China- History is on the side of China’s local brands, says An Jin, president of Jianghuai Automobile Group Corp. (JAC)

International brands from the joint ventures have two-thirds of the market, but in Germany, Japan and the United States, the leading automakers are the local ones. Ultimately, he says, the biggest brands in China will be Chinese.

JAC has grown in a few short years from a maker of parts and components to a complete auto group, with all lines of commercial vehicles and cars. At a volume of 200,000 it remains relatively small, but it has climbed its way to No.10 position in China without any investors from western companies.
However, consolidation in the industry has not escaped An’s attention.

‘We haven’t any investment from other companies, but we see a lot of opportunities, because a lot of opportunities are willing to join capital with us,’ said An. ’When the time is right, we will seek partners to cooperate with us.’An believes China has a strong potential for automobile export.

He said that exporting cars ‘will become an inevitable choice for surplus production capacity,… A minimum of 40 percent of domestic production for export is a common practice for those advanced countries,’ noting that Japan exported 45.6 percent of its production in 2009, Germany 68.5 percent and Korea 61.2 percent while China only exported 2.7 percent of its 2009 production.

An also cited the fact that Chinese auto product exports of $30 billion was only 2 percent of the world’s auto trade, while China’s overall exports account for 9.1 percent of overall trade, so ‘comparatively speaking, Chinese auto products have great development potential for export.’

Since it began, JAC has exported nearly 80,000 units, and is a leader for light truck exports. This year it hopes to export 20,000 units to Africa, the Middle East, Southeast Asia, Eastern Europe, South America and Southwest Asia. Key markets are Algeria, Vietnam, Syria and Columbia, and it has established CKD assembly operation in Vietnam and Iran.

Although his benchmarks show the spot An believes his company deserves, he does not believe JAC will get there unless it works hard. Profitability per unit for independent makers is only one fifth as much as the joint ventures, because the independent companies make mainly low-end vehicles, and quality and innovation are lacking.

All independents need to create a strategy, and An’s strategy for JAC is to work on R&D and quality.
‘Environmental protection will be the main theme for development, and green products will become the basic issue for the auto industry to address,’ he said. ‘Fuel efficiency and power innovation will become the major business trend.’

However, he said, environmental progress isn’t necessarily electric cars or plug-in hybrids, because in China, electricity is produced by burning coal, and he said battery electric vehicle are no better on carbon dioxide production than internal combustion engines. He argued that EVs should not be called zero emission cars because producing electricity causes emission.

An argued that hybrids and compressed natural gas and liquid petroleum gas engines should be promoted more.

As for low quality, he said it is ‘the reason for low progress, we have to improve quality, to improve the image of the brand.’

Source: http://jacen.jac.com.cn/jac/showDocumentAction.do?method=print&documentid=ff808081288be3e901291fe158b3291a