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Our reporter Fang Chao and Shi Yingjing reported from Kuala Lumpur and Shanghai

On both sides of the road from Suvarnabhumi Airport to downtown Bangkok, huge billboards of Chinese car brands such as MG, Nezha, Great Wall, and BYD are everywhere.

Similar to Thailand, Malaysia is another important automobile center in Southeast Asia. A reporter from China Business News recently visited the local area and found that the visibility of sales outlets of Chinese automobile brands such as Chery and Great Wall is also continuously improving. Walking on the streets of Kuala Lumpur, the occasional flash of OMODA 5 and Tiggo 8 Pro is "eye-catching".

Behind the rising “exposure rate”, sales of Chinese auto companies in many parts of Southeast Asia are also showing an upward trend.

In the first five months of this year, Chinese brands occupied 9 seats in the TOP10 pure electric vehicle sales in Thailand. During the same period, Chinese automobile brands also topped the electric vehicle sales list in Indonesia (hereinafter referred to as "Indonesia") and Singapore.

"In the past two years, more and more Chinese car brands have come to Malaysia," an investor in a Kuala Lumpur car 4S store told reporters.

In addition to the increase in the number of stores, Chinese automakers are also engaged in an unprecedented "competition" for overseas production capacity layout. Thailand, Malaysia, Indonesia and other countries have become important investment areas for Chinese automakers. According to a rough calculation by reporters, if calculated based on the maximum production plan, the overall production capacity of Chinese automakers in Southeast Asia can reach 1.48 million vehicles.

After the European Union, the United States and other places successively released information about increasing tariffs, Southeast Asia has become one of the favorite destinations for Chinese auto companies to go overseas, whether for active or passive considerations.

Wei Mei, senior vice president of Geely Holding Group and CEO of Geely International Holdings (Malaysia), told reporters, “Now the competition is fierce not only in China, but also due to various geopolitical factors, Europe and the United States have unfair economic policies towards China. If Chinese companies want to become global companies, they must continue to ‘go global’, and Malaysia has become our first choice.”

However, in Southeast Asia, where Japanese automakers have long held about 80% of the market share, many Chinese automakers have failed here many years ago. In the current situation of anti-globalization and rising trade protectionism, can Chinese automakers once again take the lead and collectively "go to Southeast Asia" to create a new world?

A huge market with a population of 600 million

"About 20 years ago, I came to Malaysia to develop the Malaysian automobile market," Li Shufu, chairman of Geely Holding Group, recently recalled to media reporters including China Business News.

However, Li Shufu, who had "longed longed for" the Malaysian market, was subsequently "frustrated".

On May 30, 2005, at the "Signing Ceremony of China-Malaysia Economic and Technical Cooperation Project" at the Parliament House in Kuala Lumpur, Malaysia, Geely Automobile and Malaysia's IGC Group signed a formal cooperation agreement on complete vehicle projects and CKD (complete knock-down) projects. According to the agreement, the two parties will manufacture, assemble and export Geely cars in Malaysia.

"There are unexpected events in life." Just a few months later, Geely's cooperation project in Malaysia encountered great difficulties.

At the end of November 2005, a vice president of Geely Holding Group revealed: "Malaysia currently wants us to export all the cars produced by this project and not let us sell them locally. This is completely different from our original intention of setting up a factory locally."

In Southeast Asia, where Japanese automakers have long held about 80% of the market share, Chinese automakers will undoubtedly face fierce market competition. Lack of international operating experience and insufficient localized R&D capabilities are also hindering Chinese automakers, and many years ago, some domestic brands failed in Southeast Asia because of this.

Chery Automobile encountered policy "barriers" many years ago.

Public information shows that in November 2004, Chery signed a contract with Malaysia's ALADO company to jointly invest 12 million US dollars to build a CKD factory. Nearly four years later, on September 2, 2008, the Eastar CROSS (local name in Malaysia: "EASTAR MPV") produced by the factory was announced to be launched on the market.

Chery then "strikes while the iron is hot" and revealed that it "will invest in the construction of a complete vehicle assembly plant in Malaysia and put it into local production in a CKD manner." However, due to Malaysia's policy of protecting domestically produced cars, the plan "died in vain" soon after.

Data from Marklines, a global automotive information platform, shows that Chery has been selling cars in Malaysia since 2006. From 2006 to 2010, its sales in Malaysia increased year by year, reaching a total of 6,080 vehicles. 2010 was also the peak year for Chery's sales in Malaysia.

