New cars are frequently downcast and prices are diving. The Chinese auto market has been particularly eye-catching since its inception in 2003, and an industry forecast report from foreign institutions has undoubtedly touched the most sensitive nerve in the Chinese auto market. The internationally renowned consulting agency ING International Group (ING) recently released the "Asian Automobile Market Research Report," saying that China is expected to surpass Canada, Spain and South Korea in 2004 and leap into the top five automobile manufacturers in the world. There is no danger of “overheating†in the Chinese auto market Reporter: In fact, the biggest suspense in the Chinese auto market in 2003 can be attributed to a worrying question: Can high-speed growth continue? How long can China's auto market be fired? Su Guojian: Just take a look at the situation in the Asian auto market and even the global auto market, and you can understand why China is still the most worthwhile investment country in the global auto industry, even with such risks. With the sluggish consumption in the world auto market, the growth of the Chinese auto market is almost “outstandingâ€. In the same report, our analysis team predicts that the growth rate of Korean auto industry in 2003 will not exceed 2.7%, and domestic automobile sales in Japan will show zero growth, while the Malaysian and Indonesian markets will hardly pick up. In the first half of 2002, the US auto market fell 2.6% year-on-year, and the European auto market fell 4.5%. One of the important ways of relieving overcapacity in major automobile production bases in the United States, Europe, and Japan is to seize the Chinese market and transfer production capacity to China. Overseas car manufacturers have every reason to have full confidence in the long-term growth of the Chinese auto industry. In 2002, China’s per capita GDP reached 1,000 US dollars, which is the main factor driving the development of China’s auto industry. The experience of other countries in the world shows that when a country's GDP reaches 1,000 US dollars, the domestic market demand for automobiles will develop by leaps and bounds. China's current auto ownership rate in urban areas is still low, and the sedan ownership rate is only 1% to 2%, which still has a huge growth potential compared with developed countries. In addition, the age of Chinese car buyers is mainly between the ages of 26 and 45. This is the population with the largest population in China. They will continue to drive the growth of China's car consumption. Of course, multinational auto giants will inevitably encounter some “growing upsets†in the rush to build factories and joint ventures. The Chinese automobile market may indeed have some risks in the next few years, such as the oversupply of automobiles, especially in the non-sedan field; auto manufacturers are rushing to reduce prices, and the price war may lead to lower profits for the entire industry. Another example is the uncertainty brought about by government policies to the development of the industry. Industrial policies may lag behind the development of the industry, such as protection measures for auto consumers, credit policies to reduce auto financing leverage, and so on. We also noticed that the eyes of Chinese consumers are improving, and the importance of automotive quality issues is also becoming increasingly prominent. However, with the increase in the quality of automotive products and the increase in exports, some of these problems will be solved. However, even if there are such risks, we do not believe that there is a danger of “overheating†in the Chinese auto market. We expect that in 2003, as the residents’ incomes continue to grow, tariffs continue to decline, and the influx of foreign direct investment and fixed asset investment will surely drive the demand for the Chinese auto market. China's car production will increase by 47% this year Reporter: Specifically, what do you think is the output of Chinese cars in 2003? Su Guojian: Our report predicts that China's auto production in 2003 is expected to reach 3.9 million, and the production of cars will increase from 1.09 million last year to 1.54 million, an increase of 47%. The relevant figures are: In 2000, China produced 2 million cars each year, ranking 11th in the world; in 2002, China's car production has exceeded 3 million, an increase of 38.5% over the previous year. The United States, Western Europe, Japan, and South Korea each produced 16 million, 17 million, 5.8 million, and 3.1 million cars last year. On average, every two weeks last year, a car joint venture was born Reporter: Before China's accession to the WTO, the automotive industry was considered to be China's most vulnerable industry, and the entry of foreign capital was exclaimed by the media as "the wolf." How do we see the development of foreign-invested auto companies in China after the first year of the Chinese car? Will the pattern of Sino-foreign joint ventures change in 2003? Will the competition between China's auto industry and foreign auto industry escalate? Su Guojian: According to figures from the National Statistics Department of China in August 2000, China has more than 600 automobile joint ventures, and the joint venture partners are from more than 20 countries and regions in the world, absorbing more than US$20 billion in foreign investment. We expect that foreign investment will continue to be heavily injected into the Chinese auto industry in 2003. Who benefits from a joint venture? Our answer is "all people", but Chinese companies that are joint ventures with foreign companies are the biggest winners. Not only have they obtained funds, they are also acquiring technologies that are constantly upgrading and they are increasingly capable of producing more and better cars. Of course, foreign-funded enterprises have also been able to quickly penetrate the Chinese market, establish brand awareness