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Special Report

July 28, 2015
 

Further Development of the Global Strategy

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Written by: Suhail Nasir
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After five successful years in both Chengdu and Wuhan, the 6th Global Automotive Forum moved to Chongqing this year. Chongqing is a city with a reputation for its strong auto industry. It is also the first time the GAF was held in summer rather than fall. During the two-day conference, many topics were discussed: The Significance of One Belt and One Road to the Development Strategy of China’s Auto Companies; Auto Financing and Leasing; Development Trends of Automotive Technology & Tomorrow’s Smart Cars; Consumer Insight: The Role of Big Data; Restructuring and Reshaping the Auto Industry; and Globalization: Integrating China’s Automotive Industry into the World.

It was a great honor to have more than 800 professionals, 78 guest speakers and 162 members of the media from around the globe at the GAF. The management also had delegations from the US, Germany and India. The forum was held alongside the Chongqing Auto Show.



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With the great success achieved in the previous forums, this year’s GAF reached a new level of success.

This year’s forum also focused on innovation. “Sharing innovative ideas; Releasing the power of thoughts; Discussing the development of the industry” was the purpose of the newly released GAF Talks program. They aimed to provide innovative ideas for the automotive industry and dedicated to creating an open atmosphere for deep thought and discussion. GAF Talks hopes to inspire audiences to think critically about every aspect of the car.

Another important approach for the reshaping of Chinese auto industry is to develop and execute a global strategy. Under the “new economic norm”, the implementation of the “One Belt and One Road” provides a historic opportunity for Chinese automobile companies. Along the “One Belt And One Road” route there is a population of about 4.4 billion people with an economic aggregate of about 2.1 billion dollars, making up 63% and 29% of the world, respectively.

Mr. Shashikant Vaidyanathan, the India-Pacific Regional Manager and Director of Peugeot India, believes that “One Belt And One Road” brings many advantages to Chinese auto makers. First, the connectivity of the road will help develop the auto market in undeveloped regions, offering new markets for Chinese auto makers. Second, it will increase the amount of trade between China and the related areas, promoting the influence and awareness of Chinese brands.

Mr. Chen Lin, the Commercial Counselor of the Department of Outward Investment and Economic Cooperation of the Ministry of Commerce, said that with the implementation of “One Belt And One Road”, Chinese companies have an opportunity to build up their international business. The Ministry of Commerce has also proposed a series of policies to grow the Chinese export market, issuing the newly revised Measures for Overseas Investment Management last October, making accessing and exporting to foreign markets much easier.

As a model for Chinese auto companies acquiring global companies, Geely Group has performed extremely well after a merger with Volvo. Mr. Li Pie Shufu, the Chairman of Geely Group, indicated that about 70% of international merger and acquisitions do not reach their expectations because of culture issues. Therefore when acquiring Volvo, Geely paid attention to the difference in management and enterprise culture. He believes this experience is notable for other Chinese auto companies.

Mr. Li also said Geely has engaged in technical cooperation with Volvo after the acquisition, which has supported Geely’s development. The two parties decided to collaborate on the development of a compact modularized basic structure. The new model–which based on this new structure–will be released in March of 2016 and will be in the market by the end of 2016. These examples show how Geely and Volvo collaborate with each other on the product development area.

Mr. Zeng Qinghong, the General Manager of GAC Group, indicated that the Chinese auto industry has improved its position by establishing joint ventures with foreign companies. However, real cooperation should not be based on government policies but should be based on the market to share resources that will benefit both sides. He also said that the old “50:50” percentage share policies will be changed since the auto companies must learn from the international stage while trying to understand core techniques and take a share of the global market.

Mr. Yuan Xueming, the Vice President of Changan Automobile, believed that Chinese auto makers must improve R&D abilities to grow the influence of the brand. Cultural factors also need to be understood. He also pointed out that the Chinese auto companies need to cooperate together to join the global market.

-Published on page#15, July-2015 edition MOBILE WORLD Magazine





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