From 2011 to 2015, Chery's sales volume declined all the way, with annual sales of only 303 vehicles in 2015. Since 2018, Chery has "disappeared" from Malaysia's automobile sales statistics.

Behind the efforts to expand into the Southeast Asian market, including Malaysia, is the huge "temptation" of this large market with a population of more than 600 million for Chinese automakers.

Public information shows that there are 11 countries in Southeast Asia, including Thailand, Malaysia, Singapore, Indonesia, etc., with an area of ​​about 4.57 million square kilometers and a population of more than 670 million. Many of these countries have experienced rapid economic development in recent years. For example, Malaysia's per capita GDP reached US$11,600 in 2023.

In addition, the young population accounts for about 60% of the total population in Southeast Asia, and the automobile consumption market has huge potential.

Not only that, Southeast Asian countries have intensively introduced a series of policies to support the development of new energy vehicles in recent years, including tariff reductions, consumption tax concessions, etc. For example, in Thailand, consumers who purchase pure electric vehicles can enjoy a car purchase subsidy of up to 150,000 baht (about 30,000 yuan).

Thailand, Indonesia and other countries have successively introduced specific electric vehicle development plans.

For example, Thailand has proposed the "30·30" goal - it plans to have new energy vehicles account for 30% of its total automobile production by 2030; Malaysia has stated that by 2030, electric vehicles will account for 15% of total automobile sales, and will further increase to 38% by 2040.

"Southeast Asia is indeed a very promising overseas destination." Xu Guangjian, an internationalization research expert at the Beijing Institute of China Automotive Engineering Research Institute Co., Ltd., analyzed to reporters that in addition to factors such as its close geographical location and relatively stable economic and trade relations with China, "compared with mature markets such as Europe, consumers in the Southeast Asian market may be more receptive to Chinese brands."

Leading to the "Detroit of the East"

"The development of electric vehicles is the only way for Thailand to become an electric vehicle production and sales base in ASEAN. The Thai government has been committed to promoting the production and sales of electric vehicles in Thailand, and will firmly continue the incentive policies to promote electric vehicle consumption."

In November 2023, Thai Prime Minister Setha Thavik visited SAIC CP Group Co., Ltd. (hereinafter referred to as "SAIC CP") and demonstrated Thailand's firm determination to develop electric vehicles.

It is not just Thailand that is betting on new energy vehicles. Indonesia and Malaysia are doing the same. A fierce "chase" is underway in Southeast Asia to attract Chinese new energy vehicle companies.

Chinese new energy vehicle companies are becoming "guests of honor" in many Southeast Asian countries. Government departments in Southeast Asian countries, such as the Thailand Board of Investment (BOI) and the Indonesian Ministry of Industry, frequently meet with Chinese new energy upstream and downstream companies, such as vehicle companies and battery manufacturers.

According to the reporter, Thai industrial park operators such as 304 Industrial Park, WHA Weihua Industrial Park, and Amata Group have targeted China's upstream and downstream new energy vehicle companies in recent years, seeking to provide the first foothold for Chinese companies to develop overseas.

"The speed at which Chinese car companies are coming to Southeast Asia has clearly accelerated. There are many car sales outlets next to our store, many of which are Chinese brands." A person from a Chinese car company working in Malaysia told reporters that according to his observation, in the past two years, many car companies such as Chery and Great Wall have entered Malaysia and set up sales outlets in major cities such as Kuala Lumpur and Penang.

At the Proton Aapico Motors CSL 4S store, Tang Kim Koh, head of Aapico Malaysia Operations, a Malaysian car dealer, recently told reporters that two Chinese car brands have recently opened new sales outlets nearby. "The Chery sales outlet is on the next street, and GWM (Great Wall) is on the road in front of our store."

Tang Kim Koh told reporters: "Most Malaysian Chinese have Chinese sentiments, so the first batch of people who bought Chinese cars were mostly Chinese, mainly high-income groups. The cooperation with Geely and Proton also helped us to develop this part of the market."

The reporter noticed that Chery, Great Wall, and BYD all chose to enter Malaysia in 2022. Among them, Chery returned to the local market after many years. In December 2022, BYD officially announced its entry into the Malaysian passenger car market and released its first model, BYD ATTO 3.

