An Moran: When I returned to Turkey after living in China for 13 years, I found that the streets were full of Chinese electric cars

Observer.com

2024-05-06 08:30Posted on the official account of Shanghai Observer.com

[Text/Observer Network Columnist An Moran]

I have lived in China for thirteen years and have just recently returned to Turkey.

When I decided to go to China in 2011, my friends were surprised by my decision and questioned why I chose China over Europe and the United States. In their view, China is not a place where there are many opportunities.

However, this perception has changed at an astonishing rate over the past decade. When I decided to go back to Turkey, my friends even said that my best choice was to stay in China, "There are many opportunities in China, why would you want to go back to Turkey?" ”

What has changed in the last decade?

Over the past decade, China has been exporting more products to the world and putting forward its own initiatives on global issues. In terms of total import and export value, China surpassed the United States in 2013 to become the world's largest trading nation. In many industries, China has shifted from manufacturing and suppliers of components to development, production and branding. China has become more self-sufficient in many areas, from food to key technologies, and high-tech green industries (photovoltaics, lithium-ion batteries, and new energy vehicles) have also become a major driver of the Chinese economy.

When I started living in China in 2011, a key indicator of China's industrial development was high-speed rail. When I decided to leave at the beginning of 2024, the most important symbol of China's industrial development became new energy vehicles, which have become one of China's most important business cards.

The first thing I noticed after returning to Turkey was the rapid increase in the number of cars of Chinese brands on the streets. In the past, various Chinese goods were an indispensable part of our daily lives. Regardless of the industry, ordinary businessmen have experience in doing business with China and go to China several times a year to buy goods. This trend continues, but now a new phenomenon has emerged: Chinese goods with brand value and industrial quality bring a difference to people's lives.

Ten years ago, when you mentioned Chinese goods, Turks would think of all kinds of cheap products, but the vaccine from China during the pandemic was an important turning point in people's perception of Chinese goods. In addition to vaccines from Western countries, Turks also prefer vaccines from China, as they are produced using more traditional methods. Now, Chinese brands of cars are taking Turks' perception of Chinese goods to a higher level. When I heard that I had lived in China for a long time, people started asking me questions about electric vehicles. I also post videos about electric cars on my YouTube channel, which get more views than any other video.

In terms of price-performance ratio, Chinese cars offer a very attractive product for Turkish consumers. In recent years, Turkish consumers have been struggling with the increasingly high cost of living due to rising inflation, and car prices have risen with it. During the pandemic, the balance between supply and demand in the automotive industry was broken, and used cars in Turkey were once more expensive than some new cars, and high inflation caused cars to become an investment tool for consumers. Coupled with the high special consumption tax, the price of the most common new car has risen to more than 1 million Turkish lira, equivalent to about 250,000 yuan. So when I told my Turkish friends that they could buy a Xiaomi Su7 for 250,000 yuan, they were all surprised.

With a short-range version of the TOGG, Turkey's domestically produced new energy vehicle, priced at 1.5 million lira, it's no wonder that Chery's Omodo5 and Tiggo7 have attracted the attention of Turkish consumers. If you take a short tour of the streets of Ankara, you will see many Chery cars. Concerns about after-sales service and the supply of spare parts have been reduced as Chinese companies are ramping up their after-sales services in Turkey.

A new vision for China-Turkey relations?

Turkey is struggling to keep up with the trend of electric vehicles, and of course, China is one of the main countries that Turkey is focusing on in this regard.

Turkish Minister of Industry and Technology Mehmet Fatih Kacır visited China at the end of December 2023. He traveled to eight different cities and met with local government representatives, visited seven companies, and also visited the Yangtze River Economic Belt, the heart of China's burgeoning electric vehicle industry. For its part, the Turkish industrial delegation visited the factories of well-known Chinese electric vehicle manufacturers.

According to the Turkish Automobile Distribution and Mobility Association, the total market for automobiles and light commercial vehicles in Turkey reached 1,232,635 units in 2023, an increase of 57.4% compared to the previous year. In 2024, this trend will be difficult to repeat, and owning a car will become more difficult as funding and credit become more difficult to obtain. Industry representatives expect car sales to fall below 1 million this year, but new energy vehicles are likely to be more positive in a different direction from the market trend.

