Chinese Economics Thread
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I agree with what you say, but it needs to improve on the after sale service.That is not true anymore let market be the judge. The best prove is China domestic market that was once dominated by foreign brand. But now more than half of the market is grabbed by domestic producer. And so do the components to make those cars. At one time they have to be imported thing like engine and electronic. But now are all domestic although some of the engine are designed by European consultant. IN term of styling most Chinese car maker now has subsidiary in Italy to design stylish care. But IC car is sunset industry and soon will be replaced by EV and here China is leading as the important component is Battery and high efficiency and compact motor. Both industry are dominated by Chinese company like CALT. China decided to open the market to give equal footing to both domestic and foreign car that way it induced competition and excellence. China domestic car can stand on its own now no more coddling
Chinese brands grab half of domestic auto market share
By Chen Liubing | chinadaily.com.cn | Updated: 2020-08-17 11:28
An employee checks a Hongqi sedan at an assembly workshop of China FAW Group in Changchun, Northeast China's Jilin province, on June 19, 2019. [Photo/Xinhua]
Chinese-branded vehicles have taken more than half of the domestic automobile market share, and 40 percent passenger vehicle market shares, Fu Bingfeng, deputy secretary general of the China Association of Automobile Manufacturers, said at the 2020 China Auto Forum on Aug 14, Xinhua reported.
The country has topped the global auto market in sales for 11 consecutive years, and taken up one-third of the world's market, Fu said, adding that the number of vehicles in China is set to reach 270 million units by the end of this year.
Chinese-branded vehicles are benefiting from the country's huge automobile market, he said.
Wang Xiaoqiu, president of SAIC Motor, said the Chinese vehicle sector is rebounding rapidly thanks to the support of the government. Wang added that the rebuilding of the company's brand was directed by younger consumers and the upgrading trend of consumption. Wang also noted that cooperation among Chinese brands is vital in tackling core technologies in key areas such as internet connected vehicles.
The global automobile market has seen sales slump amid the coronavirus pandemic, while the Chinese market has rebounded since May, indicating market resilience and positive effect of policies, said Christoph Wolff, member of the executive committee at the World Economic Forum, who noted that the Chinese experience is referential to the global market recovery.
The adjustment of industrial policies has provided more opportunities for multinational car makers in China, the report said.
As the country lifted restrictions on foreign equity shares in new energy vehicle manufacturing, Tesla Inc launched its first mega-factory in Shanghai and unveiled its China-made Model 3 in November last year. Volkswagen AG also closed its 1 billion euro deal in acquiring 50 percent stakes of its electric-vehicle partner JAC Motor this May.
The next five years will be the key period for the upgrading and transformation of China's auto industry, Fu said, suggesting industry players should seize the opportunities and expand their footprints in both domestic and overseas markets.
China's domestic auto brands rapidly progressing
The rise of NEVs has given Chinese auto companies the opportunity to rapidly progress. Chinese companies have made breakthroughs in the three core technologies of NEV batteries, motors and electric control, analysts said.
Shenzhen-based BYD was the first automaker in the world to master the three core technologies. Its annual battery production capacity of 16GWh makes it a world leader in batteries.
Contemporary Amperex Technology Co Limited (CATL), China's largest lithium-ion battery maker, has grown into one of the world's most competitive battery suppliers backed up with its innovative capability, and foreign automakers have been actively seeking cooperation with CATL.
In a recent move, Japanese automaker Honda said that it will buy a one-percent stake in CATL. The two companies said in a joint statement that they would jointly develop EV battery technologies and expand discussions on battery recycling and reuse businesses.
FAW, the cradle of China's auto industry, has also stepped up efforts to reinforce EV innovation, research and development and made breakthroughs in new energy and key technologies.
China has been leading globally in terms of NEV output and sales in the past five years. Despite this, the sector met a turning point in 2019 when sales declined for the first time by 4 percent year-on-year due to a cooling auto market and the reduction of government subsidies.
"Home-grown NEV brands now take the lead and it is one of the development areas where domestic brands surpass their foreign peers," said Feng.
