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"After arriving in Frankfurt, they raised the five-star red flag. I was very excited on the stage with Chairman Shufu." On November 28th, at the 3rd China Automobile Industry Summit Forum, Zhao Jie was still pondering two What happened that month ago. In those days, they received the attention of more than 3,000 journalists from more than 2,000 media worldwide. Zhao saw the future. "We recognize that the world market is very large for Chinese cars and we are very confident."
Zhao Jie is Vice President of Zhejiang Geely Holding Group and President of Geely International Group. In mid-September, he and the chairman Li Shufu led a delegation to participate in the 61st Frankfurt Motor Show. This is the first time that Chinese cars have appeared in the world's top five auto shows in the name of manufacturers. Since entering the automotive industry in 1997, Geely has an annual production capacity of 200,000 complete vehicles, 200,000 engines and 150,000 transmissions. However, as heads of 6,000 employees, Zhao Jie and Li Shufu felt an unprecedented loss.
Lost because they saw another scene - many German experts and engineers looked left and right in the car. "Some squatted on the floor, and some laughed. I was very uncomfortable at the time." Although, these engineers Zhao Jie was told that when the Japanese car arrived at the European market between 30 and 40 years ago, it was also in this state; this was the state of the South Korean car 20 years ago. “People think what your Chinese car is. China's things seem to be of low quality, cheap, and bargain. It is not good.†In response, he was “very angry†and felt “very "," "very angry," but "do nothing".
The encounter with Zhao Jie was not unexpected. The Chinese auto industry has been developing for more than 50 years. There are currently more than 120 vehicle manufacturers, but there are few independent brands. It is understood that there are currently 355 trucks, buses and sedan brands in China, of which 69% are self-owned brands and 31% are foreign brands. However, among the 100 car brands, there are only 37 independent brands. At present, among domestic sales of cars, foreign brands produced by joint ventures account for about 90% of the market share.
"Market for technology" in exchange for "Latin American model"
The so-called independent brand dispute is in essence a dispute over the development of China's auto industry.
The traditional cooperation line of "market-for-technology" has begun to be questioned
In August 2005, Long Yongtu, Secretary-General of the Boao Forum for Asia, and He Guangyuan, former Minister of Machinery Industry, quarreled over independent brand topics at the Huadu Automobile Forum. Long believed that “we cannot engage in independent brands for our own brands. The key is From a high starting point to participate in global cooperation and competition, what dictates that we should "gradually develop brands with independent intellectual property rights."
One background at the time was the lack of brand and technology in the domestic automobile industry, and it had already affected competitiveness. Zhu Huarong, vice president of Changan Automobile Group, revealed a set of figures: From the comprehensive index of international automobile competitiveness, we are only 41.7% of the United States, 42.4% of Japan, 47.3% of Germany, and 61.6% of South Korea. The so-called independent brand dispute is in essence a dispute over the development of China's auto industry.
The traditional cooperation route of "market-for-technology" has begun to be questioned. "Because of the low development capability, most of our automotive products' core technologies are in the hands of joint ventures, which leads us to have less say in the joint ventures or no right to speak. Even if we have some say, the effect is limited." Zhu Huarong said.
Zhu believes that we have engaged in joint ventures and cooperation for 20 years. While promoting the development of the automotive industry, there is still a serious problem that has not been solved. “There is a lack of independent innovation capability, lack of core technologies and independent brands. Meet our expectations. Who will we get for the technology?"
South Korea and Japan chose another road. The Korean auto industry that was born in 1962 has focused on independent research and development since its inception, and the Korean government has specifically promulgated the "Support Law for the Automotive Industry." In 1973, the "Long-Term Development Plan for the Automotive Industry" was formulated, requiring Korean companies to independently design and develop. "After more than 20 years of development, Korea has become one of the world's leading manufacturers." "The Japanese government has adopted many protective policies for the automotive industry, guided enterprises to take the path of clustering, and strive to develop economical cars. Companies also insist on independence, independent innovation, and establish their own brands."
Zhu Huarong believes that China's automobile industry has already faced the risk of the "Latin American model."
The so-called Latin American model is to open the door and encourage multinational companies to come in and cooperate, not to pursue national brands. This model proves that the transfer of investment in the automotive market can save technical investment, reduce investment risks and market risks, but the price is to hinder their own technology development and independent brands. The domestic auto industry and auto market are controlled by multinational corporations and become dependent industries.
