Chinese automakers need to improve design details and global taste

Gasgoo.com: Would you give us a brief introduction of FAKT's major business and related activities in China?

Xaver Fackler: Founded in 1996, FAKT is headquartered in Germany and has divisions in China, Sweden and Italia. FAKT is authorized as a testing laboratory by the accreditation body of the "Kraftfahrt Bundesamt", German Approval Authority, and is one of the five independent testing laboratories accredited by the "Kraftfahrtbundesamt" for complete vehicle, systems and parts certification within the German statutory defined domain.

Our main business includes Homologation and Certification Services, which account for 25% and 75% of our total revenue each. Through Homologation we use our long-term experience in the automobile business to help automakers and parts makers export products to Europe, while by offering Certification Services we win many world-renowned customers, including complete vehicle OEMs, research institutions and engineering services companies.

We set foot on China by setting up an office in South China's Guangzhou city. We have provided a lot of certification services to brake-parts suppliers and auto lighting suppliers in the country.

Gasgoo.com: Why did FAKT choose to enter China? What's your business plan for this market?

Xaver Fackler: Our target is to provide more authentic, proficient certification services to Chinese customers. For those Chinese suppliers who hope to explore overseas markets, the EU market tends to be more attractive than North America where its own enterprises are fighting for survival amid the current financial crisis. But the EU has more strict access standard than the latter.

For example, all complete vehicles and components must have the e-mark for sale across the EU market. The E-Mark is the compulsory mark for vehicle safety systems and components and was established by an EU committee according to an EC directive. With our far-reaching experience and our excellent know-how, we can use and optimize our testing equipment and devices to manage even time-consuming test proceedings within a short time at the highest quality.

In future we will continue to provide technical support for Chinese OEMs in vehicle design and engineering services. Chinese automakers have already exported vehicles to developing countries and in future, they have a great chance to export cars to the EU and North America. Thus what we want to do here is to help them meet the market access standard by improving their quality.

Gasgoo.com: Can you specify what kind of opportunities do Chinese automakers and suppliers have?

Xaver Fackler: Yes. Economic crisis sees consumers shift from luxury cars in Europe to more economic cars like Renault Logan. Meanwhile governments launch incentives for people swap polluting older models for newer, fuel efficient ones, and demand for these cars are steadily increasing in the region.

Chinese suppliers have much more room for development in the EU market, in my view. For these suppliers entering Europe could pave the way for their global expansion. The labor cost of Chinese suppliers is only one-twentieth of German suppliers, though only 20% of Chinese suppliers can meet Germany's quality standards. Take brake components for example, Chinese-made brake products currently account for 5% of EU's brake market, but personally I believe this share will surge to 30% or so in the next five to 10 years.

Gasgoo.com: What do you think of the quality problems in China? What are the shortcomings?

Xaver Fackler: Back in 2007 we did an emission test on Shuanghuan CEO. You know at first glance the car does indeed look like an exact copy from the BMW X5 stylings but what we finally concluded is that it's actually a low-quality imitation. China is well known for making brand name imitations with cheap prices, but they are still weak in quality competitiveness.

There are two shortcomings, or two aspects which Chinese automakers need to improve. One is design details. Typical European car buyers may be more interested in a few design details such as the noise of the car door or interior convenience. The other is the global taste. Chinese homegrown automakers generally make cars in line with tastes of Chinese consumers, but seldom pay attention to the need of overseas car buyers. European consumers will not buy a car not of their style.