Chinese car companies that have suffered setbacks in India may see hope in Xiaomi vivo

Text | Huang Chi

On June 15, while India was shouting "Boycott China", the OnePlus 8 Pro mobile phone was sold out within minutes of going on sale.

The "Remove Chinese Apps" software launched by an Indian company has been downloaded more than 5 million times, but many people downloaded the software using Chinese-made mobile phones.

India’s Ministry of Electronics and Information Technology announced that it would ban the use of 59 Chinese applications, including TikTok, and the Indian media reported in the title: “‘Chicken-eating’ is not included in the ban.”

Outside of the Internet field, there are media reports that Maharashtra has announced the suspension of investment plans by Great Wall Motors and BAIC Foton, and the domestic "boycott China" movement in India is spreading to various fields.

But as a reporter wrote "We Can't #BoycottChina, China Is In Our Blood (We can't boycott China, China is in our blood)", India really wants to get rid of China The impact is not realistic.

On the one hand, the experience of Chinese car companies in India proves that the road to "going out" will never be as smooth as imagined, with too many difficulties and unknown possibilities.

But on the other hand, Chinese car companies should also see more confidence from Xiaomi and vivo. After all, Great Wall and Geely are no longer the toddlers they were more than ten years ago.

The Indian market has had a slow start

As great as the opportunities are for the Indian auto market, so are the current risks.

India’s population structure is very young, which means huge economic growth potential and potential car buyers in the future, and the number of vehicles owned by 1,000 people, which is only 22, also has huge room for growth. Some institutions predict that around 2026, India will become the world's third largest automobile market after China and the United States.

However, the development of the new coronavirus epidemic in India and the boycott of "Made in China" may mean that all this may have to be overthrown and restarted.

Although netizens can joke: "As a countermeasure, we can only boycott India's pie-throwing." However, the losses suffered by Chinese car companies cannot be overcome with a joke.

Great Wall was originally going to take the Chinese media to New Delhi to witness the long-prepared press conference, but the pace was disrupted by the COVID-19 epidemic. When the domestic epidemic situation improved, India’s accumulated The number of cases has reached the fourth place in the world.

Under the influence of strict blockade policies, India’s auto market sales in April actually dropped to zero. Even though the market returned to 37,000 vehicles in May, the year-on-year decline still reached 84.5%.

According to predictions by the Indian credit agency ICRA, demand for new cars in India may fall by 25% in 2020-2021, and it may take 12-18 months to get out of the trough. The International Monetary Fund (IMF) predicts that India’s economy will shrink by 4.5% in 2020, reaching a “historical low”.

However, just as the spread of the new coronavirus in India has not improved at all, no one can guarantee when the recessionary economy will reach the bottom, and the original growth forecast for the Indian auto market has become no longer reliable.

The Indian market strategy of Great Wall Motors mentioned the establishment of a full-service ecological chain covering research, production, supply and marketing, deepening investment based on the existing Bangalore R&D center, and increasing local R&D efforts based on global products. Goals such as establishing production bases and radiating products to other countries will also be full of uncertainty due to the suspension of investment in Maharashtra. Great Wall Motors debuted at the 2020 New Delhi Auto Show

It took Chinese mobile phone manufacturers four years to increase the market share of local Indian manufacturers from 43% to 2.5%, and achieved nearly a quarter in the first quarter of 2020. market share of three.

But for Chinese automobile manufacturers, things may not be that simple. Maruti Suzuki still occupies half of the market share in 2019. There are no Chinese brands among the top ten sales brands. The best-performing MG brand sold 16,000 units and had a market share of only 0.5%.

After all, compared with Japanese and Korean car companies that entered the market earlier, Chinese brands still have a certain gap in technological reserves and brand recognition. At the same time, they have a certain gap in the depth of the Indian market, investment scale, and industrial chain layout. They are all just getting started.

