The Evolution and Transformation of a Chinese Automotive Joint Venture
Author | Ge Bangning
Edit | Jane
Produced by | Bangning Studio (gbngzs)
On December 30, 2021, the night in Hangzhou was somewhat cold, and due to the impact of the epidemic, the 6th year-end show of the famous Chinese financial writer Wu Xiaobo, "Foresee 2022", was carried out instead of online live broadcast.
But this does not affect the communication effect of the mobile Internet era. According to the data, on the night of the live broadcast, 8.31 million people watched the live broadcast through Tencent Video, 6.56 million people through Mango TV, 6.2 million+ people through Migu Reading and Migu Cloud Bookstore, and 2.31 million people watched the live broadcast through Wu Xiaobo Video Number.
The perspective of this year-end show revolves around the keyword "the charm of the cycle". Wu Xiaobo summarized the six major cycles affecting China in 2021 as a century-long modernization cycle, a real estate cycle, an Internet cycle, a new domestic goods cycle, an industrial intelligence cycle, and a new energy cycle. He believes that some of the business events that occur in 2021 have the shadow of these 6 major cycles behind them.
Why talk about cycles in a year full of changes in 2021? Shortly after the opening, Wu Xiaobo answered this question: "I think everyone's life and the economic development of a country are like a long journey. He then further explained, "In 2021, our lives are like breaking into a dangerous historical canyon, we have witnessed a lot of strange scenes, encountered a lot of windy and rainy weather." We are also wondering if there is such a map... If there is this map, it should be woven together by certainty and uncertainty. ”
In the real business world, it is difficult to find such a map with clear road signs. A new era has come, and the world we face is more magnificent, but also more confusing.
The scene of uncertainty and uncertainty also occurs in the automotive industry. What is certain is that after a century of turmoil, the car has been profoundly transformed. "We are experiencing a great automotive revolution. What underpins the automotive revolution is the rapid progress of new energy and information technology; what forces the automotive revolution is the urgency of saving the planet, reducing carbon emissions and protecting the environment. As early as the 2018 forum of the China Electric Vehicle Hundred Association, Chen Qingtai, chairman of the China Electric Vehicle Hundred Association, appealed.
It's hard to say whether the redefined car led to this far-reaching automotive revolution, or this far-reaching automotive revolution that led to the redefinition of the automobile, or whether the two influenced each other. However, the result is indisputable – the scene and runway of the global auto industry have changed, and the protagonist of this runway is China.
When the traditional automakers have joined hands with Internet companies - SAIC and Ali, Geely Holdings and Baidu, Changan Automobile and Huawei - once again stand at the mouth of the times, when eating McDonald's, drinking Coca-Cola, and growing up with IPDA after 85/90 become the main force of automobile consumption, all automakers have to seriously face the potential challenges of a new round of industrial cycle.
This is a war to reshape the pattern of China's auto industry. How to find its own positioning and coordinates again in the era of great changes, how to cross in the new era of joint ventures without a road map, Dongfeng Nissan may provide a case for reference.
01.
Infiniti is on the left and Venucia is on the right
Adjustments are proceeding in an orderly manner. On January 5, 2022, Dongfeng Motor Co., Ltd. (hereinafter referred to as Dongfeng Limited) announced that Dongfeng Infiniti, as an independent business headquarters, was included in the management system of Dongfeng Nissan.
This is another major move of Dongfeng Limited after the Venucia brand bid farewell to three years of independent operation on December 28, 2020 and became the second brand under Dongfeng Nissan. According to the plan, after this integration and collaboration, Dongfeng Nissan can focus on the high-quality development of the passenger car business, optimize the organizational and cost structure, improve decision and operational efficiency, and more quickly adapt to the needs of Chinese consumers for diversified products and technologies.
