In the recent past, as the sign of China’s large auto companies concentrating on overseas markets, China’s autos have entered a stage of collective departure for the purpose of pursuing economies of scale.

Not long ago, Chang’an Group announced that its overseas sales had reached 400,000 units in seven years. BAIC also reported that it wanted to acquire several overseas automakers to accelerate the pace of overseas expansion. Prior to this, China’s auto exports were smashed, and large auto exporters were not independent giants such as the Great Wall and Chery. With the stronger and stronger large enterprise groups joining and leaving the army, Chinese auto exports have become a general trend.

According to a report issued by the Boston Consulting Group, in the global market, the space left for Chinese auto exports has become very narrow. How China's auto exports have survived has become a common issue for Chinese automakers.

Go to the sea

The large enterprise groups that have been continuously exposed to major moves in overseas markets are Changan Group and Beijing Automotive Group. In terms of the focus of automobile exports, Changan emphasizes on weight, and BAIC pays more attention to rhythm and style.

Not long ago, Zhu Huarong, deputy secretary of the Party Committee of Chang'an Group, externally stated that by the year 2020, Chang’an Group aims to produce and sell 5 million automobiles each year, of which, the overseas market’s sales target is 400,000. The Chang’an Group covers emerging economies and major developing countries. Global manufacturing, sales, and service networks will initially form. Changan Automobile plans to set up 800 dealerships overseas to support this production and sales target. Brazil and Russia are currently Changan's key markets.

The BAIC Group did not place too much emphasis on overseas sales targets in its overseas expansion. Bei Dong International President Dong Hai believes that the importance of methods and directions is more significant than the quantified targets in the short-to-medium term. Dong Haiyang stated that BAIC will focus on the 'three major-three small-trilateral' nine markets. The “Big Three” refers to the three strategic markets of BAIC Overseas: Brazil, Iran, and Russia; the “Three Smalls” are the three smaller, more accessible regional markets: Colombia, Chile, and Algeria; the “three sides” are Three markets are located in the peripheral regions of China, including markets in Central Asia, East Asia, and Myanmar.

Dong Hai believes that boosting overseas sales by means of trade is in line with the company’s desire to boost short-term profits, but BAIC is more concerned with long-term benefits than short-term profits. According to informed sources, at present, Beiqi intends to acquire overseas molded car manufacturers to accelerate the pace of overseas expansion. Dong Hai believes that overseas construction is more conducive to companies based on the local market than Beichun. To lay a solid foundation for the development of overseas markets.

Previously, the major Chinese auto exporters were Great Wall, Chery, and Geely. The above companies are not China's most powerful large enterprise groups, but Changan Group, which ranks fourth in sales and sales volume among Chinese large enterprise groups, and BAIC Group, which ranked fifth in production and sales volume. Focusing on overseas markets, China's auto exports will enter a new stage of blossoming.

opportunity

The important move that Chinese auto companies have taken away is because the Chinese market is extremely fierce and there is little room for independent brands to survive.

“The Chinese market is the world’s largest auto market, and all auto brands are rushing to sell in China. The fierce competition in the Chinese auto market is second to none in the global market,” said Jin Weidong, a partner at Boston Consulting Group. “Actually, the competition is so fierce. The market environment is not in line with the survival needs of young Chinese independent brands. In a relatively calm environment, the development of China's independent brands is even broader.”

The difficulty of the development of independent brands in the Chinese domestic market and the relative ease of development in overseas markets are reflected in the data. In 2012, China's automobile production and sales volume increased by 8% year-on-year, and its own brand production and sales increased by only 4.5% year-on-year, which was lower than the overall growth rate of the industry. However, in this year, China’s own brands took off in overseas markets. In 2012, China’s auto exports exceeded the one million mark.

Compared with China's domestic market, the rapid growth of overseas markets and the continuous increase in the proportion of production and sales of companies have made the importance of overseas markets become significant. A more detailed data shows that: In 2012, Great Wall Motor sold 96,000 overseas vehicles, an increase of 28% year-on-year; overseas production and sales accounted for 15% of total sales; in 2012, Chery Automobile sold 180,000 overseas vehicles, which accounted for the total sales. In the same year, Geely Automobile produced and sold more than 100,000 vehicles in overseas markets, an increase of 164% year-on-year, accounting for about 20% of total sales.

"The development of auto companies needs scale effect. The scale effect is conducive to companies building brands and reducing costs. However, relying solely on the single market, this demand for scale effect cannot be achieved," said He Make, partner and managing director of Boston Consulting Group. “The scale is very important in the automotive industry, and with scale, there will be more money to develop new products in order to quickly enter the new market. In the past, Japanese cars and Korean cars were in the global market. Only after achieving the growth rate of sales did it achieve a major breakthrough in scale. Whether it is Japanese cars or Korean cars, they rely on overseas markets to achieve economies of scale. The scale effect is an internal cause for Chinese auto companies to leave.

"Countryside"

Under the quest to go out, the proposition of how to go out and whether to go abroad becomes more important.

At present, the “BRIC countries” represented by China, North America, and the European Union are the world’s major automotive markets. In 2012, the three major automotive market’s global market share was more than 70%.

“The competitive situation in North America, the European Union and China is very fierce, and it is difficult to achieve the demand of Chinese auto companies for scale effect.” Hemar said, “according to our research on more than 70 markets worldwide, the development direction of Chinese auto companies overseas should not be Focused on Europe and the United States, it is as difficult a market as the Chinese market, leaving little room for Chinese companies."

According to the Boston Consulting Group’s market research in more than 70 countries and regions, for Chinese auto companies, the market with a relatively broad development space is 88 countries outside Europe, the United States, and BRICS, and by 2020, the above 88 countries will The overall production and sales volume can reach about 21 million vehicles.

"In the case of stagnant growth or slowing growth in many mature markets, the competitive landscape of the BRICS market is basically shaped. The opportunity for finding growth in emerging markets has become a must for Chinese auto companies. Problems,” said Hema Ke said. “Although these 88 countries are small in size and mostly in developing countries, if they are considered in accordance with the cluster approach, they will be able to support Chinese auto companies' demands for economies of scale.”

The Boston Consulting Group believes that the export strategy of the above 88 countries should follow the principles of different countries and different priorities. “In terms of China, speed and localization are very important. Car business in China is like walking on the highway. The above 88 markets are more like some provincial and rural roads. They are more complicated and twisted. As a car company, all cars must be integrated. The value chain elements can truly achieve results in the market,” said Hema.

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