The establishment of SAIC Iveco Hongyan Commercial Vehicle Co., Ltd. and SAIC Fiat Powertrain Co., Ltd. in Handan marked the birth of the leading commercial vehicle industry in the western region of China. Three-party shareholders will invest 4 billion yuan to build a new auto factory and engine plant with advanced technology and technology in the northern New District of Chongqing. Within three to five years, SAIC Iveco Hongyan will produce 40,000 full-vehicles and 40,000 cabs. The main business will have annual revenue of 10 billion yuan and foreign exchange earnings will reach 120 million U.S. dollars. The scale of the engine project of SAIC Fiat Powertrain Co., Ltd. is an annual output of 100,000 engines. Xinhua News Agency reporter: Zhou Hengyi
When the foreign brands produced by the domestic joint ventures grow and fall in China's car market, China's domestic commercial vehicles used to transport goods still go its own way, occupying 70% of China's market share. For a long time, there have been few successful cases of joint ventures between domestic commercial vehicle companies and multinational companies, and “joint ventures have failed†has basically become a vicious circle for commercial vehicle companies. Recently, at the first China Commercial Vehicle Development Summit Forum held in Chongqing, how commercial vehicle companies had joint ventures caused heated debate among experts.
Joint venture commercial vehicle brand “say good or badâ€
From the perspective of the joint venture between domestic commercial vehicles and multinational companies in recent years, many joint ventures have not produced the effect of “1+1>2â€. The heavy trucks jointly produced by Volvo and the China Heavy-Duty Vehicle Group had sales of only 100 vehicles in the first half of the year; and the heavy trucks that Dongfeng and Nissan cooperated with each year had sales performance of 400 or less. The industry believes that the high price of foreign brands is an important reason for the joint venture to defeat the commercial vehicle market.
Contrary to the car market, China's commercial vehicle market is still dominated by independent brands. Taking heavy-duty vehicles as an example, China’s major companies including FAW, Dongfeng, Futian, China’s heavy-duty vehicles, Shaanxi Automobile, SAIC Iveco Hongyan, and most of them are domestic companies. SAIC Iveco Red Rock is just in June this year. Joint venture company.
According to Xu Xingyu, former deputy general manager and chief engineer of FAW Group, FAW Group is taking the road of independent research and development in the heavy-duty vehicle field. Engines, equipment, and software are developed on the basis of long-term learning from the developed Western technology and experience. At the same time, it has reached the advanced level in contemporary Europe. Bearings are jointly developed by itself and foreign institutions. Shaanxi Steam is different, and its engine technology is Cummins. Xu Xinglu said, "All roads lead to Rome," and no matter how you walk along the path of independent development, you just have to go well. Transport vehicles are used as tools to make money. Unlike car cars, they can “show off†and reveal their identities. Foreign brand cars are even more advanced. If they don’t match the needs of the domestic market, they will “get goodâ€.
Yu Zhuoping, Dean of the School of Automotive Engineering at Tongji University, said that China’s commercial vehicles do need to improve their technological level, but China is indeed a developing country. It is not that the higher the technology is, the more effective the joint venture is. The characteristics of the market will put the technology of the existing brand vehicles on the market and maintain the appropriate price to be competitive in the market. Unsuccessful joint ventures are often desperately engaged in technology transfer. The cost has been very high. Naturally, they have to raise prices and eventually lose the market.
The Fusion of Chinese and Western Corporate Culture is the Key
The joint venture of commercial vehicles is unsuccessful, and it is also a big reason why Chinese and Western cultures are difficult to integrate. Xu Weida, former general manager of Shanghai Diesel Engine Co., Ltd., believes that the success of joint ventures between Chinese and foreign commercial vehicle companies largely depends on the level of cultural integration between the East and the West. For example, SAIC Iveco Hongyan has both the fusion of Chinese and Western cultures and the integration of Chinese and Western cultures. Shanghai Diesel Engine Company once tried to establish a joint venture with Western companies, but failed due to poor cultural integration.
