Survey: Outflow of huge profits from China's auto industry will continue

The massive outflow of profits has always been a pain in the development of China's auto industry. However, it has been difficult to find effective means to eliminate such defects.

According to the authoritative statistics from the China Association of Automobile Manufacturers, the overall sales volume of China's auto industry in 2009 was 13.6448 million, an increase of 46.15% year-on-year. Among them, the sales volume of passenger cars reached 10,313,300, an increase of 52.93% over the same period last year. It is with this extremely rapid expansion of production and sales data, the overall sales of the Chinese automotive market exceeds the world's veteran overlord the United States, for the first time ranked among the world's top.

Moreover, the potential consumer groups in the Chinese market are still expanding. Judging from the market performance in the first nine months of this year, some institutions boldly predicted that China’s market sales this year will reach 17 million vehicles and continue to lead the 2010 global auto market. With the ever-increasing demand for end-user consumption in the Chinese market, we believe that it is necessary for interested parties to seriously review the auto industry's malady with a serious outflow of profits.

As one of the pillar industries of China's national economy, fluctuations in China's auto industry production and sales data reflect the prosperous trend of the auto industry that is in a period of rapid development. However, behind the prosperity of the surface, the lack of core technology has led to a dilemma of serious outflow of profits, but it has not been alleviated. According to a report by the domestic financial media "First Financial Daily", Wang Xiaoguang, a researcher of the Policy Consulting Department of the National School of Administration, said in an interview that the current pattern of the Chinese automobile market is "40% of the capital of international capital, occupying 50% of the share. , Reap 70% of profits."

Since there is no authoritative organization to effectively quantify the amount of profit exodus from the Chinese auto industry, the 70% figure, while lacking strong and scientific data support, at least shows how far the outflow of profits has developed.

In fact, the Chinese auto industry is not afraid of talking about the fact that profits are being drawn by foreign investors. Because as early as the late 1980s, foreign capital began to enter the Chinese automobile market one after another, and has always played a dominant role.

Initially, based on the urgent needs of the market and economic development, the Chinese government realized that the lack of key core technologies was a fundamental factor that led to a serious lag in the development of China's auto industry. While introducing foreign investment, it emphasized the simultaneous introduction of the technology, “Market for Technology. The joint venture strategy was born.

However, even after China entered the WTO in 2001, foreign capital further influxed and joint ventures continued to establish. With the continued maturity of the Chinese market, foreign companies earned high value through joint ventures by virtue of their controlled technological superiority and control over the industrial chain. After the technology transfer fees and sales profits, the Chinese did not obtain the technology as it wished. Even today, after the government has forced a localization rate, China’s discourse power in joint ventures has still not dominated.

In fact, the weakness of self-owned brands and the lack of key component technologies have been recognized by the industry as the crux of the problem that the Chinese auto industry's profits are flowing to the outside world. If these problems are not resolved, the gap between the outflow of profits and the failure of dams will be difficult to repair. Although the government has gradually paid attention to the importance of developing its own brand in the past two years, it is also difficult to fully favor local enterprises in policy control. As a joint venture that has become integrated into the Chinese auto industry, China cannot obtain technology and profits are inevitable.

The latest industry survey conducted by Gasgoo.com shows that among the 2032 readers who voted, 91% of the votes have been tending to believe that the current phenomenon of the outflow of profits from the Chinese automobile industry will be difficult to improve in the short term. This pessimistic voting result is a true portrayal of the weakness of the Chinese forces in the current development of the Chinese automobile industry, and in particular the joint venture’s position as the mainstay of the market.

Chen Deming, China’s Minister of Commerce, pointed out in a speech on the eve of the China-US Strategic and Economic Dialogue in July last year that foreign brands accounted for about 70% of the Chinese auto market, and the market share of self-owned brand cars was less than 30%. By the end of 2008, the number of local vehicle manufacturers in China had reached more than 130, but only 24.5% of the 4.82 million cars had their own proprietary rights. Of the tires exported to the United States market, 68% are produced by foreign companies.

At present, among the vehicles that drive on China's highways, the technologies of its engines and transmissions are basically from various series in Europe, America, Japan, and Japan, such as Deutz of Germany, Perkins of the United Kingdom, Cummins of the United States, and Denso of Japan. Some key core technologies are controlled by companies like Bosch, Delphi and Siemens. Although many of these companies have jointly established joint ventures with Chinese companies in the Chinese market, foreign companies often have a controlling interest in the joint ventures because the government does not require joint ventures for parts and components. Moreover, the foreign capital's sole proprietorship in the powertrain has not faded. More relevant statistics, foreign-funded parts and components companies have accounted for nearly 80% of China's parts market share. For China, which is already in a weak position, it is undoubtedly necessary to set critical technologies to set insurmountable obstacles again.

The relatively "pure" independent brands represented by Chery, BYD, and Geely, despite their rapid development in recent years, still only remain in the low-end market competition. According to statistics from the National Association of Passenger Vehicle Market Information, by the end of August, the market share of self-owned brands has fallen from 35.9% in January to 27%, indicating that the independent brands are under pressure from foreign product strategies and other factors. The volatility is still very large and there is no real power to compete with foreign brands.

Therefore, in summary, we believe that the huge outflow of profits from the Chinese auto industry will continue for 20 years or more.