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Behind China's auto "big country": foreign capital takes 70% of profits

2020-08-09 14:20

The Chinese auto market has become a paradise for the global auto industry. If a multinational auto company has not put the Chinese market in the first place, it would be rare news.

The ever-increasing auto production and sales have pushed China to the pinnacle of the world's auto manufacturing power, but behind the market boom, it is difficult to conceal the fact that the domestic auto industry is weak. When many auto companies discovered China, a huge market of 13.65 million vehicles, in the sorrow of the global auto market last year, they seemed to have caught the straw. Global auto giants including Toyota, Volkswagen, General Motors, Nissan, Honda, and Hyundai-Kia have turned to China. This year, mainstream multinational auto companies have achieved more than 20% growth in sales in China.


With the rapid increase in sales, the Chinese market has quickly become the main source of profits for multinational giants. In the first quarter of 2010, the German Volkswagen Group achieved a pre-tax profit of 703 million euros, of which 286 million euros came from the Chinese market, three times that of the same period last year. The profit of nearly 300 million euros has accounted for 40% of the Volkswagen Group's total profit before tax. In order to make greater profits, Volkswagen decided to continue to invest 1.6 billion euros in China. So far, in the next three years, Volkswagen will invest 6 billion euros in the Chinese market. Toyota Motor, the world's largest automobile producer, lost US$4.4 billion in fiscal 2008, but according to media reports, Toyota's two joint ventures in China, FAW Toyota and GAC Toyota, had profits of about US$1 billion in 2008. Honda Motor’s 2009 fiscal year net profit was 3.18 billion US dollars, of which net profit in China reached 2.86 billion US dollars. In order to capture more high profits in China, more and more multinational car giants have established their Asia-Pacific headquarters in China.

Wang Xiaoguang, a researcher at the Decision Consulting Department of the National School of Administration, believes that the pattern of China's auto market is that international capital takes 40% of the capital, occupying 50% of the share, and grabbing 70% of the profits. The rapid expansion of market capacity is the most stable source of profits. Industry insiders generally predict that this year China’s auto market will continue the development trend of last year and continue to grow strongly. The annual production and sales volume is expected to exceed 17 million vehicles. As a result of the further expansion of the market, more profits are being pocketed by foreign giants. However, behind the fast-growing market is the dilemma that China's auto industry has not yet mastered the advanced technology of global automobiles.

Industry experts have long been worried about the “big but not strong” domestic auto industry. Xiang Songzuo, chief economist of the Global Institute of Finance and Economics, has long discovered that foreign giants make money for design, new materials, and new technologies. The main responsibility is the role of the manufacturer. Looking at the survival status of more than 100 domestic vehicle manufacturers, all of them have been pacing at the lower end of the automotive manufacturing industry chain. Few companies have ranked among the top international teams in terms of independent brands.

Recently, the International Organization of Automobile Manufacturers (OICA) announced the 2009 global automobile production statistics. According to statistics, through the merger of the two micro-car companies Changhe Automobile and Hafei Automobile under AVIC Automobile, China Changan has become the automobile group with the highest output among Chinese automobile companies with 1.4258 million vehicles, ranking 13th among global automobile companies. BAIC Group, Dongfeng Motor, FAW Group, Chery, BYD and SAIC are ranked 18th, 20th, 21st, 22nd, 24th and 25th among the world's automakers respectively. Almost left behind by most mainstream foreign auto groups. China's domestic statistics on the production and sales of auto companies have always been based on the production and sales of all cars including joint venture brands and independent brands under the auto group, but this ranking conceals the true development of independent brands. From the statistics of OICA, we can clearly understand the competitive position of China's automobile manufacturing industry in the global industry.

Fu Yuwu, executive vice chairman and secretary-general of the Chinese Society of Automotive Engineering, said frankly in an interview with reporters a few days ago that as far as China is concerned, the core technology of traditional automobiles and new energy automobiles is still very much compared with the international advanced level. gap. "In terms of vehicle technology, automatic transmissions are blank. In terms of automotive electronics technology, we are getting closer to the international advanced level, and there are gaps in automotive lightweight technology. In short, in the core of automotive manufacturing. In terms of technology, there is a big gap between my country and the world," said Fu Yuwu.


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