Independent Brand To Resist Foreign Affairs: Firmly Upholding The Doctrine Of "Encircling The Cities By The Countryside"

Xiao AI (a pseudonym) is the director of overseas business division of an independent brand enterprise in China. Since 2010, he obviously felt the increase of orders on hand.

However, their companies have been cautious about the market rebound after this financial crisis. In the internal meeting, the company has consistently implemented the following measures: long, short and short.

"Even if the buyer asks for a six month long order, we usually sign only two months or so with us."

Xiao AI said this is the company's risk of market instability in order to avoid the financial crisis.

Xiao AI's company has been negotiating with the relevant departments of Mexico. No accident. In the near future, a small number of prototype cars will be exported to Mexico.

Mexico is known as a bridge to enter North America, but Mexico's emission regulations are very strict. Domestic brands, including Geely and FAW, had planned to enter Mexico before, but they were delayed by the financial crisis.

"The financial crisis has suppressed consumption. Although we are still cautious about the international market, we must make good reserves."

Xiao AI said it would not be caught off guard when the market resumed.

Seeking a new export mode, the global financial turmoil in 2008, China's auto export industry is in a predicament. The five traditional markets of China's independent brand export, the Syria market slipped by 60%, Algeria dropped by 50%, Iran dropped by about 30%, Vietnam dropped by about 40%-50%, and Russia's export market, which was attacked by the unstable political situation, almost stagnated.

There are indications that domestic independent brand enterprises are launching a new round of overseas markets.

In May, Chery released two RV cars in Taiwan, A1 (Taiwan renamed FRESH) and A3 (Taiwan renamed APOLA); April, the first Vietnamese joint venture factory in Jianghuai, which was officially produced in Vietnam, and was negotiating with Turkey and Mexico government to build a joint venture; An Cong, general manager of Geely automobile, disclosed that it was planning new overseas factories; BYD set its North American headquarters in Losangeles; the Jiangling Automobile which had encountered "collision door" in Europe also returned to the area with its MPV product CV9; last October, the the Great Wall automobile, which has been certified by the EU market, plans to challenge the EU's "harshest" Swedish market after exporting Italy and Bulgaria.

Statistics show that in the first quarter, China's total export volume reached 105 thousand and 600 vehicles, up 52% from 69 thousand and 700 in the first quarter of 2009.

Although there is still a big gap from the peak level in 2008, China exported 680 thousand and 700 vehicles in 2008.

However, Xiao AI told reporters that this growth momentum is still continuing. The volume of car exports in April was close to 40 thousand vehicles, becoming the largest number of cars exported this year.

With the improvement of export situation, the major car manufacturers have adjusted their export targets accordingly. The export sales target of Chery motor is 100 thousand vehicles, the number will double that of 2009. The proportion of BYD's annual target output of its 800 thousand vehicles is 5%-10%, and the Great Wall automobile has set the highest historical goal of exporting 150 thousand vehicles.

"Before the financial crisis, the main exporters were Chery and the Great Wall. The main export products of the Great Wall were mainly pickup trucks and off-road vehicles, but the structure of this export has changed," Xiao AI told reporters. In the past two years, enterprises such as Jianghuai, Geely, Lifan and BYD have emerged and accounted for nearly 30% of the total export volume of passenger cars.

The growth rate of "porridge" in overseas markets can not keep up with the growth rate of "monks", which makes export competition more and more intense.

Now in 1-4 months, though the total export volume of 140 thousand cars in the first four months is almost the same as that of 160 thousand in the first four months of 2008, there is still a big gap between the export volume of Chery, which is ranked first on its own brand cars, and the volume of exports in early 2008.

The export market environment has not been loosened earlier.

Xiao AI has revealed that in this round of economic crisis, the foreign auto industry has suffered a setback. After the economic crisis has just passed, the local government is bound to save the local auto industry, such as some European countries, to encourage consumption policies and encourage consumers to buy their own brand cars. Russia has banned the production and import of substandard cars by increasing the threshold of imported cars, and strengthened the way of import vehicle certification management to restrict imports.

"Increasingly fierce market environment, forcing independent brand enterprises to find a breakthrough in the overseas market."

Zhou Fangyu, vice president of PAC company, thinks.

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Jianghuai responsible for export related personnel told reporters that Jianghuai set up factories in Vietnam market is to enhance local competitiveness.

In July last year, the Jianghuai Vietnam factory was planned to start. The investment in Jianghuai project totaled 4 million US dollars. The joint venture between Vietnam and the Ministry of pport, investment and pportation cooperation and import and export company and Junye International (Hongkong) Co., Ltd. was jointly invested by JAC Vietnam automobile production and assembly company, which is controlled by Jianghuai 51%, and plans to produce 6000 vehicles annually.

"The foreign trade of independent brands has focused on technology export and brand output, and I think it has come to the era of capital export."

A relevant staff member of Chery also believes that the export mode of China's independent brand enterprises is changing.

In the first stage, there is no risk in the form of vehicle export, but the cost is relatively high, plus tariffs, and the yield is low. The second stage is to reduce costs, reduce tariffs and avoid policy barriers in the form of KD, and the third stage is joint venture cooperation.

It is still "rural encircling the city". The export of independent brand enterprises is still limited to Southeast Asia, Middle East, Africa and other developing countries. Zhou Fangyu believes that "China mainly aims at the low-end purchasing power of low-end market, and develops the consumer groups which originally can not afford to buy cars." however, the common problem of these developing countries is that they face high tax barriers, which makes the profits of their own brand exports obviously low, and to a certain extent, this is a region disdained by Western automobile companies.

Coupled with the disorderly competition in this part of the market, Chinese cars have to adopt abnormal marketing channels in order to get into these areas. "This shows that China's automobile exports are still at an early stage."