China's auto companies have settled in Brazil's localization is the main direction
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From Sao Paulo, the largest city in Brazil, it drove more than 80 kilometers to the east and reached the small town of Yakarei, which has a population of 200,000. This is where China’s Chery Automobile is taking root in Brazil. It is expected that the car plant, which was officially completed at the end of July this year, will have an investment of 400 million U.S. dollars. It is the largest factory that Chery has exclusively invested in overseas. This marks that China's mainstream autonomous car companies have entered a new phase in the development of Brazil and Latin America.
Localization is the main direction of China's car prices <br> <br> Brazil behind China, the United States and Japan, the world's fourth-largest car market, but also the world's seventh largest car manufacturer. In 2013, the total annual production of car manufacturers in Brazil reached 3.74 million units, an increase of 10% over the previous year, setting a record.
Foreign companies’ investment in Brazilian auto industry has been increasing in recent years. According to the statistics of the United Nations Economic Commission for Latin America and the Caribbean, as of the beginning of this year, the investment projects announced by the car companies in the world in 2017 will have reached US$34 billion, and the Brazilian automobile market is facing increasingly fierce competition.
Chinese car manufacturers began to enter the stage of cooperation or independent construction from the vehicle export. On the one hand, they will expand the overseas market of Chinese enterprises, and on the other hand, they will also compete with the mainstream international car companies.
Localization is the main direction of Chinese-owned automobile brands that have entered the Brazilian market. JAC set up a plant in Brazil through cooperation with Brazil's general agent, and the plant invested and built by Foton Motor Group plans to start production in 2015. Geely, Lifan and others set up factories in Uruguay, Brazil's neighboring country. With the advantage of Brazil and Uruguay as members of the “MERCOSURâ€, they will enter the Brazilian market. Huang Zhen, general manager of Lifan South American Project, said in an interview with this reporter that in 2012, Lifan had established a research and development team in Uzbekistan and focused on advancing technological transformation projects such as production line renewal. At present, the production capacity of the Lifan plant is 12,000 units per year, and the capacity will be doubled after the completion of technological transformation.
Achieve win-win situation is the basis of long-term development of enterprises <br> <br> automotive industry is an important pillar of the economy in Brazil, accounting for 5% of Brazil's total output value of industrial production and a quarter of Brazil's gross domestic product, to attract foreign companies to enter revive The automotive industry is an important part of the re-industrialization of Brazil. In 2012, the Brazilian government introduced the "Automotive Innovation Plan" aimed at boosting the domestic auto industry with the help of foreign companies' production and technological capabilities. The plan was implemented from early 2013 to the end of 2017. Its essence is to use taxation and other means to “force†foreign companies to move to Brazil. For example, one of the main clauses of this plan is that any company that sets up a plant in Brazil may consider waiving the high industrial product tax imposed on imported cars. In order to benefit from the "Innovation Plan for Automobiles," the world's major car makers have set up factories in Brazil in recent years to increase the localization rate.
People in the industry believe that Brazil is trying to use this plan to establish a complete automotive industry chain. According to government estimates, the annual automobile production in Brazil will increase from 3.3 million in 2012 to more than 4 million. According to data from Brazil's Ministry of Industry and Trade, only about 50 companies had requested to join the "Automobile Innovation Plan" at the beginning of 2013, and some old European, American, Japanese and Korean car companies started to set up factories or expand in Brazil. Fernando Pimentel, the former Minister of Industry and Trade of Brazil, said: "These figures show the success of this innovative project. It will help Brazil produce safer, lower energy consumption cars while attracting large amounts of foreign capital."
The implementation of the plan will bring disadvantages to Chinese auto makers. Lu Jiankang, Deputy Director of Sales at Chery Brazil, told this reporter that “it is impossible to occupy the Brazilian market with vehicle imports, and building a factory in Brazil is the only choiceâ€. However, the challenge is also an opportunity. The new plan of Brazil has forced the “Chinese enterprises to go out†to a new level.
In recent years, the economic and trade relations between China and Latin America have developed rapidly, and trade has gradually shifted to the direction of trade and investment. Investment promotion is currently mainly carried out in the fields of mining, energy, and infrastructure, while the construction of automobiles and other manufacturing industries marks a new level of investment promotion. An authoritative source in China who declined to be named told this reporter that when China's manufacturing industry goes abroad, it must change its concept of “making big money†and must consider more about the global market layout and how to create a win-win situation. This is the basis for long-term development.
The automotive industry is one of the major manufacturing sectors and is a relatively labor-intensive industry. The profound interaction between China's manufacturing industry and the Latin American economy has changed the simple relationship between sales and purchases in the past and is forming a new relationship of “fate communityâ€. Chinese car companies entering Brazil will drive local employment. Lu Jiankang told this reporter that Chery’s factory project in Brazil will be carried out in two phases. The first phase will build a factory with an annual output of 50,000 vehicles, and the second phase will build a Chery Industrial Park including R&D centers and some suppliers. The production of 150,000 vehicles is expected to bring more than 3,000 direct jobs to the local area.
Brazil is the best choice for Chinese auto companies to build their own plants
At present, the number of 1,000-person vehicles in Brazil is about 170 units, and the figure in developed countries such as Europe and the United States is about five to six hundred units. Chinese car companies still have a lot of room for growth. Brazil, as a major automobile producer in South America, still has considerable export potential.
Currently, the four car brands with the largest market share in Brazil are Fiat, Volkswagen, General Motors and Ford, which have a market share of over 70%. The main Chinese passenger car brands in the Brazilian market are Chery, JAC, Geely, Lifan, Haima, Great Wall, etc. The market share in Brazil is only about 1%. At present, the market share of brands such as Chery, Jianghuai and Lifan are steadily rising. In the Brazilian market, Chinese-owned cars have formed a group concept, "a loss is a loss, a glory and a glory." At present, the Brazilian public has little awareness of Chinese-owned car brands. It is the main task for the Chinese company to expand its market in Brazil and improve the image of the entire category.
Reporters interviewed by Chinese car companies all said that from a global perspective, Brazil is currently the best choice for Chinese auto makers to build their own plants. African countries have a low level of labor, and their political, economic, and legal environments are inferior to those of Brazil. In recent years, the poverty-stricken population in Brazil has accelerated its pace of poverty alleviation. In the past ten years, 36 million people have entered the ranks of middle class. They have become the largest consumer group of Chinese automobiles. The cost-effective Chinese car rounds up many of Brazil’s car dreams.
These people also do not deny that the main challenge facing Chinese car companies in the future is also how to meet the needs of middle class people. Overall, the sales of passenger cars in Brazil have started to slow down, and the model upgrade has become a trend. The demand for SUVs or A-class vehicles will increase in the future. At present, the SUV has become the fastest-growing model in the Brazilian market with a market share of 8%. Chinese auto companies must pay attention to the transition problem at the beginning of investment and construction, and must increase their technology and management while controlling prices. They will still face multiple challenges in the future.