Recently, because the Foreign Company Accountability Act has led to a sharp decline in Chinese stocks in the US market, many Chinese companies have been deeply involved in rumors of delisting.
Moreover, even as domestic inflation has remained high over the past few decades, the Biden administration has not eliminated the high tariffs on U.S. exports, including Chinese cars, from the previous Trump era.
It can be seen from this that although the democratic and republican parties in the United States have different views on many policies, they will not make any concessions in the short term to confront China, especially on the matter of imposing high tariffs on Chinese exports to the United States.
Whether it is a Chinese car company or a global car giant, how to make a better plan between the two major auto markets in China and the United States, so that resources can be used in the most reasonable or maximum extent, is not a simple topic.
Imports of models from the United States need to accelerate localization
As reciprocal retaliation, when the United States imposes high tariffs on Chinese-made cars, China will also reciprocally counter the import of cars from the United States. Therefore, not only many American luxury brands, BBA also has many medium and large cars produced in the United States that also need to be considered for domestic production.
After all, although localization will cost some costs, if you consider the amazing demand released by the huge domestic market in the future, localization can help many car brands avoid the uncertainty of tariffs caused by related geopolitical risks.
Especially with the liberalization of the equity ratio of domestic joint venture car companies, foreign car companies can be well solved in terms of expanding localization in China, whether it is intellectual property rights concerns or profit concerns.
Taking Tesla's Shanghai Gigafactory as an example, it not only helped Tesla accelerate delivery in the domestic market, but also became an important node to support Tesla's global production and sales.
Without the Shanghai Gigafactory, Tesla will not only be difficult to complete the annual delivery of 940,000 units in 2021, let alone call the wind and rain in today's domestic electric vehicle market.
Recently, there are also rumors that Tesla will expand the production of the Shanghai Gigafactory to increase its production capacity to 1 million units, and its second gigafactory in China is about to land, when Tesla will have more than 2 million units of production capacity in China.
In addition to Tesla, BMW, which has obtained a 75% stake in BMW Brilliance, has been introduced into domestic production of the X5 originally produced in the United States, which has become an important measure for BMW Brilliance to increase sales in 2022.
Under tariff barriers, Geely detoured to enter the US market
As the world's second largest auto market, for independent brands, if they want to truly grow into a global car company, they need to be laid out in the US market as soon as possible.
However, with the United States imposing higher tariffs on China's export of complete vehicles, it has become unprofitable for China to export complete vehicles to the United States.
Previously, Geely hoped to cooperate with Renault to produce Lynk & Co models at Renault's factory in South Korea, and then enter the US market with the help of the US-Korea Free Trade Agreement.
In this case, whether the origin is South Korea or the brand is Renault, there is no way for the United States to easily prevent Geely technology from entering the US market.
But for Geely, the biggest regret is that the United States is not the home of Renault, and the Renault brand and technology do not have much appeal in the United States.
Therefore, even if it is possible to enter the US market through Renault, it is difficult to change the situation that Lynk & Co or the whole Geely is difficult to do great in the US market.
After all, Volkswagen, which is regarded as a sacred car by the Chinese people, cannot gain a foothold in the United States. As for the PSA after the integration of FCA, it is also based on the US market.
Therefore, entering the US market through the Renault curve is only the first step for Geely to test the waters of sales in the United States, but it is certainly not sustainable.
In addition to Geely, BYD, which is good at electric vehicles and Great Wall, which has a lot of accumulation in the field of pickup trucks, can also do something in the US market. Just how to enter the huge U.S. auto market, or need to plan well.
The practices of Japanese car companies are worth learning from
After skimming the US market, we first need to abandon a kind of thinking that the car is sold directly to the United States to achieve export earnings. The U.S. market is even more saturated than the Chinese auto market, and the United States also has a strong labor union to protect the right of local workers to work.
In this case, if the independent brand wants to really gain a foothold in the United States, it needs to set up factories in the United States like the previous Japanese and Korean systems.
By recruiting local workers and carrying out local production and sales, and then transforming into an American car company, only by contributing considerable employment and GDP to the United States can we truly gain a foothold in the American market.
In this way, even if the United States fights a trade war in the future, it will not sanction companies that employ many American workers. Domestic enterprises can realize the embodiment of enterprise value through the output of technology, management and even system capabilities.
Just like the multinational car companies like Volkswagen and GM that can stand firm in the domestic market before, they have all established very perfect system capabilities in China.
If the era of fuel vehicles continues, it will be difficult for other car companies to find opportunities to overtake based on the foundation laid by these two multinational giants in China for decades.
For the rising independent brands, we also need to have this determination to operate a market, especially if the US market is worth operating.
In the field of smart electric vehicles, Tesla is not only leading the way in the Chinese market, but also in the United States. Whether it is GM's Bolt or Ford's Mustang Mach-E, as well as other new forces in the United States, they are not invincible at all.
Compared with the two major markets in China and the United States, the European auto market is more of volkswagen and Stellantis. It is estimated that it will be more difficult for other brands to stir up the existing pattern in the European market.
This can be seen from the Volkswagen MEB model, which is not Tesla's opponent at all in China, and can compete with Tesla in the European market.
Therefore, in this case, if independent brand car companies want to truly transform into a global car company, the relatively open US market is the target market that must be fought for.
How Japanese brands competed for market share from GM, Ford, and Chrysler at that time, independent brands and even new forces should have the confidence to replicate such a history in the era of smart electric vehicles.