"Fighting overseas, if you only solve the market problem, that's just 'entry-level'."
Zhao Fuquan, vice chairman of the Global Automotive Elite Organization, honorary president of FISITA, and dean of the Institute of Automotive Industry and Technology Strategy at Tsinghua University, made this remark at the 2026 Global Chinese Automotive Elite Annual Meeting and the "China Embracing the World" Automotive Industry International Development Forum.
China's full-year auto exports could top 11 million in 2026, potentially challenging 12 million. Yet beyond those headline numbers, issues like tariffs, geopolitics, after-sales service, and talent demand closer attention. In Zhao's view, the key to overseas success lies in building a globalized company for the new automotive era.
Old Logic Hits a Ceiling: How Far Can "Made in China, Sold Overseas" Go?
The surge in Chinese auto exports has been one of the most striking industry shifts over the past five years. At the forum, Xu Haidong, deputy chief engineer at the China Association of Automobile Manufacturers (CAAM), reviewed the data: exports stood at just 995,000 in 2020, but leaped past the 2 million, 3 million, and 4 million marks between 2021 and 2023. Last year hit 7.09 million, and this year is poised to exceed 11 million.
Shifts in the domestic market have added weight to these overseas figures. CAAM data shows domestic sales fell about 22% year-on-year in the first three quarters, while exports jumped roughly 66%. Overseas markets are no longer an optional add-on; they are a vital pillar keeping the industry running.
Impressive as those numbers are, Zhao argues that equating "going global" with simply selling more cars abroad remains stuck at an "entry-level."
He points to a set of figures. Annual global passenger car sales sit around 75 million. China accounts for about 20 million, and the U.S. represents another 15 million — a market largely closed to Chinese brands. Excluding those two, the addressable market for Chinese automakers is roughly 40 million. Yet they are already flooding in with over 10 million units a year.
The problem lies in the trade model itself. For some companies, the cars arrive, but the industry and jobs stay behind. When locals don't see employment gains, resistance builds. Growth driven solely by trade won't go far.
What's more, barriers are tightening in a specific order: tariffs, quotas, and localization rates.
Data on exports to Europe highlights the context for these tightening barriers. In 2024, China exported about 100,000 pure EVs to the EU; in 2025, that figure was roughly 300,000. In the first eight months of this year alone, it reached 490,000, with a full-year forecast of around 800,000.
With EU anti-subsidy tariffs now in effect, the tax burden varies wildly by company. Xu revealed that the top-tier anti-subsidy rate hits 45%. Stacked on the 10% base tariff, some firms face a total burden exceeding 50%. Plug-in hybrids are also being drawn into quota negotiations.
Zhao put it bluntly: first come tariffs, then quotas, and finally localization requirements — "squeezing you tighter, one by one."
More thorny are the invisible, long-tail issues. In some markets, clearing parts takes ages — "not a rejection, but a delay. And delay is the best form of rejection."
If parts can't get in, maintenance lags. New energy vehicles also face gaps in insurance products and weak residual value management — each enough to wipe out the upfront price advantage.
He also warned that quality issues with some Chinese cars have already damaged reputation abroad. The window for cooperation is shorter than imagined; local partners are willing now, but that may not hold true in a few years.
Southeast Asia demands vigilance too. Zhao revealed that a price war has already ignited there; the intense competition is spreading, turning the region into a deeply cutthroat market.
He was blunt: companies that can't compete at home but look for a "blue ocean" overseas are "essentially digging their own graves."
These issues point to one fact: the path of boosting volume through trade is narrowing. To establish a long-term foothold abroad, Chinese automakers need a new playbook — specifically, building a globalized company for the new automotive era.
A New Benchmark: Redefining the "Globalized Company" in the New Automotive Era
Zhao advises against simply copying the path of traditional multinationals. Remember, foreign brands that once dominated China are now retreating; even models once in short supply struggle to sell despite price cuts.
His assessment: "Old globalization, old bottles without new wine." The world, the industry, and the landscape have all changed. Chinese companies must find a new model suited to the new automotive industry.
Moving from trade exports to localized operations, and finally to global operations, represents the three typical stages of expansion. These aren't mutually exclusive; even at the global stage, trade persists — many high-end Western brands still produce locally and sell globally.
Localization itself has tiers. Zhao notes that local production is just "entry-level." Localizing supply chains and adapting products for regions is still early stage. Even deep localized operations aren't enough; the direction is global integrated operations.
A truly global company must manage its worldwide business as a unified whole. It should use group strategy to coordinate common capabilities while granting regional autonomy for local flexibility. The goal is unified investment and multi-market reuse, continuously expanding global brand influence and long-term corporate value.
This means sharing resources globally: linking headquarters with overseas arms, and connecting different overseas regions with each other. R&D, procurement, production, sales, and service must all be interconnected.
Image source: BYD
He outlined four layers of global operations. Strategy sets the direction; capability relies on reusable product platforms to cut costs; operations treat the world as a chessboard while leaving room for regional maneuvering; and support relies on organization, culture, and systems. This is an open-book exam, he noted — fail to reach the standard, and success is impossible.
