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"A joint venture is not working well" seems to have become the destiny of foreign bus companies in the Chinese market. However, some recent news shows that a wave of joint ventures by another bus company has started.
Regroup
Since the end of last year, news about joint ventures and cooperation with passenger cars has been heard from time to time. First, there was media coverage that FAW Bus signed a letter of intent for joint venture with South Korea’s Daewoo Bus and each invested US$10 million to establish a joint venture in Dalian. Recently, there have been reports that South Korea's Hyundai Buses intends to seek "deep cooperation" in Sichuan for vans.
The reorganization of GAC and Shenfei Hino buses, which have attracted wide attention in the industry, has also witnessed new progress. GAC Group and Toyota Hino reorganized the Shenfei Hino project and reached a cooperation agreement. Although this matter has yet to be confirmed by relevant parties, it is widely believed in the industry that the news is not groundless. According to analysis, GAC's integration of its Yangcheng and Denway passenger cars last year was to prepare for a joint venture of commercial vehicles. Japan’s largest shareholder, Hino Motors, also intends to “get pro-grace†with GAC.
History of old pain
Since the reform and opening up, many foreign passenger car companies have entered the Chinese market. Mercedes-Benz, Volvo, Iveco, Daewoo, Hino, and Isuzu have established joint ventures in China. Among them, although some companies have experienced short-lived glory, most of them have no achievements, and some have difficulties in management and even have no choice but to withdraw.
There are many opinions in the industry regarding the reasons for the failure of bus joint ventures. For example, joint ventures generally produce high-end products with limited market capacity; domestic passenger cars have made rapid progress in recent years, and the advantages of joint venture products have gradually weakened. Some people think that the contradiction between the joint venture partners in the localization of parts and the decision-making power of products restricts the development of the company.
Scania's "non-joint venture" strategy seems to confirm the viewpoint that "bus companies are not suitable for joint ventures". At the Shanghai Bus Show in March this year, He Mochi, general manager of Scania (China) Co., Ltd., said that Scania currently does not have joint ventures in China to provide chassis-based, only high-end market.
Another way
There are few successful cases of joint venture bus companies. Does it mean that bus joint ventures can hardly make a difference? Will foreign bus companies ignore the temptation of the Chinese market?
At the Guangzhou Automobile Summit last year, Lu Zhifeng, general manager of GAC Group, analyzed the reasons for fewer successful joint ventures for commercial vehicles in the report of China Automotive Industry in the Post-joint Venture Era. He said that the ratio of domestic and overseas prices of similar products for commercial vehicles is only 0.4 to 0.5:1. Simply relying on local production can no longer solve the problem that the cost of imported products is much higher than that of similar domestic products.
To solve the problem of product competitiveness, GAC concluded that it is developing “Chinese productsâ€, that is, localized development. Lu Zhifeng believes that only about 40% of the responsibility for reducing costs will be borne by the development team. Combined with localized production, it is possible to make imported products have a higher price/performance ratio and basically have competitiveness. It is not difficult to judge that if GAC starts a joint venture project for commercial vehicles, it will certainly find new ways to adopt a new profit model.
According to a report from the FAW Group on the official website of the State-owned Assets Supervision and Administration Commission, a joint venture between FAW Bus and Daewoo will produce high-end intercity buses and city buses for Daewoo, South Korea. The purpose is to "seek new business developments in the future. , mechanism and product technology level to further enhance market competitiveness."
In fact, Xiwo, Ankai and other joint ventures or the introduction of technology companies have adopted a dual-brand strategy in recent years in order to adapt their product quality to the Chinese market.
The Scania, which shows that it is not a joint venture, has also found a way to penetrate the high-end passenger car market in China. It is understood that Scania has already provided high-end bus chassis for three domestic passenger car companies, including Xiamen Golden Brigade and Suzhou Golden Dragon. Compared with the establishment of a joint venture, this approach is clearly conducive to occupying a larger market share. Moreover, compared with previous years, the level of manufacturing of coach bodies in China has progressed greatly, and more products can be equipped with imported high-end chassis. At present, China's passenger car exports have a strong momentum and form a chassis supply relationship with leading domestic passenger car companies, and they can also use leverage to seize more international market share.
China is already the world's largest passenger car market, and bus sales account for one-third of the world's total bus sales. Moreover, Chinese passenger car exports are showing a momentum of rapid development. Although self-owned brand products currently occupy a dominant position and most of the market share, it is impossible for foreign passenger car companies to abandon this fast-growing market. In addition, several major domestic groups have not had a big role in the field of passenger cars, and entering into cooperation with multinational companies is technically a shortcut. Therefore, the possibility of a joint venture between passenger cars still exists.