A Research Report on the Change in Global Auto Industry (XIV)

3.  Chinese brands will meet with setbacks on the road of globalization

The financial crisis has led to the deterioration of the external environment of the international market. The opportunity is getting smaller for Chinese-brand carmakers to take part in overseas competition, and they suffer temporary setbacks at the beginning of their globalization.

How has the financial crisis impacted on China's domestic auto industry? The most obvious impact is the sharp decline in vehicle exports. In the first five months of 2009, China exported a total of 111,700 automobiles, down 61.5% from a year earlier. The deterioration of the international market plunged China's auto exports to the bottom, and the current change has slowed down the step of Chinese brands going global.

Our survey showed that 85.7% of the respondents believed that the "deterioration of the international market has slowed down the step of Chinese brands going global."

Judging by the setbacks for exports, the industry survey respondents believe that Chinese-brand automakers have been affected by the financial crisis mainly in three aspects:

① The decline in exports has a negative impact on the revenues and profits of Chinese brand automakers, and it is the most direct impact.

② At present, whether in the developed markets such as Europe, the United States or in the emerging markets like Eastern Europe, the impact of financial crisis is so obvious that the possibility of selling Chinese-brand vehicles in these markets is getting smaller. China's vehicle exports are moving back to the Middle East and African markets of 3-5 years ago, and this trend will see no sign of reversal in the short term.

③ The setbacks in the globalization of Chinese-brand automakers will affect their ability to enhance international competitiveness. Nowadays when the domestic market is hot and the global market demands are dropping sharply, many Chinese companies have become less ambitious about global expansion and are devoted to the domestic market.

However, as we can see from the change in the global auto industry, globalization is the means of survival for independent-brand automakers and therefore is the way they must go. Due to this round of crisis, automakers in China may have little or no chance to boost their international competitiveness significantly over the next 3-5 years, and this actually means a great loss to Chinese-brand automakers.

(To be continued)

A Research Report on the Change in Global Auto Industry (I)

A Research Report on the Change in Global Auto Industry (II)

A Research Report on the Change in Global Auto Industry (III)

A Research Report on the Change in Global Auto Industry (IV)

A Research Report on the Change in Global Auto Industry (V)

A Research Report on the Change in Global Auto Industry (VI)

A Research Report on the Change in Global Auto Industry (VII)

A Research Report on the Change in Global Auto Industry (VIII)

A Research Report on the Change in Global Auto Industry (IX)

A Research Report on the Change in Global Auto Industry (X)

A Research Report on the Change in Global Auto Industry (XI)

A Research Report on the Change in Global Auto Industry (XII)

A Research Report on the Change in Global Auto Industry (XIII)

A Research Report on the Change in Global Auto Industry (XV)

A Research Report on the Change in Global Auto Industry (XVI)

A Research Report on the Change in Global Auto Industry (XVII)