Feng believed NIO, the best-known Chinese EV brand listed at the US stock market, has the ability to compete with US auto giant Tesla based on the Chinese firm's advantages in high-end manufacturing and services.
For the transformation toward smart cars, domestic brands have some natural advantages, according to Cui.
"Supported by technologies like 5G and the BeiDou navigation system, as well as other innovations made by Tencent and Alibaba, China-made smart cars have huge potential to take the lead in the sector," said Cui.
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"Only" about 50%? The Chinese auto industry peaked in 2017, going down about 2% in 2018 and another 8% or so in 2019. It started turning around in 2020 and could reach another record this year. For more than a decade the share held by domestic brands was only in the low to mid 30's. Back in early 2019, I read an article saying the proportion of the market held by domestic brands had climbed to about 43%. In other words, the auto industry was showing the same trend as many others in China, where the population was beginning to prefer local brands.
I then used google to find the corresponding figures for other countries and discovered that the figure for both the US and Germany was also about 43%. It was more in France and certainly in Japan. but China is a more open market than practically any other major country in the auto sector, not for imports but for foreign brands. 50% is not low at all, considering just about every brand produces cars in China and components can be sourced there as well, which means Chinese brands don't have much of a cost advantage.
And yes, only domestic brands are "domestic, otherwise the percentage would be in the high 90's, since generally only about a million cars are imported into the country. As to "joint" brands, you misfired, as the only one I know of is Wuling, which is 40% owned by GM. Roewe is not a joint brand, it is owned entirely by SAIC, and even though it was based on Rover, the bought the rights and gave it a different name. So what counts as domestic? Roewe does, and so does Wuling, which is a partially foreign owned Chinese brand. Volvo, even if wholly owned by Geely, does NOT count: it's a Swedish brand.
It is not simply that. In fact it has been on the agenda for some time and was planned well before decoupling was a thing. Bosch already had a wholly owned auto parts plant in China when the Tesla "Gigafactory" was announced in mid-2018. The reason for this opening is the assessment that the industry has matured enough to withstand the more open competition. The assessment is based partly on the increased share of the domestic brands, but also on the fact that a number of international brands are being exported from China, which was not true until recent years. This showed already a few years back that the build quality is at least on par the American auto industry.
By the way, auto exports are also way up this year.
This chart can be posted here or Indian economics thread. So I'll post here.
This should send all those Jai Hind into ecstasy. Though not quite No. 1, but No. 2 on PPP. Although A word of warning, I'll caution with their prediction. I thinking a bit gunho especially for India.
This should send all those Jai Hind into ecstasy. Though not quite No. 1, but No. 2 on PPP. Although A word of warning, I'll caution with their prediction. I thinking a bit gunho especially for India.
Although most would welcome such projections, it's in the best interest for everyone that we refrain from engaging in these kind of projections. The covid-19 has shown that the future is unpredictable.
China ought not to revel and rejoice in projections but on accomplishments that are tangible and present. Lot of things could happen coming years that may bolster or go against these projections.
Absolutely, one thing is certain about the future. And that is the future is uncertain. However, unfortunately, in business and in governments, the people in the driving seats hates uncertainty. Which is why they employed economists to predict the future for them.
Unfortunately for us economists, predicting the future is a black art. Which is why we sometimes called economics the "dismal science"!
As such, we always warned readers to take predictions with cautions. As things like the butterfly effects will affect the outcome greatly.
Unfortunately, most politicians and business leaders don't heed to this warning. Thus exacerbate the problems. This especially applies to Jai Hind crowd.
Chart was probably made before Modi destroyed India's economy.
India's GDP growth dropped to 6.1% in 2018 and a mind bogglingly low 4.2% in 2019, even before Covid hit.
Remember, when China was at India's current level (2006-2007), it was growing at over 12% a year.
First the shock from demonetisation and now from Covid. India may well never recover to their previous growth rate.
What is India's present GDP? Isn't 3 trillion dollars a projection? At present I think it's 2.7 trillion dollars.
Even assuming that this will happen by 2030, GDP PPP matters little to countries that need to import most of their goods from home appliances to electronics and clothing.