Last year, there was a noticeable increase in the interest of Chinese brands in the Turkish market, which was reflected in the number of companies entering the market. With BYD, the world's leading electric vehicle manufacturer, joining the Turkish car market, the number of brands with Chinese roots has increased to nine.

In 2023, Chery stood out among Chinese car brands with sales of 40,590 units, followed by MG with 14,458 units and Skywell with 2,541 units. BYD, one of the world's largest electric vehicle manufacturers, entered the Turkish market with its only model, the Atto 3, with sales of 839 units, while Chinese luxury car brand Hongqi recorded sales of 19 units.

The position of Chinese brands in the Turkish market is increasing in terms of volume and market share.

In 2024, 42 new EV models will enter the Turkish market, and Turkish consumers will be exposed to new brands from China, such as Zeekr.

On the other hand, it is also worth paying attention to whether Chinese brands will produce in Turkey. According to company officials, Turkey is one of the top candidates for Chinese brand production and battery investment, but regulations and developments related to electric vehicles are being closely watched. BYD announced that it will open its first passenger car plant in Europe in Hungary, while Chery has chosen Spain as the location for its first factory in Europe, both of which are investments that Turkey is looking forward to.

On October 29, 2022, Turkish President Recep Tayyip Erdogan attended the launch ceremony of the Togg, the first domestically produced electric vehicle, and personally took it for a test drive

Will Turkey Follow EU in Sanctioning Chinese Electric Vehicles?

Currently, Turkey imposes an additional 40% tariff on new energy vehicles imported from China, which, combined with the 10% tariff, brings the total tax to 54%.

However, it may be misleading to interpret Turkey's decision to impose additional tariffs as a parallel step to the EU's ongoing countervailing investigation. At a time when Chinese manufacturers are highly competitive, Turkey is taking certain measures to protect its domestic industry. Turkey welcomes global manufacturers such as BYD and Chery to produce domestically and benefit from the free trade network it provides.

In the field of battery production, the ongoing collaboration between Farasis and TOGG is a notable example of cooperation between the two countries. SIRO, a joint venture between Chinese battery manufacturer Farasis and Turkish domestic automotive company TOGG, has facilities located next to the TOGG plant in Gemlik.

Turkey, which has made a major breakthrough in the defense industry in recent years, also does not want to lag behind in new energy technologies. Turkey needs to carefully analyze where China started and how it has developed to where it is today. The automotive industry is largely a reflection of a country's industrial infrastructure and the complexity of its supply chain. Behind the success of Chinese manufacturers in this field is not only state support, but also a large amount of R&D investment, innovation capabilities and an efficient supply chain. For Turkey, which has successfully launched the TOGG project, government support alone is not enough.

Looking at the Yangtze River Economic Belt region that the Turkish delegation visited last year, we can see that within a two-hour drive, an electric vehicle manufacturer can get everything it needs to produce it. China has achieved this by consistently doing more in the field of technology than its Western competitors; Today, to compete with China, it is essential to always strive to surpass every step that Chinese manufacturers are doing.

China's leadership in new energy and electric vehicles is now seen in the West as "industrial overcapacity". Of course, giving China a long "to-do list" and acting unilaterally is not a reasonable approach. From a Western point of view, it is seen as a problem of industrial overcapacity, and from a Chinese point of view, it is seen as competitiveness and innovation.

And the question of whether electric vehicles are overcapacity is also controversial in itself. According to the latest report of the International Energy Agency, the number of electric vehicles in the world continues to grow rapidly. By 2030, one-third of all cars in China are expected to be electric, while nearly one-fifth in the United States and the European Union are expected to be electric. So globally, there is still a big demand for electric vehicles. What needs to be done at this stage is to create a level playing field, not to turn it into some kind of "arms race", and of course to provide consumers with safe, low-cost products.

In a broader context, the global shift to new energy coincides with a shift in the geopolitical paradigm. As the world changes significantly, so do the technologies and forms of energy we are used to.

Therefore, the shift to new energy vehicles means not only rewriting the long-standing rules of the automotive industry, but also heralding a shift in the entire international system. The recent talk of an increase in industrial overcapacity actually stems from concerns about falling behind in this critical competition. Ultimately, it is more beneficial to see it as a transition in which all of humanity wins, rather than a game in which some lose and some win.

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