Gasgoo Munich- From 2021 to 2026, Chinese automakers have pledged roughly $17.7 billion in cumulative investment across the ten ASEAN nations.
Sun Xiaohong, former secretary-general of the automotive internationalization committee at the National Chamber of Commerce for Import and Export of Machinery and Electronic Products, revealed these figures at 2026 International Forum (TEDA) On Chinese Automotive Industry Development (2026 TEDA Forum) on September 20. To put that number in perspective: China is expected to export about 990,000 vehicles to ASEAN in 2025, worth $15 billion. The money committed over the past five years is nearly on par with what the industry earns in a single year from sales.
Image source: 2026 TEDA Forum
But spending is easy; standing your ground is hard. As the scale of investment swells, so do the challenges of implementation. Discussing the industry's next phase, Sun outlined the core objective for Chinese automotive exports during the 15th Five-Year Plan: stand firm, and bring it back.
Money Down, Problems Up
Clearly, Chinese automakers are accelerating their investment pace in Southeast Asia.
Investment in ASEAN falls into three phases: 2010 to 2014 was a testing period marked by light-asset forays totaling roughly $500 million. From 2015 to 2021 came the M&A expansion phase—Great Wall Motors' acquisition of General Motors' Rayong plant in Thailand happened here—with investment hitting $2.85 billion. Since 2022, the market has entered an explosive phase, with projects from CATL and BYD taking root, pushing investment to $13.8 billion. The last four years alone account for 80% of the cumulative total.
Investment is concentrated in two markets: Indonesia accounts for 36% and Thailand for 32%. By value chain segment, vehicle assembly projects make up 54% of the total, while power battery investments account for 34.5%, with the remainder going to auto parts. At present, around 180 Chinese auto parts suppliers have established a presence in Southeast Asia.
An investment boom, however, doesn't guarantee a foothold. Chinese automakers are shifting from "bringing in capital" to "bringing in systems," yet the transition is far from smooth. Contradictions between local policies, supply chains, market competition, and operational quality are beginning to surface.
Thailand offers the clearest example. Under the EV3.5 policy rules, by 2027, companies must produce three vehicles locally for every one imported into the Thai market to offset the quota. This May, Thailand's top ten industry associations jointly petitioned the government to sharply raise consumption taxes on imported vehicles. Their core fear: an "industrial cliff."
This "industrial cliff" refers to the risk that if automakers reduce local production and increase imports in the future, existing factories, supporting ecosystems, and domestic manufacturing capabilities could be hollowed out. The concern isn't just short-term competition, but whether local industry will be marginalized once policy cycles end.
Indonesia's pressure is equally palpable. Local targets mandate localization rates climb from 40% starting in 2026, reaching 60% by 2029, and hitting a hard 80% by 2030. Meanwhile, Indonesia applies differential treatment to battery types: nickel-based batteries enjoy full tax incentives, while non-nickel options like LFP batteries receive significantly reduced benefits.
Sun noted a local saying in Indonesia: policy looks ten steps ahead, plans five, but acts only three. The implication is that local policy adjustments are swift, and companies cannot build long-term strategies solely on current regulations.
Beyond policy, market issues are surfacing. For some time, Chinese automakers in Southeast Asia have relied on price tactics to drive growth. In September, the Ministry of Commerce, Ministry of Industry and Information Technology, and State Administration for Market Regulation jointly issued guidelines for overseas compliance. Of the seven behavioral norms listed, six relate to pricing. This signals that low-price competition has evolved from a business issue into a regulatory risk abroad.
Sun cited several market observations at the forum. Normally, the three-year residual value for Chinese brands in Thailand is about 56.8%—already decent locally. Yet some models, subjected to aggressive discounting, have seen new-car prices fall below their projected residual value. In extreme cases, individual brands have operated with such disorder that their after-sales and warranty systems have effectively collapsed.
"Price competition has no future." While moderate price wars help open markets, if low prices fail to secure stable market standing, brand trust, and after-sales systems, the result is merely a one-off transaction in overseas markets.
From "Going Out" to "Standing Firm"
Price wars are just the surface friction. The deeper reality is that some Southeast Asian nations are already seeing investment clustering and homogenous competition.
Although ASEAN has a free trade framework, it is not a fully unified market. Each country maintains its own certification systems, consumption taxes, quotas, and licenses. Localization rates are calculated nationally, with no unified ASEAN standard. Expecting to treat Southeast Asia as a single monolithic market and replicate the same capacity model everywhere simply isn't realistic.
Facing this complex regional landscape, Sun proposed a new direction for global expansion: "Stand firm, bring it back."
"Standing firm" means establishing stable localized operations once a market is entered. During the "14th Five-Year Plan," China's automotive exports focused on "going out" and "moving up." "Going out" meant scale expansion—targeting over 8 million vehicle exports nationwide by 2025. "Moving up" meant gaining global recognition for new energy and intelligent connected products.
But the "15th Five-Year Plan" demands an upgrade. Standing firm means not exiting markets easily, avoiding short-term trading, and genuinely building local capacity, supply chains, and brand trust.
"Bringing it back" isn't just about repatriating profits; it's about creating a closed loop between overseas operations and domestic R&D. If overseas business relies long-term on low prices and subsidies without generating sustainable returns, it cannot feed back into technology development. Once the market shifts, companies risk getting trapped in a cycle of enter, expand, struggle, and exit.
Sun offered a forecast at the forum: commercial vehicle exports could hit 1.5 million units in 2026, while passenger vehicle exports aim for over 10 million. Yet he emphasized that quantity isn't the goal—growth quality and sustainability are.
That point is critical. Historically, Chinese automotive exports focused on scale, speed, and incremental growth. But in this new stage, success depends on whether companies can sustain operations locally and convert export capabilities into industrial capabilities.
Especially now, Chinese automakers in Southeast Asia have entered a phase of full industry-chain exports. Whole vehicles, batteries, power electronics, chassis, rubber, and glass components are all migrating outward alongside the OEMs.
Yet capacity implementation is uneven. Thailand's project operation rate has reached 76%, Indonesia around 40%, while Malaysia and Vietnam sit at roughly 24%. This gap shows that while Southeast Asia is forming the embryo of an industrial cluster, progress varies by nation. Some markets are in a capacity release phase, others are still under construction or ramping up.
This means the second half of China's global push must answer three practical questions beyond just spending money: first, can investment truly convert into capacity? Second, can capacity integrate into local industry? Third, can local operations generate sustainable returns?
The question Chinese automakers must answer next is whether investment can translate into industrial capability that truly takes root. If they simply walk away after a round of price wars, no investment figure—however high—will sustain China's long-term standing in Southeast Asia.