Compared with the export of products, the production capacity layout of Chinese auto companies in Southeast Asia has attracted more attention from the outside world.

The first to take the lead is SAIC Group. In 2013, SAIC Group and Thailand's Charoen Pokphand Group jointly established SAIC Charoen Pokphand; in November 2020, Great Wall Motors acquired General Motors' (GM) Rayong Province factory in Thailand.

In fact, most Chinese car companies have chosen to deploy their production capacity in Southeast Asia since 2022.

In terms of production location, Thailand is the first choice for Chinese automakers, while Indonesia, Malaysia and other countries are also popular locations. The reporter counted the factory construction in Southeast Asia of 8 mainstream Chinese automakers including SAIC, BYD, Geely, Chery, Great Wall, Changan and found that except Geely, which entered Malaysia by acquiring Proton shares, the other 7 Chinese automakers all have or planned production bases in Thailand, while the number of Chinese automakers that choose Indonesia, Malaysia and Vietnam to deploy production capacity is 6, 5 and 2 respectively.

At the same time, Chinese automakers are accelerating their concentration in Southeast Asia and have also expanded their production capacity there. Reporters found that if calculated based on the maximum production capacity of each automaker as shown in public information, among the eight Chinese automakers mentioned above, except for Proton, the other seven Chinese automakers have deployed 1.48 million vehicle production capacity in Southeast Asia.

"Chinese auto brands investing in Southeast Asia are not only targeting the Southeast Asian auto consumer market, but also hoping to use Southeast Asia as a springboard to take a bite of the 'big cake' in right-hand-drive countries." A local auto industry insider in Southeast Asia told reporters meaningfully that the same is true for Japanese and Korean automakers.

"Among the destinations for Chinese car companies to build factories, Rayong Province is the most popular." The above-mentioned Southeast Asian automotive industry insider told reporters that Rayong Province is located in Thailand's "Eastern Economic Corridor" and has a developed automobile industry. Not only Chinese car companies, but also international automobile brands such as Ford, BMW, Toyota, Honda, Mitsubishi, and Isuzu have also set up factories in Rayong Province to produce cars. Therefore, the place is known as the "Detroit of the East."

“Sharing profits with local communities”

Near the bustling Pavilion Kuala Lumpu in the heart of Kuala Lumpur, for every 10 cars on the road, there are almost two or three sleek Proton cars speeding past. Models such as Proton X70 and Proton X50 are more common.

In Chen Nana's view, the above scene is completely different from that in previous years.

Chen Nana is a Malaysian Chinese whose ancestral home is Fujian, China. Her family has been in Malaysia for more than 100 years and has long been integrated into the local community. Like other Malaysians, she supports the domestically produced Proton cars. However, in the past few years, her impression of Proton cars was that they were "ugly in style" and "many people would buy Proton cars because they had no money."

"I feel that Proton's models are a little different now. Compared with previous models, they feel like they have been 'reborn' and are much more fashionable in appearance." Chen Nana said with a smile, "Now the salesmen selling Proton cars are more successful. Not many people bought their cars before."

Several Malaysian automotive industry professionals told reporters that, unlike other regions in Southeast Asia, before the birth of Vietnamese new force VinFast, Malaysia was the only country in the region with its own national automobile brand. Proton and Perodua accounted for 60% of the local market share and had a group of loyal fans, making them veritable national brands.

But what is rarely known to the outside world is that Proton, a car brand that embodies the efforts and national pride of Malaysians and has a local market share of more than 70%, once experienced a "life and death" moment.

"Before Geely acquired a stake, Proton had been losing money for nine consecutive years, with an average annual loss of 1.6 billion Malaysian ringgit," a Geely Auto insider told reporters. Local auto industry insiders in Malaysia also recalled that at the time, facing the "hot potato" of Proton, the local government asked Proton to find a partner amid the continuous losses.

In 2017, Geely Holding Group acquired 49.9% of Proton's shares under Malaysia's DRB-HICOM Group. As the exclusive foreign strategic partner, Geely fully leads the management of Proton, exports management and technology, and fully empowers Proton.

However, after acquiring a stake in Proton, what puzzled the outside world for a long time was why Geely, as China's leading automaker, only acquired 49.9% of the shares instead of the usual 50%:50%?

