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wang xun, chairman of shanghai longchuang automotive design co., ltd.

"if you don't go overseas, you're out." this "famous saying" has been mentioned repeatedly in many recent industry conferences. since overseas has become the main incremental market for the automotive industry, what is the "optimal solution" for chinese auto companies to go overseas?

"today i would like to bring you a new idea: we are not just exporting products overseas, but also exporting technology, industrial chains, and the entire automotive ecosystem overseas." on september 2, the 2024 world power battery conference power battery quality improvement special meeting was held in yibin. wang xun, chairman of shanghai longchuang automotive design co., ltd. (hereinafter referred to as "longchuang design"), shared his latest thoughts on the overseas expansion of the automotive industry chain.

during the event, wang xun told the reporter of daily economic news that many countries have demand for chinese products, but in fact, the demand for china's industrial chain and r&d technology is greater and longer-term. china's automotive industry chain should "go overseas in groups" to form the advantages of groupization and copy the successful experience of japan and south korea in the world. "compared with the traditional export of complete automobile products, the resistance to the industrial chain going overseas will be greatly reduced."

"at present, the biggest problem facing our entire industrial chain going overseas is finding reliable power batteries locally, especially since there are very few options for chinese power batteries. in other words, our power batteries overseas are not enough to meet the current strong growth demand," he said.

overseas is a bigger market for car companies

as the chinese auto market intensifies its internal competition, "going overseas" has become the only choice for chinese automakers to find new growth points and enhance their international influence. the latest data from the china association of automobile manufacturers shows that from january to july 2024, my country exported 3.262 million complete vehicles, a year-on-year increase of 28.8%; and exported 708,000 new energy vehicles, a year-on-year increase of 11.4%.

"there are not so many catl and sunwoda in the international market. any of our top ten auto companies would be a giant in their own country. this is an advantage of dimensionality reduction. we must go overseas bravely and quickly." in wang xun's view, whether it is a complete vehicle or parts such as power batteries, going overseas is already a major trend. after all, the domestic market is small and the competition is fierce, while the international market is like the sea ahead.

"2030 is a very important node." wang xun noted that many countries have formulated policies requiring that all or at least 50% of cars be replaced with new energy vehicles. in 2023, global car sales will be about 90 million, of which only about 15 million will be new energy vehicles. there is still a huge room for growth in new energy vehicles.

"our current domestic (automobile industry) development is oversupplied to some extent, but it is in the early stages of development in the international market, and demand is expanding at an accelerated rate every year." wang xun believes that china's new energy vehicle production capacity is relatively oversupplied, but the production capacity of technologically advanced products, especially in the field of power batteries, is very prominent.

this is also an important reason why chinese automakers are flocking to overseas markets. according to data from the general administration of customs, my country exported 1.727 million new energy vehicles in the past year, with sales in various regions accounting for 42.3% in asia, 41.5% in europe (including tesla produced in china), 6.6% in latin america, 6.0% in oceania, 3.2% in north america, and 0.5% in africa.

in wang xun's view, in addition to traditional powers such as europe, the united states, japan and south korea, some resource-rich west african countries, north african countries with relatively stable economic development, as well as the middle east, south asia and southeast asian countries all have a strong demand for chinese new energy vehicles. "some 'belt and road' countries also need chinese cars, especially the industrial chain with power batteries as the core, to develop their own car brands."

this will also be a considerable incremental market for chinese auto companies' exports.

trend: industry chain "going overseas in groups"

over the years, wang xun has visited more than 20 countries in africa, europe, the middle east, south asia, southeast asia, and south america for business needs. he discovered a new phenomenon - countries with a per capita gdp of us$2,000 to us$10,000 all have a strong demand to "develop their own new energy vehicle brands."

against the backdrop of “anti-globalization,” more and more countries are protecting their domestic markets and using various barriers in the hope of launching their own brands and automobile industries. “china’s overseas expansion must transform from a single-model product export to a product + technology + industrial chain export.”

since the beginning of this year, the united states and the european union have successively imposed tariffs on china's new energy vehicle products. in order to bypass the tariff barriers set up by some countries, chinese car companies have built factories overseas. in july this year, byd and gac aion's thai factories were completed and put into production; in april this year, chery automobile signed an agreement with spanish automobile company ebro-ev motors to establish a new joint venture in the local area to produce new electric vehicles...

wang xun believes that the first step to go overseas is to increase the "localization rate". the core parts should be assembled and produced locally. of course, the upstream industry is still in china, but the assembly is done locally. this can effectively circumvent the local parts localization rate requirements and enhance international competitiveness.

"compared with the export of complete vehicle products, the resistance to exporting the industrial chain and the ecosystem overseas will be greatly reduced." wang xun told the reporter of "daily economic news" that taking longchuang design as an example, it mainly engages in complete vehicle research and development at the front end of the automotive industry, "and it is also necessary to string together the entire supply chain and the entire production and manufacturing chain to realize the overall export of the industrial chain."

for example, power batteries account for a high proportion of the value of the entire industrial chain, and are very important for increasing the "localization rate" of local automobiles. however, the biggest problem currently facing the overseas expansion of the automobile industry chain is that "it is difficult to find reliable power batteries locally."

"currently, in terms of going overseas, many countries have proposed domestic manufacturing and hope that chinese battery companies will invest and build factories locally." wang xungao said that many countries like turkey will require the "localization rate" of the entire vehicle. for example, if the localization rate exceeds 51%, zero tariffs can be enjoyed, otherwise a tariff of more than 50% will be imposed.

he believes that china's automotive industry chain must "go overseas in groups" to form the advantages of the group. we do not directly export complete vehicles, nor only export technology strategies, but we export the industrial chain to help these countries quickly form several brands and use china's industrial chain to quickly develop their brands.

"in particular, long-term cooperation with friendly countries along the belt and road initiative to help them establish local automobile brands can create new strategic development space for chinese automobile ecological industry chain companies and achieve a long-term and stable path for automobile overseas expansion," said wang xun.

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