Text: Jan Holmberg Photo: Barry Li

In 2009 China produced over 13 million vehicles and so took over the position as the largest motor vehicle manufacturer in the world. So far the growth has been driven by the increase in local demand. In the future, increased exports will become an increasingly important factor.

However, the Chinese automotive industry needs to be upgraded, and the change process is in full swing. In 2009 China State Council announced a three-year plan, “Automotive Readjustment and Vitalization Plan". According to this very ambitious plan the automotive industry will be consolidated so that the level of technology in the industry is raised significantly and only a handful of very large players remain. According to the plan this may well take place through the acquisition of foreign companies in order to access their cutting-edge technology. Chinese companies should then be able to take the technology leap enabling them to match foreign competitors more quickly at relatively low cost.

In October 2009 several very important Chinese governmental agencies came together and issued a document (“Opinion on Promoting the Continuous and Healthy Development of Vehicle Related Products Export") setting out how to achieve the plan´s objectives. This document lays down a target for an annual export volume of vehicles and components of USD 85 billion by 2015 with a continuing annual growth in export volume of 20%, and that by 2020 China´s automotive exports shall represent 10% of the world market. Strong and concerted efforts are indeed being made!

China has more than USD 150 billion invested outside China. China´s “Go Global Policy" was already laid down in its 10th Five Year Plan (2001-2006). Here it is clearly stated that China, through the globalization of selected “national champions" among state enterprises, shall challenge the world leaders in various industry sectors.

Beyond the automotive industry, China is the world´s largest geographical market for a number of industries such as coal, cement, steel and mobile phones. This of course creates an excellent platform for China´s continued international expansion. Swedish companies that want to maintain their market positions should acquire knowledge of what their Chinese competitors are doing, as well as identify the basic strategies/considerations that represent the driving forces behind the rapid advance of their Chinese competitors. It is important to note that the picture is far more complex in terms of competition from state controlled enterprises.

The concern that is sometimes expressed when Chinese companies  acquire what they lack is understandable, e.g. technology, technology platforms, intellectual property rights, etc. It is well known that this often takes place in order to ensure that the continuing globalization of state owned enterprises can continue unhindered. It can be reasonably assumed that the state owned enterprises will share relevant technology etc. with other state owned enterprises that are venturing out in the world. It is of course all about implementing the “owner´s" strategies. In the light thereof, the debate on the sensitive issue of selling technology platforms etc. that followed the discussions on the sale of Saab and Volvo becomes more understandable.