“The reason we gave up 0.1% of our shares at that time was out of respect for the Proton brand and Malaysia’s local national industry,” a Geely Auto insider told reporters recently.

After Geely's investment, Proton turned losses into profits in 2019. By the end of 2022, its revenue had tripled, and it has ranked second in sales in Malaysia for five consecutive years since 2019. Driven by Geely, 28 global suppliers, including Chinese suppliers, have participated in the development of Proton since 2018.

Hamizan Osman, executive director of Malaysian automotive parts supplier PHN Industry, is deeply impressed by the impact of Proton's "resurrection" on the local automotive supply chain.

"The cooperation between Geely and DRB-HICOM on Proton has had a positive impact on local suppliers, including bringing new business opportunities, business growth and technological progress." Hamizan Osman said frankly, "After dealing with Geely, we realized that our level is far below the international standard. Supplying to Proton now has given us a more comprehensive understanding of international standards."

Several people in the automotive industry told reporters that, taking into account multiple considerations such as protecting the local automotive industry, promoting economic development, and increasing local employment, joint ventures, localized factory construction and other "profit-sharing" methods are more popular in Southeast Asian countries than simply exporting cars from China to Southeast Asia.

"Now we mainly go global in the form of whole vehicle trade." Xu Guangjian believes that "in the long run, the joint venture model is worth exploring, which will help to establish a stable operating environment, drive local economic and industrial development, create more employment opportunities, and achieve a win-win situation."

Breaking through like a "Transformer"

"Going out" is not easy, and "going in" is even more difficult. For many Chinese car companies that have deployed in Southeast Asia, "cultural integration" has undoubtedly become the key to breaking the deadlock.

"Every time Malaysian locals celebrate the Chinese New Year, they have to cook porridge. I didn't know this when I first arrived. The public relations department told me that it was time to cook porridge." Proton CEO Li Chunrong recalled to reporters that his response at the time was "I'm busy, I won't go."

Li Chunrong said: "Later, I learned Malay, and my Malay teacher told me: 'Mr. Li, you must go. What you are cooking is not porridge, but stirring people's souls.'"

Li Chunrong said frankly: "Since then, I not only help others make porridge, but also distribute porridge to employees who are leaving work. Why? From 5:30 in the morning to 5:30 in the evening, they have not eaten all day, and they are still working."

Public information shows that the official religion in Malaysia is Islam. During Ramadan, Muslims are prohibited from eating or drinking from sunrise to sunset.

Several people in the automotive industry told reporters that when Chinese car companies go overseas, they "must respect local cultural customs and pay special attention to content that is sensitive to local people."

"When faced with a team with different values ​​and culture, how can you become their leader? Why should they accept and trust your ideas? It took me more than six years of hard work to integrate the culture of Proton and the culture of Geely Auto," said Li Chunrong.

During the interview, in addition to cultural customs, many people in the automotive industry told reporters that due to differences in education levels, folk customs, etc., compared with domestic automotive industry practitioners, many employees in Southeast Asian countries are "less efficient" and lack engineering talents. In this regard, automobile companies need to adopt personnel training and management measures that are different from those in China.

"From the perspective of talent mobility, we see a trend that more and more Chinese new energy vehicle companies are 'going' to Southeast Asia, but the challenge is that the local talent supply is not as good as in China," Zhang Fei, head of new business at LinkedIn China, told reporters recently.

"The proportion of local employees in SAIC CP has reached 98%, and a unique talent training mechanism has been formed. When selecting personnel in the initial stage, we will not employ applicants who frequently change jobs, and we will not employ applicants who have left SAIC CP and then returned." According to information from the Chinese Enterprises General Chamber of Commerce in Thailand, Zhao Feng, general manager of SAIC CP, once introduced this.

"The production awareness of local workers is definitely not comparable to that of domestic workers. How can we overcome this problem?" Guo Yongtao, deputy chief operating officer of Proton Power, told reporters that the company has currently summed up a number of experiences, such as sending outstanding local Malaysian employees to China for training, while Chinese employees "teach them hand in hand."

In the Proton Automotive Power Plant, Guo Yongtao pointed to the Malaysian staff around him and said to reporters: "I personally trained these workers." He also believed that the "system must be standardized."

In many Southeast Asian countries, local employee unions are powerful.