This is not a distant wait. As early as around 2012, when the Infiniti brand was promoting localization, the two parties to the joint venture had discussed its ownership. One option is to bring the Infiniti brand under Dongfeng Nissan to form a product matrix of Infiniti, NISSAN and Venucia – just as SAIC-GM has the Cadillac, Buick and Chevrolet brand structures – to boost Dongfeng Nissan, which is in the second camp of the joint venture, and launch an attack on the first camp of North and South Volkswagen and SAIC-GM.
Ideals fail to break down the barriers of reality. Bangning Studio learned that there may be a business plan that can't put all the eggs in one basket, and there are also some practical political considerations. But no matter what happened in the past, now, the wish has come true – the Infiniti brand is on the left, the Venucia brand is on the right, and with the backbone NISSAN brand, Dongfeng Nissan has become a full-range passenger car manufacturer.
Both shareholders are clearly happy to see it happen. Looking at the Chinese side first, according to the 14th Five-Year Plan of Dongfeng Company released in September 2021, it is necessary to "promote the sustained and healthy development of the joint venture passenger car business and promote the production and sales scale of Dongfeng Nissan million-level production and sales". At the end of that year, Dongfeng Company set its goal for 2022 - to maintain high quality operations and challenge sales of 4 million vehicles. Among them, the joint venture is positioned as an important cornerstone, and it is once again emphasized to promote the healthy and sustainable development of the joint venture, and the development must not stall, and it is necessary to take the initiative.
Look at the Japanese side. According to the Nissan Ambition 2030, released at the end of November 2021, Nissan will focus its strategy on electric drive over the next decade to achieve carbon neutrality in operations and product lifecycles by 2050. Among them, there are two places that explicitly mention the Chinese market: First, by fiscal 2026, among its four core markets in the world, China's electric drive model sales account for 40%. The second is to expand its unique Nissan EV36Zero electric vehicle hub model to core markets such as Japan, China and the United States.
After clarifying the layout and vision of both shareholders, let's look at Dongfeng Nissan. In the next 5 or even 10 years, Dongfeng Nissan's strategy has been very clear.
"Under the great changes in the industry, it is particularly important to determine the new positioning and direction of enterprise development. After 18 years, Dongfeng Nissan has continued to move to the first camp in the joint venture automobile enterprises, reaching more than 14 million customer bases, which is our moat. Gao Guolin, vice president of Dongfeng Limited and deputy general manager of Dongfeng Nissan, said, "In the future, Dongfeng Nissan will take green, low-carbon and digital intelligence as the starting point, take multi-brand and multi-track as the core layout, establish clear coordinates and paths, maintain synergy, flexibility and aggression, and take digitalization as a new growth engine to promote high-quality development of enterprises." ”
Against this backdrop, Infiniti's accession is timely. From the perspective of market positioning, the three brands have their own duties - Infiniti as the vanguard force of the luxury car market; Venucia brand as the pathfinder of its own business, intelligent vanguard and test field in the field of new energy; NISSAN brand as the backbone, continue to polish the "technology Nissan" golden signboard. The coordinated layout of 3 brands, one upward development, one downward extension, and one intermediate force, boost dongfeng Nissan to 1.5 million or even 2 million vehicles.
The product strategy of these 3 brands is also very clear. The NISSAN brand continues to focus on three major areas, including intelligent driving, intelligent interconnection and intelligent power, and supports the "Nissan Zhixing" technology through 5 major technologies such as super intelligent driving, super intelligent connection, super variable engine, e-POWER and Zero Emission Nissan pure electricity, while accelerating the landing speed of the five major technologies.
Infiniti focuses on creating leading products such as the new QX60 to further explore opportunities in the luxury car market in terms of electrification, autonomous driving, mobile Internet and shared mobility services.
Venucia brand is poised for electrification. In 2021, with three EV models, e30, D60 EV and T60 EV, Venucia's cumulative retail sales of brand terminals doubled year-on-year, accounting for more than 15% of its electric vehicle sales. Among them, Venucia Big V, as the initial exploration of brand rejuvenation, has become a new growth point. In the next 2 years, Venucia brand plans to release 3 new energy models.
