Considerable attention has been paid to the Chinese automotive world, as the worlds biggest and at the same time fastest growing market, being a topic in newspapers all around the world. However, recent export attempts to Western countries as well as high-profile international acquisitions and take-over attempts by Chinese automobile players have shifted media attention. After political encouragement to internationalization of Chinese automobile companies with the ‘open door policy’ in 1979 and the ‘going out policy’ in 1999, as well as the WTO entry of China in 2001, the time seems right to go abroad: A new era of internationalization has begun for Chinese automobile companies.
Promoting the establishment of visible Chinese brands in China and the rest of the world is one of the key goals to the automobile industry in the 12<sup>th</sup> five-year plan. Today Chinese brands have about 27% of sales volume in China. Getting a first grasp of the internationalization we look at exports in 2010. Changan, Chery, and Great Wall show up as most internationalized automobile companies to date. The export figures taken alone however show Chery on top.
Figure 1. Export share 2010 (for FAW 2008 numbers taken) of Chinas largest 12 carmakers against total exports (Kasperk et al. 2011, data: SIC 2011)
Against scientific theory, the highest export share of Chinese automobile manufacturers indicates, that major exports do not take place to psychically close markets, except of Vietnam.
Over half of the top-10 export countries can be clustered to the Greater Middle East. The countries represented account to rather low, or lower middle-income countries to the classification in the World Bank list of economies. This explains, why those are topping the export statistics. The depicted countries need competitively priced vehicles (CAAM 2011 states an average Chinese exported passenger vehicle at 4,760 Euro) and have lower quality and safety requirements than Western countries.
Figure 2. Export share 2010 by country of Chinese automobile companies (Kasperk et al. 2011, data: CAAM 2011)
Exports to less developed countries ease competitive pressure in the small and medium car segment in the home market. Assembly plants in markets with growth potential like Russia, Vietnam, and Brazil follow the aim to position Chinese carmakers for the future. International acquisitions (e.g. Volvo, Saab) help to upgrade technological expertise of automobile companies and allow the establishment of brideheads in key European automobile markets. In addition, Chinese carmakers build-up outward directed cooperations with established brands to speed up the globalization of the Chinese automobile value chain.
A military strategy of Mao can be taken to explain the process of internationalization with exports and production locations abroad: ‘Encircling the City from the Countryside’.
Figure 3. Countries with international activities of a Chinese carmaker (* indicates production) (Kasperk et al. 2011, data: own research)
For a more detailed look into the ‘Internationalization of Chinese Automobile Companies’ the likewise-named book provides insight to the Chinese automobile industry and its 12 largest players. Company profiles with history, shareholder structures, philosophy, management, models, cooperation and technology strategy are provided. A preview can be found here.
Chinese Automobile Companies go West | China Auto News