After Sweden's largest investment, this new energy company reviewed the "pitfalls" encountered by the new energy company

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"This year, there are too many orders in our factories to reach the situation of production." Chen Yifu, deputy director of Xingyuan Material Intelligent Manufacturing Center, said to Titanium Media's "Overseas Reference".

In recent years, benefiting from the outbreak of market demand for new energy vehicles and lithium batteries, separators, as one of the four core materials of lithium batteries, have also ushered in an era of rapid development.

It's just that the export of China's new energy products has become more and more difficult in the context of the volatile international trade environment. In order to avoid the risk of policy volatility, more enterprises in the new energy industry have chosen to step up their overseas layout.

As one of the most important raw material manufacturers in China's new energy industry chain, Xingyuan Materials follows the footsteps of China's lithium battery industry chain owner and is stepping up overseas factory construction.

But the process of going to sea is not all smooth sailing, is it more opportunities or more challenges? Xingyuan Materials told Titanium Media's "Overseas Reference" about the local problems and global digital management problems encountered in the process of going overseas, which may be a reference.

With the continuous change of the international situation, it has become a trend for products and production capacity to go to sea together, and it is the basic operation to build factories overseas. However, market competition, technical standards, and data acquisition in different overseas regions cannot be generalized, and it is necessary to be bold and cautious to find your own positioning and growth point in the wave of globalization, find localization skills, and learn to use digital technology to achieve twice the effect of going overseas with half the effort.

Direct export is more difficult, and localized production has become a typical strategy

In recent years, China's lithium battery industry chain has set off a vigorous tide of going to sea.

Battery manufacturers, including CATL, EVE, Envision Power, Sunwoda, Guoxuan Hi-Tech, and Funeng Technology, have announced plans to invest and build factories overseas. According to incomplete statistics from Gaogong Lithium Battery, as of the end of 2023, the overseas layout and planned production capacity of domestic leading battery companies will exceed 500GWh. Southeast Asia and Europe have become popular destinations.

Most of these battery manufacturers are customers of Xingyuan Materials. Xingyuan material also aims at Europe and Southeast Asia.

In 2020, Xingyuan Materials began to move from domestic production to European layout, and the first phase of the factory in Sweden was put into operation in May 2022. Outside of Europe, Xingyuan Materials is building a new factory in Malaysia and is also exploring the possibility of expanding its business in North America in the future.

When it comes to the consideration of choosing Southeast Asia and Europe to go overseas, Chen Yifu told the titanium media "Overseas Reference", "Mainly in the current environment, especially in the context of China's new energy enterprises going overseas intensively, due to geopolitical or policy reasons, different countries and different regions will put forward very specific requirements for enterprises." The most typical of these is the strategy of localized production. ”

According to the "White Paper on the Development of China's Lithium-ion Battery Separator Industry (2024)" released by the research institute EVTank and Evie Economic Research Institute, the global shipments of lithium-ion battery separators in 2023 have exceeded 21 billion square meters, and the global proportion of China's separator company shipments has exceeded 83%.

Compared with overseas enterprises, the production cost of domestic diaphragm is lower and the price competitiveness is stronger. The production capacity of Chinese diaphragm enterprises has been greatly expanded, and the global production capacity is concentrated in China. So why do Xingyuan Materials and many new energy industry chain enterprises still have to build factories overseas? This has to mention the complicated foreign trade environment in recent years.

Recently, the White House Trade Representative Office announced that on the basis of the original Section 301 tariffs on China, it will further increase tariffs on Chinese imports of electric vehicles, lithium batteries, photovoltaic cells, critical minerals, medical and personal care and other products. Among them, the tariff on electric vehicles will be significantly increased from the current 25% to 100% this year, and the tariff on lithium batteries for electric vehicles will be increased from 7.5% to 25% this year.

This is not the first time that Chinese new energy companies have encountered challenges from overseas trade policies. In recent years, EU countries and the United States have successively introduced relevant access policies, making it increasingly difficult for Chinese new energy-related enterprises to export directly.