In practice, two relationships are hardest to manage.
The first is headquarters control versus regional autonomy. Too little control, and overseas units lack flexibility. Too much, and risks like operational chaos and intellectual property leakage emerge.
The second is balancing global technology platforms with regional products and regulations. Developing separate products for every small market means sales can't cover the costs. The viable path is to rely on cross-region reusable platforms, then differentiate for local regulations and user preferences.
Localization is especially critical in this era because the car itself is changing. Zhao argues that new cars are becoming "local food coupons."
Traditional localization addressed logistics, time, cost, and labor. Future cars are built on data, scenarios, and ecosystems — and data is local, ecosystems are local, scenarios are local.
In an era of security-first priorities and reshaped geopolitical landscapes, localization is no longer a cost-based choice.
Beyond that lies the contest of brand, corporate citizenship, and corporate culture.
Zhao proposes that measuring a globalized company shouldn't stop at sales volume. It must also consider whether global resources are synergized, whether tech platforms can be reused across regions, whether regions can profit independently, whether innovation flows both ways, and whether the brand holds global leadership.
He specifically explained the term "corporate citizen." Citizens have borders; companies operating abroad must respect local rules and fulfill responsibilities like a citizen.
The industry saying "from going out to blending in" speaks to this. Entering a market crosses a geographical distance, but becoming part of the local industrial ecosystem and social fabric is what truly means standing firm.
Breaking the Deadlock with New Joint Ventures: Mastering the Rhythm of the Three Stages
Zhao believes joint ventures are an underrated card in Chinese automakers' hands. For over 40 years, JVs were the path for foreign capital entering China. In this new stage, that card can be played in reverse. He calls this "new joint ventures," or "reverse JVs."
Early JVs were rigid about 50-50 splits. New JVs offer far more flexibility: you can hold a controlling stake, a minority stake, or even let the foreign partner hold the majority overseas.
He cited a case: a joint venture between a Chinese and a French company where the foreign side holds 51% and the Chinese side 49%. Some questioned the loss of control. But in Zhao's view, the foreign partner controls local channels and resources. Letting them own more, do more, and earn more — as the saying goes, "no profit, no early rising" — makes it easier to crack the market.
The essence is deep alignment of interests.
For different markets, he recommends a quadrant approach based on the localization support the partner can provide and the height of market barriers.
In markets with high barriers and mature foreign partners, "borrowing a boat to go to sea" — leveraging partner resources — offers the fastest, lowest-cost, and lowest-risk entry. The difficulty lies in sharing profits. Other markets are better suited for joint expansion.
A single template won't work; everything depends on market conditions.
In terms of rhythm, he advocates "consolidating 1.0, reserving 2.0, and striving for 3.0."
Stage 1.0 builds the fundamentals of quality and service; once brand reputation is shattered by quality issues, recovery is hard. Stage 2.0 focuses on deep cultivation in key regions, prioritizing resource linkage over single-point sales. Stage 3.0 achieves global integrated linkage.
Xu Haidong, meanwhile, highlighted two shortcomings that must be acknowledged in the expansion process.
One is the export of management models. Relying on the Chinese model of overtime and grinding in Europe won't work, he said. Getting Europeans to accept Chinese management depends not on the rules themselves, but on the corporate values behind them. If values don't stand, the rules won't land.
The second is the gap in international talent. Being an international talent isn't just about wearing suits and tasting wine, Xu noted. It's about leadership — moving local employees with personality and values, not an attitude of "I pay you, so you listen to me."
He offered a lens for judging international maturity: if headquarters disappeared tomorrow, could global business continue as usual? Overseas systems cannot rely on remote control from HQ; they need localized operations and decision-making power — a lesson most companies are still learning.
The threshold for scale is also rising. Zhao cited an industry leader's assessment: 3 million units is the survival line; 5 million is just "scraping by"; and 10 million is living comfortably. Future companies with 20 million volumes may emerge, and Zhao believes these will inevitably be ecosystem-based companies — relying on synergy across multiple brands, markets, and business models, not simply piling up sales.
Xu estimates that among the global top 10 by sales, three are already Chinese companies. During the "15th Five-Year Plan" period, that number could rise to five or six.
He also stressed that telling China's story well and spreading its image relies heavily on the automobile. Every car sold stays on the road for a decade; the owner, their children, and their relatives grow with it. When that car drives on foreign soil, it represents China. It carries Chinese manufacturing, quality, and service — behind it lies China's story, image, and soft power. As he put it, "It's different from home appliances, clothing, or shoes. In the future, it represents China."
The achievements in Chinese auto exports are undoubtedly inspiring, but at such a juncture, staying calm matters more than getting excited.
Capturing territory is hard; holding it is harder. Becoming a globalized company is both an opportunity to expand and the support needed to defend ground.
Beyond the 10-million mark, the competition is no longer about who has the most nerve, but who has the more solid system. Only by rooting locally and profiting through synergy can the industry move step by step toward becoming a true powerhouse.