According to Xu Xingkai, FAW Group had hoped to establish a joint venture with German Mercedes-Benz to produce commercial vehicles. Initially, FAW was highly motivated and hoped to launch three brands together with Mercedes-Benz: one was FAW's “liberation†old brand, one was a “mixed†brand, and one was "Benz" brand. But then there was an irreparable rift between the two sides: FAW hopes to use Mercedes-Benz's strength to overwhelm its strong rivals such as Dongfeng and Futian, and Mercedes-Benz hopes to use FAW to consolidate its own brand, that is, there will be no FAW with FAW; FAW hopes to use the old factory building joint venture, Mercedes-Benz hopes to start another new green space. Xu Xingfu said: "We hope that Mercedes-Benz will help us beat our opponents. Mercedes-Benz wants to eat us first. We can't do it, and the joint venture will eventually come to naught."
Xu Xinglu believes that the reason for the breakdown of the negotiations between FAW and Mercedes-Benz is mainly due to differences in Chinese and Western cultures. The Chinese and Japanese are relatively easy to communicate with each other, but it is difficult to communicate with Europeans and Americans. Germans, in particular, often accept the truth of death and insist that Castle Peak does not relax and resolutely does not make concessions. Of course, as long as the signing of the agreement, the Germans are unconventional, speaking, and complementary with the Chinese people.
On June 15 this year, SAIC Iveco Hongyan Co., Ltd., invested by Shanghai Automobile Group, Italy Iveco and Hongyan Auto's parent company Chongqing Heavy Vehicle Group, was formally established in Chongqing. Yang Shuyi, the general manager of SAIC Iveco Hongyan, stated that compared with many countries in Europe and America, Italians are Westerners of the West and are relatively easy to communicate. This is a key factor in the successful joint venture between the three parties.
The "Double Brand" Strategy is the Way to Win
After SAIC Iveco Hongyan Joint Venture Company was established, it did not plan to replace the old domestic brands with the advanced Iveco brand, but implemented the “Double Brand†strategy: not only retaining the original Hongyan and Steyr brand, but also “taking†it. Iveco brand. At the same time, SAIC Iveco Hongyan will introduce Iveco products and technologies with international advanced level and competitiveness. Based on the original chassis of Hongyan Automobile, Iveco technology will be used to optimize vehicle performance, optimize the chassis and suspension devices, renovate the cab, and update the car. Components, the production of "hybrid" type heavy truck, its market positioning as the mid-range products, with high performance, prices are in the middle file, with a cost-effective competitive advantage.
According to Zuiga, Deputy General Manager of SAIC Iveco Hongyan and Iveco from Italy, the "hybrid" commercial vehicle is both Hongyan and Iveco, and the intellectual property rights belong to the joint venture. Iveco’s strategy is not to immediately replace the existing products with “hybrid†commercial vehicles, but to slowly transition. The key is to first improve the quality of low-end commercial vehicles, because the Chinese heavy truck market is still in the stage of updating and improvement, and it is necessary to go through this stage. A certain time.
For SAIC Iveco Hongyan’s “dual brand†strategy, the industry has stated that this is a major initiative in the joint venture. Experts said that Xinhongyan should not place its destiny on Iveco's advanced technology. Instead, it should use the old to raise new ones and transform Red Rock and Steyr old cars to suit the market. Within three years, relying on old cars to stand up and come to dinner also depends on Iveco technology to increase the stamina. If new products are eager to replace old products, problems will arise. Because in the commercial vehicle market under China's national conditions, commercial vehicles must not only perform well, but also have to be cheap, so there is still room for development of old products.
Zhuo Songfang, the former chief engineer of Guangxi Yuchai Machinery Co., Ltd., said that in the "dual brand" strategy, you should have me and I have you. Older products will not be replaced by technological transformation, and localization of foreign products will take a long time. Time, so "double brand" is a wise move. In addition, new and old products should also be well connected. In 1997, Yuchai switched from 6105 engine to 6108 to “vertical†production. As a result, the old product suddenly disappeared. The new product could not open the market, resulting in a greater loss, and finally picking up again. The 6105 product, after market inspection, it is still a very good product.
Zhang Xiaoyu, Chairman of the China Association of Automobile Engineering, said: What is advanced? What is behind? Only one point higher on the market. The products to eat and the products to be developed must be well connected. Now some people think that commercial vehicles do not need joint ventures and they can do it themselves. However, it is undeniable that foreign companies are indeed more technologically advanced than domestic companies, and joint ventures are aimed at improving their own technological level. Now Dongfeng still wants to rely on Nissan to raise its technical level. Therefore, the "Double Brand" strategy is a victory for commercial vehicle joint ventures.
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