India is not the first, nor will it be the last

Although data shows that China’s automobile export destinations are spread over more than 200 countries and regions around the world, and it has more than 100 factories overseas. , but the internationalization path of Chinese car companies is still full of difficulties and challenges.

Although boycotts like those encountered in India were rare before, Chinese car companies that have gone abroad have also experienced the feeling of being "hit".

In 2007, China Zunchi, which was confidently entering the European market, received only 1 star for the "occupant safety" item in the crash test of the All-German Automobile Club ADAC.

The subsequent Qoros 3 received the highest score of the year in the European mainstream crash test E-NCAP, but in exchange for this, it sold 51 units in the European market throughout the year.

Let’s talk about the United States. Putting aside the “unreliable” ones like FF, GAC Trumpchi, which has participated in the North American Auto Show for four consecutive years with the strategy of “small steps and steady steps”, can be said to be cautious enough and done enough. Although I was prepared, I was defeated by the reality of Sino-US relations. The forward-looking design center established by GAC in Los Angeles

And emerging markets, which are regarded as breakthrough points by more car companies, are not much easier than Europe and the United States.

Brazil was once the largest export market for Chinese car companies. Chinese car companies began to deploy around 2008 and were once welcomed by the market with their price advantages. For example, Jianghuai Automobile entered Brazil in the second year. Achieved sales of 38,000 vehicles.

However, with the implementation of Brazil’s new tax policy in December 2011, imported cars need to pay import taxes of up to 30%, causing Chinese brands to go downhill. Chery, which chose to build a factory locally, was not able to escape Brazil's economic recession and underperformed the "broad market" amid the decline in the auto market.

The Russian market, which has relatively the best environment, has also experienced problems. In 2014, due to the depreciation of the Russian ruble due to economic sanctions, the Russian dealer Ilito Group was unable to pay the car payment to Great Wall Motors on time, involving an amount of RMB 332 million. What's worse is that the dealer involved has gone bankrupt, making Great Wall Motors trapped in a long appeal and rights protection process.

Looking at the history of Chinese automobiles "going global", it is not difficult to understand why Wang Fengying, president of Great Wall Motors and deputy to the National People's Congress, proposed "On increasing the number of Chinese automobiles in the context of the "Belt and Road Initiative" at this year's Two Sessions Suggestions on the intensity of support for “going out”.

Compared with the average unit price of EU car exports of US$25,000, the unit price of Chinese car exports is only US$15,000. Not only are the export markets dominated by less developed countries, but the promotion strategy is still to change markets at low prices. In addition, the ups and downs of the international situation and the rise of trade protectionism have also become unpredictable potential risks.

At the same time, although China's export volume is increasing year by year, its scale and efficiency are still low, and its in-depth layout, such as overseas factory building and technology and talent export, is still incomplete.

Therefore, Wang Fengying called in her suggestions to formulate a national strategy for Chinese automobiles to "go global", build a "Belt and Road" comprehensive service platform, and establish and improve risk prevention and control and rights protection mechanisms to protect the interests of Chinese automobile companies. At the same time, car companies should also focus on brand building, seize the development opportunities of new energy vehicles, and actively export technology, talents, capital and culture.

Written at the end

Perhaps the development of Chinese mobile phone and Internet companies in India can bring some lessons.

Xiaomi has been the leader in smartphones in India for five consecutive quarters; Indian users spent a total of 5.5 billion hours on TikTok in 2019, and 6 of the top 10 most downloaded apps in India from China.

The success of Chinese products in India is partly due to the technological advantages of the products themselves. The Times of India commented that OnePlus is “one of the best smartphones you can buy in India.” On the other hand, it is also excellent localized marketing and the creation of fan culture, such as the advertisements of Aamir Khan holding a vivo mobile phone all over the streets.

Perhaps for Chinese car companies, the difficulties of "going global" are not much less than ten years ago, but their own strength has long been "not what it used to be".

The obstruction of the Indian market may have indeed caused Great Wall Motors to suffer losses, but it may as well be regarded as an episode and not affect the confidence and courage to "go global".