October 11th 2011, Whilst the sales of Chinese branded vehicles fell in China, overseas markets did give Chinese car companies a pleasant surprise. Export markets were largely seen as an ‘added sales bonus’ during strong sales years from 2008-2010 but as sales are starting to slow in their domestic market more and more local manufacturers are aiming to export their products.

Dr. Patrick Steinemann, the managing director and head of the Asia Pacific Automotive Group for Merrill Lynch USA chaired a panel to discuss which expansion strategy Chinese manufacturers should use in overseas markets. Joining him on the panel were Mr. Zhi Lu Xun, the Deputy Director General from the Ministry of Commerce, Mr. Lu Jian Hui, the Deputy General Manager at Chery Automobile Group, Wilson Ni the Vice President of ASIMCO Technologies LTD, Walter Janson from Globeone, and also noted automotive analyst Mr. Max Warburton from Sanford C Bernstein.

In 2010 China exported 580,000 vehicles, which seems like a good number but in contrast to the booming local market the number is very poor. Wilson Ni pointed out “The number looks great, but in reality the number is terribly low, in 2008 we exported 6.1% of what we made and since then we have not seen a major increase”

Mr. Zhi from Chery was eager to add to that point: “Germany, Japan, Korea etc are all major automotive exporters, Germany exports 75% of what it makes, Japan 65%, Korea 50% and even Brazil exports more than 20%. China last year exported around 3% of total production.” Mr. Zhi believes that there are too many companies chasing export sales which dilutes the sales figures “We have 500 OEM manufacturers exporting 580,000 vehicles to around 200 countries and territories, this severely affects the overall industry”

Walter Janson from Globeone showed statistics that reveal that Chinese manufacturers are largely winning on price due to developing world consumer’s attitude towards low quality cars which are able to satisfy the basic demands for transport in certain markets.

Mr. Zhi believes that Chinese companies are taking the same competitive streak to overseas markets. “As soon as you launch a model in overseas markets, someone else from China will launch a similar model but priced a little cheaper” Mr. Zhi also revealed the Chinese government are starting to pay greater attention to automotive exports in a bid to improve the overall name of Chinese autos in overseas markets. At the same time Mr. Zhi revealed that he personally hopes that mergers and acquisitions in the Chinese market will improve the overseas markets. “In the last century Germany had more than 100 manufacturers, but after 20 years of M&A activities there were only ten remaining and Japan has a similar history.”

Max Warburton added his own thoughts: “For Chinese manufacturers to be successful overseas they should focus on bringing quality and not low prices to the market”. He later added “Chinese manufacturers should focus on quality, innovation and branding to reach consumers”