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Chinese carmakers are looking beyond their traditional focus on price and competition in the entry-level vehicle markets around the world and pushing up standards in terms of product and service levels, with assistance from government to guide improved networks abroad in collaboration with China's customs administration.
Speaking at last week's Automotive Logistics China conference in Beijing, Zhang Wenjun, principal programme officer from the Ministry of Commerce (pictured), said that while carmakers have established themselves in targeted overseas markets through a competitive strategy on the low-to-middle-level segments, the bigger players are realizing that trying to maintain a competitive advantage through low-price alone is only a temporary goal.
As with the Japanese carmakers, this strategy was a good one for getting a foothold in foreign markets. This is proven by China's strong export performance. Last year's exports of vehicles and knockdown kits from China grew around 50% to 850,000 units, which was close to the peak reached in 2008 just before the global financial crisis. While this output is only about 5% of total Chinese production, and only accounts for 1% of China's total exports, Zhang said the speed of growth is 18 times faster than other export categories. It was also worth a record $10.9 billion.
However, maintaining a strategy based on low-price is not sustainable, said Zhang.
He went onto say that the government had been helping to push improvements in export markets by working with the customs administration to guide enterprises in their improvement of service and aftersales networks.
Zhang also said that the Ministry of Commerce saw it as a priority to build a platform within WTO rules as a way to improve quality and upgrade Chinese automotive products, as well as building a comprehensive service network and overseas production layout. He said the ministry would aim to promote overseas mergers and acquisitions.
He acknowledged that future competition on the global stage was not going to be without its challenges. China is facing trade barriers and other protectionist measures, especially in its leading export market in Brazil, which has increased import taxes by 30% and set high localisation requirements for production.
"However, on the whole we see drivers for further growth and there is a competitive advantage in place because the basic inventory structure is there and we still have the surplus capacity," said Zhang.
Chery Automobile, which has been exporting vehicles and knockdown kits for ten years, and has a projected export figure of 800,000 for 2012, is one of the companies working on better and more consistent quality.
Logistics manager, Yin Shi Jun, said that product design was previously based on Chinese demand but is now also being informed by overseas markets and an international vision, which brought with it the need to work on quality. Logistics plays an important role both in reaching markets and in maintaining service parts afterwards, acknowledged Yin.
"We are now making a systematic effort to follow pre- and post-sales services," he said. "With better-regulated processes we can ensure quality and consistency."
Chery announced recently that it wants to establish a complete supply chain in Brazil as it prepares for production there next year.