Potential and Drive the Recovery of Related Industries'.
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