The Inflation Reduction Act, which was officially enacted in the United States in September 2022, stipulates that consumers can receive a tax credit of up to $7,500 for the purchase of new clean energy vehicles, but the vehicle must be assembled in the United States, and a certain proportion of the raw materials used in the battery must also come from the United States or a free trade partner in the United States. On May 14, 205, the White House officially announced that it would significantly increase the tariff on electric vehicles imported from China from the current 25% to 100% starting in 2024, and the tariff on lithium batteries for electric vehicles will be increased from 7.5% to 25% this year.

In July 2023, the European Union promulgated the "EU Battery and Waste Battery Regulation", starting from 2027, power batteries exported to Europe must hold a "battery passport" that meets the requirements, recording the manufacturer, material composition, carbon footprint, supply chain and other information of the battery.

These regulations have put forward requirements for the assembly and raw material sources of new energy vehicles, which not only makes it more difficult for Chinese products to enter but also puts forward the need to cultivate and develop local industrial chains.

Some scholars have said that China's new energy vehicle exports in 2024 may be further affected by trade protection measures in the United States and Europe. In the case of high entry barriers and changeable policies, localized production has become an effective way for relevant enterprises to avoid policy risks.

"We have invested in the construction of factories in overseas markets and regions in advance, and it is also in order to cope with some policy adjustments or changes in regional conditions in the future, so that we can continue to provide the local market with products that have been specialized and focused on to meet the needs of the development of the new energy industry in the future." Talking about the reason for firmly choosing to go overseas to build a factory, Chen Yifu said to the titanium media "Overseas Reference".

In Chen Yifu's view, the development of new energy to the sea has formed a relatively clear wave and trend, and it will not be simply because of temporary changes or changes that will lead to hindered future development.

In recent years, international trade barriers have increased, and for Chinese lithium battery companies, although the cost of overseas investment and factory setting up is high, it is also more conducive to expanding business in overseas markets. In the overseas market, Xingyuan Materials has established business cooperation with many large lithium-ion battery manufacturers such as LG Chem, Samsung SDI, Envision AESC, NORTHVOLT, Murata, and SAFT.

Generally speaking, going overseas is a matter of both opportunities and challenges.

Solve the problem of localized production

From simple trade and export to localized factory construction, the problems faced by lithium battery industry chain enterprises are not only limited to policies and regulations, but also need to consider the impact on local employment, labor supply, transportation and other local characteristic factors, as well as whether industrial policies and regulations are perfect, whether industrial talents are mature, and whether they can bring social and economic benefits to the local area.

When it comes to localized construction, Chen Yifu said to Titanium Media's "Overseas Reference", "Every time I go to a place, I will have in-depth exchanges and discussions with the local government, institutions or local Chinese enterprises, and we will study together how to assume the social responsibility of Chinese enterprises going to sea in the local area, how to establish their own brand image in the local area, and how to provide mature products for the local market." ”

When building a factory in Malaysia, Xingyuan Materials chose Penang, which has the largest number of Chinese, considering the follow-up recruitment, employee exchanges, corporate culture construction and other issues. For local employees, Xingyuan Material will take into account their inherent living habits, provide them with food and beverages that are suitable for the locals, and respect their cultural and religious beliefs.

In Europe, which values a sense of social responsibility and humanistic welfare, Xingyuan Materials took the initiative to sponsor a local women's football team and often invited local residents to participate in cultural activities.

Even more different from other regions, Europe has a strong focus on ESG (Sustainability Reporting) and GDPR (Data Protection Regulation). For this reason, Xingyuan Material said that it has specially applied for and obtained the corresponding certification report.

"You can't completely transfer the domestic model to foreign countries. Taking Europe as an example, all the information of European employees, even those of former Chinese employees, must be kept locally and cannot be transmitted to the head office. Europe has the strictest information security regulations, and it is also the region where the current environment has actually issued fines in terms of information security. When doing localization construction, Chen Yifu reminded.

He believes that in order to cope with regional differences and differences, it is necessary to discuss and study with the local government, residents, employees, and enterprises how to implement them locally and do some positive work. This is not only to help establish a good local corporate image, but also to maintain the big image of Chinese enterprises going overseas.