02.
e-POWER is on the left, Nissan Pure Electric is on the right
Nissan, once again on the starting line, has clarified its global vision for the next decade while also clarifying the technical path under the dual-carbon target.
In response to the diversified needs of consumers, Dongfeng Nissan will seize the power track with three major technical routes such as traditional fuel, e-POWER and pure electricity. Among them, the VC-Turbo super variable engine continues to lead the era of fuel power lightweighting. As a new generation of power technology, e-POWER has both pure electric advantages and no need to worry about battery life anxiety, bringing consumers new choices for electric drives. Zero Emission Nissan Pure Electric is the technology engine to achieve the zero emissions target.
Nissan has not abandoned traditional internal combustion engine technology. As the world's first mass-produced variable compression ratio turbocharged engine, the VC-Turbo Super Variable Engine has been developed over 20 years, nearly 100 prototypes, more than 300 patented technologies, more than 30,000 hours of test bench testing, and more than 3 million kilometers of road testing. While ensuring power output, it takes into account fuel economy and promotes the development of traditional internal combustion engine technology in the direction of small displacement and high efficiency.
Few people know the hardships. From the idea in 1998 to the mass production in 2018, the VC-Turbo R&D team has experienced various tribulations, and even the plan was on the verge of being destroyed.
The 20-year timeline is roughly as follows: 3 years from concept demonstration to project approval, 3 years from basic research to application development, 5 years to solve performance and durability problems, and 4 years to develop first. It wasn't until 2012, 14 years after Nissan automotive engineers first sketched a structural sketch of a variable compression ratio, that the variable compression ratio engine concept was finalized. Next, the mass production development lasted another 5 years before the barrier was finally broken.
If the VC-Turbo super variable engine represents the past and present of "Technology Nissan", then e-POWER and Zero Emission Nissan Pure Electricity represent the present and future of Technology Nissan, and are an important carrier for Dongfeng Nissan to carry the dual carbon goal.
Considering China's energy structure, as well as the carbon footprint of raw materials, automobile manufacturing, and automobile destruction, dongfeng Nissan has introduced e-POWER technology as one of the best solutions for the dual carbon goal. The near-term goal is to launch seven e-POWER models by 2025.
This technology is well-known in Japan. The first verification was carried out in 2007, the second verification was carried out in 2010, and the technical training was finalized in 2012. In 2016, the first NOTE equipped with e-POWER technology was launched in Japan. Since then, e-POWER has entered a rapid development channel. After 10 years of R&D and five years of market testing, the cumulative sales of models equipped with e-POWER will exceed 500,000 units by March 2021. Among them, the NOTE e-POWER model has won the first place in the sales of compact models in the Japanese market for three consecutive years.
E-POWER has three technical characteristics. First, the e-POWER engine is custom-developed, 100% power generation, focusing on thermal efficiency improvement. In the future, e-POWER engines can also explore the possibility of improving thermal efficiency by achieving full fixed point operation.
Second, by using technologies such as reducing knock at a high compression ratio, the air flow in the cylinder is strengthened to ensure that the combustion is more complete, and the compression ratio and the specific heat ratio are increased.
Third, by realizing Nissan's unique STARC cylinder gas flow combustion technology, we will create a high-roller flow ratio combustion chamber and a high-energy ignition system to achieve high-proportion EGR combustion.
On September 29, 2021, the first model of Dongfeng Nissan e-POWER was unveiled at the Tianjin Auto Show. On January 4, 2022, also in Tianjin, Dongfeng Nissan held a delivery ceremony for 1,000 e-POWER China's first car, which conveyed the message of being favored by the market.
In terms of pure electric vehicles, Nissan is a well-deserved industry pioneer. Zero Emission Nissan Pure Electric helps Nissan automobiles to rapidly transform to electric drive on the one hand, and on the other hand, it moves towards intelligent and autonomous driving technology.
