Chinese cars going global require new responses to the new situation

The 22nd Guangzhou International Auto Show is currently being held, with a total of 1171 cars exhibited by Chinese and foreign automobile companies, including 78 world first cars and 512 new energy vehicles. The exhibition covers an area of 220000 square meters, which is unprecedented and fully showcases the dazzling array of cars in the current automobile market. In 2023, China's automobile exports will reach 4.91 million units, surpassing Japan and ranking first in the world; In the first 10 months of this year, China's automobile exports reached 4.855 million units, a year-on-year increase of 23.8%, and the annual export volume is expected to once again lead the world.

However, with the intensification of protectionist tendencies in some countries and regions, the long-standing barrier problem in the international automotive market has become even more severe. A series of measures, such as the EU's new battery law, carbon border regulation mechanism, and the imposition of "anti subsidy" taxes, are being accelerated, which is also causing a change in the competition and cooperation between Chinese and foreign enterprises. Chinese cars are facing a series of new situations and challenges when going global. In this regard, the Chinese automotive industry needs to grasp the direction, plan systematically, and work together to tackle challenges, understand the international market, build a strong innovation system, cultivate professional talents, build brand image, and jointly enhance the level of international development of the industry.

Challenge 1: Currently, the Chinese automotive industry still lacks sufficient research on the international market. Firstly, there is a lack of initiative in the current international standard and regulatory coordination system, with lagging overseas intellectual property layout and insufficient ability and experience in dealing with disputes. The automotive industry is at the forefront of technology, and if sufficient attention is not paid to standard essential patents in emerging fields, it may lead to systemic intellectual property risks.

Secondly, the lack of coordination among car companies going global has led to "internal battles and external conflicts" and "overseas internal competition". There are numerous Chinese automobile companies, but their production management is relatively scattered and market concentration is low. In the process of going global, some car companies are fighting on their own, resulting in a highly homogeneous target market, products, and models, which damages the overall interests of the industry.

On the one hand, Chinese car companies need to strengthen their strategic planning from a national and industrial perspective, establish a coordination and cooperation mechanism for automobile overseas enterprises, facilitate policy, technology, and market information exchange, encourage deep cooperation in research and development, procurement, production, infrastructure, and other aspects, and form a coordinated development pattern for the whole vehicle and parts, as well as the upstream and downstream of the industrial chain, in order to enhance the competitiveness of export products and services and their influence in the global industrial chain and supply chain innovation chain. On the other hand, Chinese car companies can rely on platforms such as the United Nations World Forum for the Coordination of Vehicle Regulations and the International Organization for Standardization to strengthen the coordination of international standards and regulations in strategic emerging fields, coordinate planning, focus on breakthroughs in key core projects, and actively expand regulatory cooperation platforms to promote "soft connectivity" of rules and standards. This also helps to conduct a systematic analysis of the intellectual property layout in key areas of the target market, quickly form a core technology intellectual property protection barrier, and reduce potential risks for Chinese car companies.

Challenge 2: Compared with developed countries, although Chinese car companies have certain leading advantages in core technologies such as power batteries, their overall advantages are not obvious. There is still a gap between traditional components and basic system technologies, limited platform design and manufacturing capabilities, and prominent security risks in the industrial chain, especially in the supply chain of core components.

In this regard, Chinese car companies need to coordinate domestic and international resources, focus on strategic emerging areas, actively carry out cross industry resource complementarity and mobilization, and work together to create a multi-level and systematic linkage system of "information expert channel", to achieve coordinated and optimized allocation of resources in key regions and core areas. Secondly, we must rely on and leverage the advantages of China's super large market, industrial integration, and technological integration, and use long-term thinking to link domestic and international resources, improve the quality and level of trade and investment cooperation, and enhance vigilance against strategic misjudgments such as rushing for quick success, blindly following trends, and going abroad in clusters. We must accelerate the establishment of a headquarters led global joint research and development system, master key core technologies, achieve technological self-reliance and self-improvement, and build an independent, controllable, safe, and efficient industrial and supply chain. Starting from the improvement of product functionality, performance, and quality, keeping up with the trend of digital development, continuously strengthening new security research and system construction such as functional security, network security, and data security, and comprehensively enhancing security protection.

Challenge 3: The overall scale of Chinese automobile overseas sales is not small, but it is relatively dispersed when calculated as a single enterprise; The export models are mainly mid to low end, with low brand image and value, and an immature after-sales service system. Data shows that by 2023, the global sales of the world's top five automobile groups will all exceed 6 million vehicles, while only 5 Chinese car companies have brand sales of millions of vehicles. German, Japanese, and Korean car companies account for over 80% of the total overseas sales, while the overseas sales of several top Chinese car companies only account for just over 40%. This is due to both the late entry of Chinese car companies into the global market and the lack of international talent reserves, as well as the fact that car companies generally start with low prices and high cost-effectiveness, which is closely related to their insufficient investment in design, functionality, and international image building.

In this regard, Chinese car companies that intend to compete for overseas markets should not only continue to improve their "hard work", but also adjust their strategic direction, accelerate the formation of an outward oriented and professional international talent selection and training mechanism, and quickly form a talent reserve covering industrial design, corporate culture, brand promotion, institutional compliance and other aspects of the company's "soft power", focusing on building, enhancing and maintaining the international image of the enterprise. At the same time, car companies should actively establish communication and cooperation with key opinion leaders such as domestic and foreign media and internet celebrities, handle public relations well, and form a communication matrix in order to effectively make the impression of Chinese cars among potential foreign buyers better and better.