- 2018-10-17
Sino-Japanese car companies war in Southeast Asia
Southeast Asia is "a piece of fat": With a population of more than 600 million and a gross domestic product of more than US$2.3 trillion, the demand for import and export of automobiles is in short supply. For the Southeast Asian market, many car companies around the world have deployed their troops and made far-reaching plans, and many car companies have directly chosen to build factories in Southeast Asia. Japanese Honda, Nissan, Toyota and other manufacturers have already begun to aggressively enter the Southeast Asian automobile market, and Chinese car companies have also focused on them in order to win the ideal market share.
In Southeast Asia, Japanese cars account for more than 70% of the market share and are regarded as the "base camp of Japanese car companies", and Chinese car manufacturers have also built large factories here. SAIC Motor plans to invest nearly 200 billion yen to build plants in Thailand and Indonesia. This is the first time that SAIC has built a mass production plant overseas and will compete with Japanese automakers through a low-price strategy. However, although Chinese car companies are actively investing under the promotion of government policies, there are still many issues in terms of quality. Whether it can win the favor of Southeast Asian consumers is still unclear.
At the end of November 2016, the "Thailand International Auto Show" began to be held in the suburbs of Bangkok. Different from previous years, due to the death of the former King of Thailand, Phumibol, a solemn atmosphere was enveloped in the venue. There is no background music in the exhibition areas of Toyota and other companies, while Chinese car companies have launched a fierce propaganda offensive.
In the exhibition area of SAIC Chia Tai, a joint venture between SAIC and Thailand Chia Tai Group, accompanied by lively music and video, the narrator said that all functions can be obtained at a suitable price. Two SUV models, "MG" and "Riteng" are being introduced. The staff of SAIC Zhengda warmly applauded the atmosphere of the scene.
Prior to this, at the end of October, SAIC completed the construction of its plant in Chonburi, eastern Thailand. The plant is SAIC's largest overseas mass production base, with an annual production capacity of 200,000 vehicles. Although SAIC has not announced the total investment, it is estimated by local media to be at least 30 billion baht (approximately 5.81 billion yuan). In addition, SAIC is currently building a factory under the "Wuling" brand in Indonesia and General Motors of the United States. The total investment is 700 million U.S. dollars and the annual production capacity is 150,000 vehicles.
SAIC's advantage lies in its low price. The small car "MG 3", which accounts for 70% of SAIC's sales, is about 20% cheaper than the competing model Toyota "Vios". The female teacher (33 years old) who bought MG 3 six months ago happily said that the design is great and cheap, which surprised me very much. Pongsak, vice president of MG Sales, SAIC Zhengda's sales company, said, "We are relatively low-profile, and if we want to succeed, our price strategy is very important."
Beiqi Foton Motor, the largest commercial vehicle manufacturer in China, will start a pickup truck production plant in Thailand in the next 12 months, with an annual production capacity of 10,000 vehicles. This is another overseas production base of Beiqi Foton after Russia and India.
Geng Chao, general manager of Beiqi Foton's Thai subsidiary, said that the Thai plant will be used as a springboard for a full-scale attack on the Southeast Asian market. The total investment in the factory exceeds 1 billion baht, and more than 55% of the parts and components are planned to be purchased locally to improve price competitiveness.
Chinese car companies are also actively committed to the field of pure electric vehicles (EV). Beijing Automotive Group, the parent company of Beiqi Foton, will start a pure electric vehicle assembly plant in Malaysia in 2017. In order to comply with the traffic regulations in Malaysia and Thailand, a right-hand drive pure electric vehicle was also revealed in November 2016.
The production capacity of SAIC's two plants is equivalent to more than 10% of the overall annual sales of new cars in Southeast Asia. If the new factory runs at full capacity, its production scale in Southeast Asia will be close to some of the lower-ranked Japanese manufacturers.
However, there are many issues in sales. The sales share of Chinese car companies in the six major countries in Southeast Asia accounts for only 0.2% of the total. Thai automotive analyst Intanon pointed out that there are more quality problems with Chinese cars. According to his analysis, “extremely low prices of used cars and fewer maintenance points are the main reasons that hinder consumers from buying (Chinese cars).”
Sanshiro Fukao, a researcher at Japan’s Hamakin Research Institute, also said, “To be honest, it is difficult for Japanese manufacturers to threaten leading Japanese manufacturers in terms of sales.” On the other hand, Fukao believes that “Chinese manufacturers are gaining popularity in pure electric vehicles. In terms of being ahead of Japan, it may take advantage of the bullish policies for pure electric vehicles launched by the governments of Thailand and other countries to find a chance to win."
Japanese car companies have built a strong sales network in Southeast Asia for many years and have formed a brand appeal. Can Chinese car companies attract consumers with low-cost and pure electric vehicles? Success or failure in Southeast Asia may also affect the global strategy of Chinese car companies.
Reasons for Chinese car companies to actively explore the Southeast Asian market
There are two main reasons why Chinese companies are actively entering the Southeast Asian market recently. One is to respond to the "One Belt One Road" concept proposed by the Chinese government. If China can promote infrastructure investment in Southeast Asia, the demand for engineering pickup trucks and other commercial vehicles will surely increase. In addition, with the expansion of the middle class in Southeast Asia, if infrastructure such as roads can be improved, the demand for passenger cars will also increase.
In other words, marching into Southeast Asia can be said to be a unified step by enterprises and governments. The active Chinese companies are all large state-owned enterprises. The huge investment projects made by Chinese companies in Southeast Asia seem to be difficult to achieve by relying on their own capabilities. It can be seen that companies hope to ultimately rely on the government's ideas for the aftermath.
The second reason is that due to the economic downturn in Russia and Brazil, China has lost its main export targets. As an export destination of Chinese cars, Southeast Asia's share is increasing year by year. China realizes that Chinese cars have a certain degree of acceptance in Southeast Asia, which is also one of the reasons why Chinese companies actively enter Southeast Asia.
The reason for the third box is the gradual increase in demand in the Southeast Asian automobile market. Thailand is the largest automotive demand market in Southeast Asia. Although it has overcome the setbacks of SCG, it will not necessarily be smooth sailing in the future. In order to seize the opportunity to catch up with Thailand, Indonesia has introduced policies to attract small car production, which is expected to become the largest car market in Southeast Asia; Malaysia will also strive to become the center of new generation cars such as pure electric cars.