“In 2004, China’s auto output was 5.07 million, of which 90% was foreign, and its real product was less than 10%. Many of them played the Chinese brand, but behind the intellectual property rights, the real technology is not China’s. 60% of China’s auto companies. These are joint ventures between Sino-foreign joint ventures, and they continue to monopolize and dominate the high-end product market. Almost all joint ventures in China have basically no right to speak.†Zhu Huarong believes that the real threat is that “the foreign giants have all entered the Chinese auto market and are constantly Expand the scale and improve the layout." He advocated the "Japan-South Korea model", "there is no strong competitive brand support will lose the right to speak, let alone control the right", "the automobile industry to enter the international market, the need for independent brands and independent innovation to play a major role."
“There are two lines in the current debate: First, national brand-based, national-owned and private-owned national brand lines; second, through joint ventures to establish their own joint ventures' own brands, independent intellectual property rights, and launch joint ventures. I think that in the automobile market as big as China, these two routes are established in China and they all work. It's just a matter of speed," said Xu Heyi, chairman of Beijing Hyundai Motor Co., Ltd. His company is a Sino-Korean joint venture.
To go international needs to rely on their own brands
Undoubtedly, in the next 10 years, Chinese domestic manufacturers will go to the international market. The key to the debate is which vendors will get this opportunity. From this point of view, manufacturers with their own brands will take a step forward
"In January of next year, we will go to the United States to participate in the exhibition in Detroit and conduct field trials," said Li Shufu. Geely Automobile is one of the few companies with self-owned knowledge brands. Li Shufu used four "most unique" models (the only one being able to independently develop and manufacture automatic transmissions; the only one capable of independently developing and manufacturing electronic functions to power steering systems, namely EPS; The only company that can independently research and develop and manufacture world-class automotive engines; the only one that can independently research and develop and match vehicles and engines, complete vehicles and electronic appliances, vehicle and driving systems, drive trains, steering systems, brake systems, noise and vibration And other related technologies) to express this.
Detroit's participation is just a step for Li Shufu to expand overseas. It is said that the Ministry of Commerce “is selecting about 100 auto and auto parts manufacturers with independent intellectual property rights, strong competitiveness and export scale as national export bases, and provide necessary support in terms of finance, export credit, etc.†Geely is among them, "Chinese cars have to strive for 10 years and account for 10% of the world's auto trade market, which is the scale of exports of more than 120 billion U.S. dollars."
Li Shufu's rhetoric is not as smooth as the support of the Ministry of Commerce in reality. At the Frankfurt Motor Show, he suffered a loss. Recently, another news came out. He was attacked by the Malaysian side again: The horse demanded that Geely's CKD-assembled cars in the country be sold 100% abroad because "Chinese cars imported into Malaysia have Threatening the market share of local cars".
Ivan Hodac, Secretary-General of the European Automobile Industry Association, is accustomed to the loss of Geely. When he was interviewed by this newspaper at the China Europe International Business School Information Center, he said that Geely and other Chinese independent brands went overseas. It did not cause much concern to participate in the Frankfurt Motor Show. This is normal. Such as Japan and South Korea, they also encountered such a situation, and finally succeeded. The Chinese will also succeed. He believes that the time of success will be in the next 10 to 15 years, but the premise is that "if Chinese companies participate in international market competition, they must comply with the international provisions on intellectual property rights," "in addition to laws and regulations, to achieve two-way equality" .
“In the next 10-15 years, the automotive industry will have a big development and need to focus on giving input.†Professor Christian Mohrdieck, Development Director of the Fuel Drive System at the DaimlerChrysler Research and Technology Department, has a soft spot for technology, he told reporters that Daimler-Chrysler, with 1,600 employees engaged in research and development, they attach great importance to new technologies, "Technology has always been a strategic pillar, only through technology to achieve differentiation, but also to bring a competitive advantage."
“Individual brands are very important to car manufacturers and they are very valuable. This is not only true for BMW, but also for other manufacturers.†Christoph Stark, president of the Greater China Group of BMW Group, said that he believes that BMW’s achievement of high-end brands is mainly due to their Have a lot of creative brands, and allow consumers to be emotionally recognized, to provide different cars for different customers, "If you provide products to loyal customers, differentiation is important. Technology and brand are linked together."