Increase production by 50% and reduce costs, digitalization supports global operations

In the face of the huge global market, how to improve efficiency, reduce costs, expand the market, and meet the needs of different countries and regions with the help of digital technology is the first and most important issue for many overseas enterprises.

"When the enterprise grows to a certain scale, the market is also growing, and our control of cost and production will gradually improve to the next level and level. In this process, it is natural to use digital technology to better empower our enterprises to do things that were very difficult or difficult to achieve in the past. Chen Yifu said to the titanium media "Overseas Reference".

According to Chen Yifu, Xingyuan Materials is currently the largest Chinese company in Sweden with the largest amount of local investment. When I arrived in Sweden, Xingyuan Materials found that the complete ERP system that had been formed in China could not be used overseas. In the face of digital management requirements, Xingyuan Materials had to choose the ERP of a local small enterprise to undertake daily operation and management.

For Xingyuan Materials, this overseas ERP system is very complete, but in the process of use, it is different from the overall management concept of Chinese enterprises.

The ERP system is not a simple tool or the arrangement and combination of data, but more reflects the management philosophy of the enterprise and the design of the management model.

In the end, Chen Yifu decided to switch the ERP product, which was not very smooth to use, to the SAP system. "In addition to the Swedish factory, [our] Malaysian factory is also under construction. A unified digital platform is essential to control the operations of the global production sites. Chen Yifu emphasized to the titanium media "Overseas Reference".

The greater significance of this for Xingyuan Materials lies in the fact that in the future, more reasonable decisions can be made after data interaction in various places.

For the selection of digital systems, Xingyuan materials also have more in-depth industrial considerations. "Under the wave of digitalization, more and more leading customers at home and abroad will put forward more specific and clear requirements for your own digital construction. In order to meet the needs of our customers and to work together to build an ecosystem, we must choose the right partners. ”

Chen Yifu said that leading enterprises at home and abroad basically choose global digital partners. In the future, if there is data interaction or data docking between each other, the same platform and system will become closer and smoother, and some more important customers will not be lost.

He believes that as more and more enterprises choose to move to the cloud, the demands and requirements for such digital interaction between enterprises may become more and more frequent.

In addition, the effect of digital systems in reducing costs and improving efficiency is more obvious. In the past, many of the production links of enterprises relied on on-site feeding or process handover by operating employees to prevent sluggish products from flowing out to the customer. With the launch of the digital system, with the assistance of industrial software, even if there is no human intervention, it will automatically intercept unqualified defective products and do a good job in quality control.

Last year, Zhu Huarong, chairman of Changan Automobile, Zhang Xiong, deputy general manager of GAC Aion New Energy Vehicle, and other industry insiders expressed that there was overcapacity in the battery industry. The production capacity of power batteries, cathode and anode materials, electrolytes, separators, etc. is at least more than double the actual demand. At the same time, high-quality production capacity is tight.

How to ensure international competitiveness in the case of capacity expansion, Chen Yifu told Titanium Media "Overseas Reference", "In addition to continuing to do some iterations on the product side or developing products that others do not have, at the same time, our own internal cost control is also gradually optimized, including the latest fifth-generation production line, which can continue to optimize costs when the production capacity is increased by 50%." I think this is why it is very important to maintain the core competitiveness of the company, and it is also very important for us to continue to survive in the wave of expansion. ”

The new energy industry chain going overseas is not only the international layout of China's new energy vehicle companies, but also driving the core component suppliers and material suppliers such as batteries and motors to go overseas, forming a landscape of upstream and downstream industries going overseas in a coordinated manner.

It is foreseeable that the global demand for new energy vehicles is increasing, and the trend of China's new energy industry chain going overseas is expected to continue, and the era of China's new energy industry has arrived, but at the same time, industrial chain enterprises will also face a complex environment different from the domestic one, strengthen their own scientific and technological hard power, and group development is the only magic weapon.

(This article was first published in Titanium Media App, author | Yang Xiujuan, editor | Jinping)

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