China's auto exports are expected to reach 1 million for the first time this year. Facing the increasingly fierce competition in the domestic market, where China has the world's largest auto market, Chinese auto makers have found it easier to sell cars to foreign markets such as Iran and Iraq, which are less popular.
The growth rate of China's auto market and the domestic economy have been slowing down simultaneously. Sales of passenger cars have only increased by 6.9% during the year ending in October. The abolition of government tax incentives is a particularly serious blow to Chinese domestic manufacturers, who are taking away market share from rivals in the United States, Europe and South Korea.
As the territorial dispute between China and Japan triggered a public boycott of Japanese cars, Japanese car manufacturers could only give up their market share in China. However, this part of the market share did not fall into the hands of Chinese manufacturers. According to sales, the latter accounted for less than 30% of the market.
The response of Chinese manufacturers is to export products to some less popular markets. In the first three quarters of this year, the main export destinations for Chinese cars were Algeria, Iraq, Iran, Russia, and Chile. As of the end of October, China’s total automobile exports this year have exceeded the full year of 2011, and passenger vehicle exports have only achieved a 43% year-on-year growth rate in October.
“This is due to changes in domestic demand,†said Bill Russo, president of Beijing Synergistics Automotive Consultancy and former head of Chrysler China. “As the market slows, inventory pressure rises. To ease this pressure, manufacturers naturally choose to shift to the export market."
Iris Automotive's Namrita Chow in Shanghai said: “The export of passenger cars has become the main driving force for the growth of Chinese domestic car manufacturers.†Chow added: “Chinese auto makers are involved in areas outside the scope of international manufacturers’ targets to achieve growth†And solve excess inventory.
Apart from several well-known companies such as Great Wall Motors, which is well-known for sport-utility vehicles (SUVs), most Chinese auto companies are targeting low-end export markets. Because of their own product restrictions, they have no choice in this regard.
But Lin Huaibin of IHS Automotive pointed out that this strategy has risks. He said: "If you initially enter overseas markets with low prices, it will be difficult to advance to the high-end... They do not want to repeat the mistakes in the country. In the Chinese market, domestic brands give people the impression that they are cheap, making it difficult to score. High-end areas."
For decades, China has mainly exported cheap and inferior goods. Pet foods, toothpaste and other products that were exported have caused scandals involving casualties several times. Today, many manufacturers in China are facing the same problem: How to change the bad image of Chinese brands abroad?
As one of the world’s largest household appliance manufacturers, Haier chose a brand name that sounded biased towards Germanization, which solved the problem to some extent. However, this method is not universally applicable.
China’s largest car exporter, Chery, sold 165,000 cars overseas during the first 10 months of this year. Chery claims that 30% of its sales come from overseas markets, and the best-selling models are those with lower prices.
Geely, which owns Volvo and has the second-largest export volume in China so far this year, denied that it was forced by domestic pressure to open up its export market. A spokesperson for the company said that Geely’s domestic sales this year are expected to increase by 10%. “We don’t need to shift our focus to exportâ€.
Overseas sales currently account for about one-fifth of Geely's total sales. The company said that "since overseas sales growth will still be much higher than domestic, this proportion will continue to expand - we still have a huge market to open up." Geely had previously indicated that it plans to increase its overseas sales to the same level as in China.
China Great Wall Motors, which ranks fourth in China’s auto exporters and has the highest level of product quality, has adopted different strategies. The company said that “for overseas markets, we value quality rather than quantity†and added that many products sold by Great Wall overseas are equal to or close to similar products in the West and Japan. "We hope to create the Great Wall brand image and change the foreign market's impression of the quality of Chinese cars."
Chery has started to build a factory in Brazil, and the Great Wall is also increasingly producing automobiles for overseas sales. Great Wall expects to have 24 production plants overseas by 2015 with a capacity of 500,000 vehicles.
However, Klaus Paur, global head of automotive research at Ipsos, said that for many Chinese automakers, export-focused “is not a sustainable strategy,†and they must first focus on solving the challenges posed by increasingly fierce domestic competition. He said: "If their products sell well overseas, they may ignore the problems inherent in the Chinese market."
Camping Chairs,Camping Table,Folding Picnic Chairs,Foldable Camping Chair
Dalian CS Logistics Technology Co., Ltd , https://www.dlcsem.com