and corporate image, and are no longer restricted by the quota system in China, a still relatively closed automotive market. At the same time, Chinese consumers have also received newer, better cars and better services. The major auto manufacturers in the world have increased their investment in China and rushed to expand their production capacity. This is an important reason and sign that China has the strength to look forward to the “top 5†status of the global auto manufacturing industry and to become the world’s largest automobile production country. We think this trend is becoming very clear in 2003. China is becoming a "battleground for the military" in the global automotive industry. On average every two weeks last year, a Chinese-foreign joint venture automobile company was born in the Chinese market. The front door of the Chinese auto market has opened its doors, and multinational auto giants have been congested into bees, trying to seize market share in the first place. It can be said that the foreign auto giants currently wishing to enter the Chinese market have basically entered the end. Germany and Japan are the biggest winners in the Chinese auto market so far, but other countries are also struggling to catch up. Guangzhou Honda expects its production capacity will quadruple to reach 240,000 units in 2004. Nissan and Dongfeng Motor’s joint ventures in China will also increase production in 2006 to 550,000 vehicles. The two major auto makers in South Korea--modern Automobiles and Kia Motors plan to invest US$430 million and US$300 million in their joint ventures in China in 2005 and 2006, respectively. Other joint venture projects are brewing are also attracting attention. Brilliance Automotive will set up a joint venture with BMW. The relationship between FAW and Ford will appear more subtle after FAW Mazda launched the M6 ​​on January 21. Geely Automobile not only wants to list its A shares in Hong Kong and the Mainland, but also claims to be a vehicle for Geely Automobile and Jiefang. Shida Automobiles, sports cars, and auto parts are involved in mergers and acquisitions, and cooperate with other companies in all aspects. Four changes in China's auto market Reporter: Do you predict what changes will occur in the Chinese automobile market in the next few years? Su Guojian: Our report believes that in the coming years, four major changes will occur in the Chinese auto market: First, foreign automakers are increasingly localizing their production and sales in China, and their services will also add localization content. Second, the strategic alliance between foreign automakers and Chinese auto companies will be more flexible and open. In October 2002, Dongfeng Group and Japan’s Honda Motor Co., Ltd. and Guangzhou Automobile Group formed a joint venture to build a new automobile manufacturing plant in the Guangzhou Export Processing Zone to produce Honda’s economical sedans with an annual production capacity of 50,000 vehicles and 100% of the product. Exports, mainly for the European and Asian markets. The greatest significance of this project is that the foreign company broke through 50% of the shares for the first time, marking the first time that foreign investors are holding shares in Sino-foreign equity joint ventures. Of the total investment of 1.6 billion yuan, Japan's Honda invested up to 65%. Third, as Chinese consumers increasingly increase the ability to discriminate their cars, foreign automakers have to introduce the most advanced models synchronously into Chinese production and sales. Fourthly, some multinational auto giants have upgraded their production capacity in China and started export-oriented automobile production. This will undoubtedly further enhance the technical level of China's production of automobiles, which in turn will lead to an overall upgrade of the Chinese auto industry. China's auto market will enter the "quality is king" period Reporter: Do you agree with this statement that the Chinese auto industry is entering the era of mergers and reorganizations? Su Guojian: Our report suggests that instead of the Chinese auto industry entering the era of mergers and reorganizations, it might be better to say that the Chinese auto market will enter the period when “quality is kingâ€. We believe that it is time for automakers to establish a long-term success strategy in a huge and fast-growing market like China, and it is time to raise brand, quality and after-sales service to the top. In the imported car market, this is quite obvious; and for Chinese automobile companies, their importance is also increasing. For foreign auto companies, the rapid expansion of production capacity in China has made their strategic deployments in China obvious. The next step will be to establish channels for sales, services and financial credit. China's auto export era is far from coming Reporter: As you just said, some multinational automobile giants are producing automobiles in China and exporting them to other countries. This is also one of the new trends of foreign companies in the Chinese auto market. Can China's auto export era accelerate? Su Guojian: We do not think so, at least from the current point of view, the number of export-oriented production of multinational automobile companies in China is still quite insignificant. The explosive growth of China's auto industry may have a negative impact on other Asian countries such as Malaysia and Indonesia, but on the other hand it may also push these countries to change their position in the upstream of the industry chain. Bronze Hydraulic Balancing Valve
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How did this conclusion come from? What do they think about some hot issues in the Chinese auto market? The reporter had an exclusive interview with Dr. Su Guojian, a Dutch automaker analyst. 
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——Interview with Dr. Su Guojian, a Dutch auto market analyst