This technology is the culmination of Nissan Automobile's more than 70 years of pure electric research and development, more than 25 years of battery research and development and manufacturing experience, a cumulative safety mileage of 10 billion kilometers, and zero major battery accidents, and its first product will be installed on Aria. In November 2021, Ariya was the first to accept bookings in the U.S., attracting a strong consumer interest. The data shows that Ariya received 135,000 orders in two weeks.
Ariya plans to introduce it to the Chinese market this year. In September 2021, China's first Aria Experience Center settled in Art Park, a key consumer landmark in Shanghai, and opened at the end of that year. In 2025, Zero Emission will be installed on three Dongfeng Nissan models.
In the new decade, Dongfeng Nissan will embark on a new journey in which challenges and opportunities coexist.
03.
Brave the new era
A brand new Dongfeng Nissan will start sailing from 2022.
As a successful model for China's automotive joint venture, Dongfeng Nissan has built itself into an international company in the past 19 years after experiencing market baptism and cultural precipitation. Over the past 19 years, whether it is sales, efficiency, or profit, Dongfeng Nissan has been highly recognized by both shareholders - Dongfeng Company and Nissan Motor.
Before opening the door to a new era of joint ventures, it is necessary to sort out the revelations brought by Dongfeng Nissan to the joint venture queue. This is actually two sides of the same coin - if the impact of force majeure factors is excluded, the factors that have relied on success for 19 years will continue to drive the new Dongfeng Nissan forward.
First, corporate culture.
From the action plan that was spawned when the joint venture was most difficult, to the executive declaration that revisited the action plan; from overcoming the bureaucracy of large enterprises and maintaining the style of doing things in small enterprises, to the culture of happy work and happy life; from the perspective of everyone should stand in the interests of the joint venture, to establishing a relationship of mutual understanding, mutual respect and mutual trust... Over the past 19 years, these codes of conduct have been inherited and developed, and have formed the universal values of Dongfeng Nissan.
The essence of business includes altruism. "Dongfeng Nissan is a culture that does not have to be whipped up, and its business objectives are always very tight, challenging to pursue the market, which also directly or indirectly affects other areas of Dongfeng Company." Zhu Yanfeng, chairman of the board of directors and secretary of the party committee of Dongfeng Company, concluded.
Second, the only partner.
This principle was enshrined in the joint venture contract at the beginning of the joint venture, dongfeng is nissan's only partner, and Nissan no longer cooperates with any second company in China to produce cars. Although there were trade-offs in between, this principle continues to this day.
The benefits are clear. On the one hand, the two sides are fully committed to the cause of cooperation. On the other hand, avoid the establishment of two joint ventures in China like other multinationals, which leads to the dispersion of resources and technology, and the checks and balances between the two domestic partners. To some extent, the principle of uniqueness is also the basis for the establishment of a relationship of trust between the two sides.
Third, localization.
Decision-making is made locally, including talent, products and services, in China. Taking the Venucia brand as an example, when it was born, the Chinese joint venture to build its own brand was in the ascendant, but today, people have found that those who persevere like the Venucia brand are like the morning star.
Not only that, relying on the Venucia brand, Dongfeng Nissan has been working on vehicle networking technology since 2015. After 5 years of practice, the internet of vehicle technology started from the after-sales products of Venucia Smart Car Steward, to venucia new cars, to Nissan's existing cars, and finally to Nissan's new models, breaking through step by step.
Benefiting from this, the NISSAN brand's smart network product competitiveness in China far exceeds that of other joint venture brands.
Fourth, systematic force.
This involves all aspects of the value chain. For example, we will establish a responsibility system for product planning and development that is consistent with Nissan Motor; create a globally competitive production system from the Nissan production method (NPW) to the Renault-Nissan-Mitsubishi Alliance (APW) production method; and form a production and marketing balance system based on Nissan's 3R concept (Right time, Right place, right car, that is, delivering the right vehicle to customers at the right time and in the right place) to ensure process cost optimization.
