Chery cars are being readied for shipment overseas. Chinese car brands are setting their sights on emerging markets Algeria, Syria, Vietnam, Russia and Chile. Imaginechina via AP Images
Chery cars are being readied for shipment overseas. Chinese car brands are setting their sights on emerging markets Algeria, Syria, Vietnam, Russia and Chile. Imaginechina via AP Images

China powers up as car exporter



When it came to describing the threat posed by Chinese car makers, Sergio Marchionne, the Fiat and Chrysler chief executive, did not mince his words.

Building Brics Emerging giants

Keep pace with the emerging economic powerhouses Brazil, Russia, India, China and South Africa Learn more

With his concerns centred on Brazil, where Fiat generates much of its profit with a market share of more than 20 per cent, Mr Marchionne talked in almost apocalyptic terms, saying "the day of reckoning is inevitably coming".

"We cannot afford to be unprepared for the ascent of China, reassuring ourselves of our invincibility," he told the annual conference of the Center for Automotive Research in August.

Still struggling to make a major impact at home, where they hold a modest 31 per cent share of sales in a country dominated by foreign-local joint ventures, Chinese car brands are setting their sights on emerging markets further afield.

Yet so far they have failed to create a stir abroad, in stark contrast to China's domination of other manufacturing sectors.

Last year, China exported 544,900 cars, a figure dwarfed by the 813,600 that were imported. Moreover, the cars imported tended be of higher value than those exported.

All the other Brics countries - Brazil, Russia, India and South Africa - are key export targets for China, according to Nathan Yang, a manager with the international sales division of the Beijing car manufacturer Hawtai.

But the top five countries for Chinese exports last year were Algeria, Syria, Vietnam, Russia and Chile, all places with strong demand for cheaper models.

For Hawtai, which up to now has exported in significant numbers only to former Soviet nations, the overseas adventure is only in its infancy.

Mr Yang acknowledges that many competitors are further ahead in the exports race.

"A lot of Chinese car manufacturers have already explored many overseas countries, like Geely and Great Wall and others," he says.

Tomorrow's exclusives tonight:

Industry Insights e-newsletter Stay ahead of the pack and get the pick of the premium Business content straight to your inbox. Sign up

The leading Chinese brand for the overseas market is Chery, which made its first foreign sales in 2001, when it sent cars to Syria. This year, it is hoping to sell 120,000 cars abroad, up about 30 per cent on last year.

Like other Chinese car companies, Chery has built overseas assembly plants. In August, the company announced it was looking to construct a US$50 million (Dh183.6m) plant in Kenya. It already has facilities in countries including Ukraine, Thailand, Malaysia, Iran and Egypt.

Geely, which grabbed headlines last year by taking over Volvo, also has global ambitions, with more than 20,000 cars exported last year, about 5 per cent of the company's total output, and a target of 40,000 this year.

The company already has several overseas plants where vehicles are assembled.

"The long-term target is that we locally produce cars and sell them there and [in] the region," says Victor Yang, a spokesman for Geely.

Indeed, local production of cars and, perhaps equally important, sourcing of components, is considered essential if Chinese car makers are truly to establish themselves abroad and improve their modest overseas performance.

A recent development in Brazil, the world's fifth-largest car market, provides evidence.

Last month, the Brazilian government increased by 30 percentage points the tax on cars sold in the country with a large proportion of components made overseas.

The authorities are reportedly concerned that local manufacturing, dominated by Fiat, General Motors, Volkswagen and Ford, could be undermined by cheap imports, especially from China.

Similar measures imposed by the Russian authorities in 2008 significantly dented car imports from China, with some Chinese manufacturers leaving the market entirely.

The Russian authorities also showed resistance to allowing Chinese companies to open factories in the country.

While several Chinese car makers, including JAC Motors and Chery, have announced plans to build plants in Brazil, John Zeng, the director of Asia vehicle forecasting for JD Power and Associates in Shanghai, believes it will be difficult for them to become established there.

They face challenges of setting up supply chains and sustaining success in foreign markets.

"Many Chinese [car makers] are competing for certain markets without any vision. They just compete for volume in the short term. They just authorise trading companies to sell vehicles for them," Mr Zeng says.

He cites Great Wall, whose pickup trucks are popular in the UAE, as an example of a Chinese car manufacturer that has done things well, by establishing an extensive dealer network in key foreign markets such as Australia.

But the ultimate aim is to penetrate the mature economies of North America and western Europe.

The British sports car manufacturer MG, which was bought by China's SAIC Motor, is now producing and selling cars in western Europe, and these have been reasonably well received.

Many previous attempts to sell in these markets have, however, come to nothing after vehicles such as the BS6 model produced by Brilliance performed poorly in crash tests.

Mr Yang at Geely insists his company's cars have made "big steps" in safety, with 80 per cent of new models reaching five stars, the maximum, on crash tests conducted by the Chinese New Car Assessment Programme. He acknowledges, however, that other issues exist.

"It's step by step," he says. "In three to five years, not all of the models, but some of the models, will be there."

Ultimately, then, Fiat's Mr Marchionne may be having sleepless nights about a possible Chinese takeover not just in Brazil, but also in markets closer to home.

If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.

When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.

How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Other workplace saving schemes
  • The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
  • Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
  • National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
  • In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
  • Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
Company%20Profile
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20myZoi%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202021%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Syed%20Ali%2C%20Christian%20Buchholz%2C%20Shanawaz%20Rouf%2C%20Arsalan%20Siddiqui%2C%20Nabid%20Hassan%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20UAE%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%3C%2Fstrong%3E%2037%3Cbr%3E%3Cstrong%3EInvestment%3A%3C%2Fstrong%3E%20Initial%20undisclosed%20funding%20from%20SC%20Ventures%3B%20second%20round%20of%20funding%20totalling%20%2414%20million%20from%20a%20consortium%20of%20SBI%2C%20a%20Japanese%20VC%20firm%2C%20and%20SC%20Venture%3C%2Fp%3E%0A