Guo Yongtao told reporters: "If we don't reach an agreement with the union, we will have to work overtime this weekend, which is absolutely impossible." Despite facing many challenges, Guo Yongtao lamented to reporters: "Chinese companies are like Transformers. No matter where we go, we must find ways to analyze how to find a breakthrough."

Learn from Japanese style and surpass Japanese style

"The COROLLA GR Sport is priced at RM146,000 without insurance, which costs around RM4,000." At a Toyota dealership in Perak, Malaysia, sales manager SIMON SOO BG told reporters that there is "no discount for the COROLLA GR Sport because the company does not offer discounts."

A local person in Kuala Lumpur, Malaysia told reporters that in Malaysia, the prices of Toyota and Honda are generally higher than those of Proton and Toyota. He took the Toyota Aruz he drives as an example and said: "This car costs about 80,000 Malaysian ringgits, while a similar car from Toyota costs more than 120,000 Malaysian ringgits." Toyota cooperates with Daihatsu, a member of the Toyota Group. Local industry insiders in Malaysia told reporters that most of the Toyota vehicles are "Daihatsu re-branded."

Compared with Malaysia, Japanese brands account for 90% of the new car market in Indonesia. In Thailand, the overall market share of Japanese automakers is also around 80%. Therefore, Southeast Asia is known as the "backyard of Japanese cars". It took decades for Japanese automakers to establish their dominant position in Southeast Asia.

"We first need to learn from the Japanese before we can surpass them." Several people in the Southeast Asian automotive industry told reporters that the influence of Japanese automakers in the Southeast Asian market is not only reflected in sales and market share, but also in their close ties with the local political and business circles in Southeast Asia and their impact on the local automotive industry.

"Our competitors have done a very thorough job." A senior executive of a Chinese auto company with operations in Southeast Asia lamented to reporters, taking his location as an example, over the past 50 years, the influence of Japanese brands has "reached into every aspect of the Party, government and military." "I saw a local auto industry policy before and thought it was very similar to Japan's plan. Later I learned that it was a retired Japanese man who helped the locals do it."

"Japanese automakers have maintained good communication with Southeast Asian governments for a long time, actively promoting and participating in the formulation and improvement of local automobile industry policies, which is very beneficial for Japanese cars to occupy the market. For example, the automakers participating in the formulation of Thailand's environmentally friendly car policies are all Japanese companies." Guohai Securities research report believes.

However, under the wave of electrification, the situation in the Southeast Asian auto market is quietly changing. Many of Thailand's original Japanese brand dealers are now turning to cooperate with Chinese auto brands.

As an automobile distribution group with business covering Thailand, Malaysia and other countries, Aapico has cooperated with Chinese automobile brands in recent years. Tang Kim Koh told reporters that in Thailand, Aapico has 6 Mitsubishi and 2 Ford sales stores, as well as 2 MG and 1 Changan sales store.

How can Chinese automakers "stand out" in the face of the huge advantages established by Japanese automakers?

"The Southeast Asian market is dominated by cost-effective models, and Chinese automakers' products must maintain a certain cost-effectiveness advantage." Xu Guangjian said that in addition to the advantages of intelligence and electrification, Chinese automakers also need to do a good job of branding. "I hope that there will be Chinese brands that are comparable to BBA and Lexus, with different models and brand systems in different market positioning to form a product portfolio."

Some people in the Southeast Asian automotive industry also told reporters that Japanese companies' localized R&D and marketing capabilities in Southeast Asia are also worth learning from for Chinese automakers.

The reporter noticed that in Thailand alone, Toyota, Honda and other companies have established many R&D institutions. For example, Honda has R&D bases in Bangkok and Chonburi. The former is responsible for vehicle R&D and vehicle testing in Asia and Oceania.

Xu Guangjian said that Chinese car companies need to face up to the achievements of Japanese and Korean car brands in the local area and learn to "cooperate in competition and compete in cooperation."

It is worth noting that even Japanese brands that have a monopoly advantage in the Southeast Asian market are currently experiencing a wave of factory closures.

In May this year, Thai media reported that Subaru would close its local factory; in June, Suzuki Motor officially announced that it would close its Thai factory by the end of 2025. The reason for the closure of both factories was declining sales.

Southeast Asia is like a "besieged city". Car companies "outside the city" want to get in, and car companies "in the city" want to get out. In any case, those Chinese car companies that are not afraid of dangers and go south to explore are "brave" people worth remembering. Their "golden age" may have just begun.