The agile response of Dongfeng Nissan's supply chain in 2021 is a typical case of system competitiveness. In view of the world problem of lack of core, Dongfeng Nissan has launched a "four-word policy" of grabbing (multi-channel coordinated efforts to grab resources), adjusting (making full use of existing resources and adjusting the structure), waiting (implementing the lack of vehicles off the line, waiting to be reloaded), and replacing (taking technical countermeasures and finding alternatives).
As a result, the lack of core in 2021 will affect the automotive industry by more than 30%, while Dongfeng Nissan is controlled within 15%, the product market demand satisfaction rate is 96%, and the customer delivery compliance rate is 92.8%, which is at a high level in the industry.
"Dongfeng Nissan has created a system force that goes deep into the whole value chain, and the fields of business and enterprise, research and development, manufacturing, marketing, channels, and services form an integrated and efficient operation, which builds a moat for enterprise development and ensures that Dongfeng Nissan can go far steadily under the uncertain situation." Gao Guolin said.
In the context of this era, it may be easier to interpret the "college entrance examination report card" of Dongfeng Nissan in 2021. In the year of increasing uncertainties, Dongfeng Nissan terminal sales reached 1.135 million units due to the superposition of multiple unfavorable factors such as the industrial transformation driven by the double carbon target, the lack of core crisis, sudden danger, and local epidemic. Among them, the NISSAN brand sold 1.047 million units, with sales of more than one million units for seven consecutive years, and Dongfeng Nissan Venucia about 88,000 units, an increase of 11.6% year-on-year.
Compared with the superficial sales figures, the driving forces hidden behind the figures are obviously more substantial. How to continue to succeed on the foundation of 19 years, 14 million cars? Dongfeng Nissan, which has entered a new era of joint ventures, needs to answer the following questions:
First, after having 3 brands, how to achieve strategic synergy and tactical battle?
Infiniti, NISSAN and Venucia brands have already collaborated in planning, manufacturing and procurement, next, how can the three brands collaborate in terms of marketing and service sectors in the shortest possible time, and land as soon as possible? After all, the market does not wait for anyone.
For example, the Venucia brand, when the new national tide is surging, how to take advantage of the situation to play this independent card? Zhang Jihui, deputy general manager of Dongfeng Nissan Sales Company and deputy head of Dongfeng Nissan Venucia Business Headquarters, said, "To do Venucia, Dongfeng Nissan is serious and will not be conservative... On the Venucia brand, Dongfeng Nissan does not have too much baggage, does not have too many negative assets, and can use Venucia to do more experiments and efforts in terms of intelligence, electrification and rejuvenation. ”
This tests the wisdom and perseverance of both China and Japan - if this card is played well, it will become an advantage; if it is not played well, it will become a burden. If played well, the Venucia brand will become a trump card that distinguishes Nissan from other Japanese competitors of the same lineage.
Second, can e-POWER technology blossom everywhere as soon as possible? How to import the Infiniti brand and Venucia brand as soon as possible?
The key to promoting products and technologies lies in the decision-making and action of decision-making and executive-level. One advantage is that Nissan Motor is a multinational company with rich governance experience, and among the management of Nissan Motor, the management represented by CEO Makoto Uchida and Chief Financial Officer Stephen Ma have a deep understanding of the Chinese market.
Third, can the user's thinking really land?
A study shows that the main force of car purchases in the Chinese market is the Internet native generation represented by the post-90s. They pay more attention to the quality of life, generally pursue personality freedom and good experience, prefer high value, like rich configuration, and pay attention to practicality. Dongfeng Daily production capacity can not respond to this change in user demand, to provide more competitive products...
In 2003, as a late entrant to the joint venture, Dongfeng Nissan stepped into the game and staged a classic drama in the history of China's automotive joint venture.
19 years later, in the center of an unprecedented industrial transformation, the integrated new Dongfeng Nissan will usher in a new era of joint ventures.