The experience of DaimlerChrysler and BMW is very useful for Chinese companies. In the words of Professor Pedro Nueno, Executive Director of the China Europe International Business School, there is no doubt that in the next 10 years, Chinese domestic manufacturers will move to the international market. The key to the debate is which vendors will get this opportunity. From this point of view, manufacturers with their own brands will take the lead.
According to Xu Heyi, “Beijing Hyundai Motor Co., Ltd. officially launched the first joint-venture company’s sedan products with independent intellectual property rights and self-brands in line with the Chinese market positioning in 2008. By then, Beijing Hyundai will form a complete 600,000 capacity car. Manufacturing base.†The purpose of implementing these measures is also to go overseas.
China's car enters the period of industrial integration
The market will not always encourage high investment. Although the sales volume of the Chinese automobile market has increased by 17.9% in the first 9 months, the profits of enterprises have dropped by 52.9%.
Pedro Reynolds predicts that while going into the international market, there will be a large number of mergers and acquisitions. It may be that Chinese enterprises merge M&A companies in Europe and America, and may also be M&A companies acquiring Chinese companies. Plagiarism and imitation will no longer apply. If companies want to develop in the long term, they must comply with the protection of intellectual property rights.
Bernd Schmitt, a professor from Columbia Business School, also acknowledged the integration. “There are more than 100 companies in China, which are not only inferior in R&D but also in other areas. They should be integrated.â€
According to Li Jingwen, an academician of the Chinese Academy of Engineering, these more than 100 companies are located in 27 provinces and cities across the country. Of these, there are only two companies with more than 500,000 units, eight with more than 100,000 units, 95 with less than 10,000 units, and 70 companies with less than 1,000 units.
“At present, Chinese enterprises have formed a three-dimensional competitive pattern, and the real competition is formed by domestic companies with an international backgroundâ€, said Zhu Huarong. “According to data from the National Development and Reform Commission’s 11th Five-Year Plan, various types of manufacturers in the automotive industry already have 5,800. The total output value has exceeded RMB 1 trillion, and the total output in 2004 was 5.07 million. The total output value of the auto industry has reached more than RMB 1.1 billion, and the proportion of the national GDP has risen from less than 1% to 2% in the end of the Ninth Five-Year Plan period.â€
Behind the rapid growth of data is the high degree of investment in the automotive industry. Chen Qingtai, deputy director of the Development Research Center of the State Council, believes that total output in 2003 increased by 36.7% on the basis of rapid growth in production and sales in 2002 due to higher consumer spending power and repressed consumer potential. (Including a 85% increase in sedan sales, SUV growth 180%), explosive growth. This growth has misled many companies and investors. “They considered this extraordinary stage of extraordinary growth as a routine and they have formulated ambitious investment plans.â€
According to the person in charge of the National Development and Reform Commission, the current vehicle production capacity will reach 8 million vehicles, plus the 2.2 million capacity under construction. After completion, it will reach 10.2 million vehicles. “A lot of investors still don’t care about our explosive growth. The market signal has been transformed into a stable growth, and the investment enthusiasm remains unabated."
However, the market does not always encourage high investment. According to Chen Qingtai, the current scale of preparation for investment is expected to reach 10 million vehicles. In the increasingly fierce price war, the utilization rate of car production capacity has fallen to about 55%. Although the sales volume of the Chinese automobile market in the first 9 months has increased, 17.9%, but corporate profits have dropped by 52.9%. Fifteen car companies suffered losses. The profits of eight companies were declining, and only three of them had increased profits.
In this regard, the famous economist Wu Jinglian also suggested caution to invest, "over-investment has caused the auto industry to be quite passive."
As Pedro Reynolds said, the result of this situation must be integration - companies that cannot survive will withdraw from the stage of history. “We once said that there are more than 100 auto manufacturers in China. How did they survive? I don’t know about this specific figure, but I think the trend of quantity is slowly decreasing, but the decreasing figure will not be as fast as I expected. Because the process of mergers and acquisitions and restructuring of domestic companies is relatively slow."
Chen Qingtai acknowledges this trend, but he also hopes that governments at all levels will deepen reforms and change the current phenomenon of being distorted in the competition. “Some companies have been unable to maintain it, but it can still be maintained. Why can it be maintained, because many companies are There is a government background. They can't maintain the government's background, but there is a government background that can be maintained. This is like what Wu Jinglian said. This is a distorted phenomenon." (Xu Kai)