On June 7th, the Global Automotive forum was coming to a close. As the last meeting of the forum, this discussion was highly attended and anticipated.
Currently both the global and domestic Chinese automotive industries are slowing down as demands decease. Expected profits are falling year on year. The entire automobile industry is facing problems including the environment, oil consumption, future energy resources, safety and traffic management. Cooperation and competition among policy makers, industrial organizations, vehicle manufacturers, component suppliers and relevant stakeholders will continue to play an increasingly crucial role.
What challenges will automobile industry face in the future? How can we build a community in the industry based on mutual interest? What are the trends that will arise from the international and domestic markets?
Ho Leongleong, host of Phoenix Satellite Television, discussed solutions to sustainable development of the Chinese automobile industry with Chen Zhixin, President of SAIC Motor Corporation, Roland Krueger, President of Infiniti Motor Company and Li Shufu, Chairman of Volvo Car Corporation.
Even with considerable change in technology, the human need for travel will still exist—travel now has just become a different experience. To combat the slowing growth of the auto industry, industry leaders must tailor their products towards individual’s increasing expectations from their travel experience.
Chen Zhixin: Rather Build a New City, Than Guard an Old City
Chen Zhixin points out, “Opportunities are always accompanied by challenges. Going forward, it’s not enough to just have a product. Better service and full integration are necessary in order to satisfy customer expectations.” The focus on a fully integrated vehicle brings with it some problems. On one side there is a movement to innovate, make strides in connectivity, alternative energy, smart car capabilities and car sharing. This makes the industry more competitive and fosters innovation. On the other hand, the merger between Internet technology and the automotive industry threaten the chain of operations in the auto industry.
This reminds Chen Zhixin of Besieged City by Qian Zhongshu. “The present automobile industry seems much like a besieged city, people outside the city want to rush in while people inside the city want to rush out. One can imagine the burden and shock of the SAIC. Facing industry change, we seek to transform and upgrade, namely the traditional enterprises from parts manufacturers to comprehensive suppliers that provide customers with a finished product and service. At the top of the industry chain, the focus is key technology, such as new energy, Internet and smart cars; at the end of the industry chain, emphasis should be put on service, finance, and overseas markets so as to create new market opportunities and effectively improve the ability of capital operations.
Chen Zhixin also stated that automotive professionals should not be defending this gate, but the ones opening it and creating synergies for everyone involved.
Chen Zhixin elucidated that having these cross industry partnerships allows for growth and can create a win-win situation if a high level of cooperation exists. He also advised that Chinese auto companies should join in the international market with their differentiated products in which they have a competitive advantage. He encourages leveraging technology as a source for cooperation. With the merger of the sci-tech reform and the industrial reform it is fundamental for companies to complement one another’s technologies and resources. Zhixin closed with a quote: “a couple can be attracted to one another, support and encourage each other and then fall in love with each other, it does not need to be a marriage between families of equal social rank ”.
Roland Kruger: Investment Can Only Happen with Cooperation
Sustainable development of a corporation is the long-term goal for any company. With changing consumer behavior, increasing cooperation between companies and the rise of the Internet, the auto industry is facing unprecedented changes globally. Roland Kruger's speech mainly focused on three areas: sustainable business development in China, environmental responsibility, and the future of the Internet Smart City.
Roland Kruger stated, “We have to adapt new ideas and put more attention retailing and customers. For example, we can promote the after-sale services and financing services. The dealer network is an indispensable part of Infiniti Motor Company’s operations in China, so it’s very important for us to keep good partnership with the distributors and help them to realize their value-added service. We ought to help them make profits, continuous profits and provide better facilities and supporting services for them.”
As for the environmental issue, Roland Kruger emphasized that cooperation is key in a solution: First we need extensive cooperation within the industry, and only by this way can we lessen the burden of the huge investments. Secondly, we have to coordinate with a third platform, like the energy and battery companies. Finally, we need to develop the infrastructure with the support of the government and other influential companies to push electrical cars to the forefront of the consumer market.
“The automobile industry tries its best to rebuild itself, but it cannot do this alone. Mutual efforts and sincere cooperation are crucial in helping the automobile industry flourish.” The panelists came to a consensus that to restructure the industry chains and value chains, there is a need for greater inclusion and wider cooperation.
Li Shufu: It is Conventional Vehicles that Can Be Replaced, Not the Conventional Automotive Enterprise
What does automotive safety rely on—air bag restraint systems? Mr. Li argues that it is not airbag systems but rather the core values of a car company. He referred to this as the genes of the company. Every company should emphasize safety whether that impedes their creativity. Enterprises should give priority to safety.
Further, Mr. Li also thinks that it is important to consider safety in a larger context: social surroundings, legal environments and moral environments. Conception is the internal factor, and the surroundings are the external factors. Only when both factors are connected with each other can automotive safety be guaranteed. There is nothing more important than life, and a company taking personal safety into consideration is fundamental.
Individuals equate artificial intelligence of cars to driverless driving. Li thinks AI technology is for the purpose of safety and soundness, protecting consumers, and giving extra freedom to people. And the development of hi-connect technology is endless. Automobiles are the carrier of application of artificial intelligence. Automobiles at the end of the day are meant to serve people, and therefore must be controlled by them.
Li suggests that competing on price is useless; instead companies should be competing on their brand name, quality, service and moral code. These factors will allow them to command a premium. “I have a strong feeling that there is a long way for us to go, there are harder challenges waiting for us, though we have just begun a new stride forward. Rome was not built in a day. We must be prepared for a protracted war with the shift of conventional vehicles and manufacturing automobiles in the Information Era,” said Li.
Some argue that EVs will replace conventional vehicles, a school of thought that Li himself belongs to. However, he does not that that conventional vehicles will disappear.
“Now, many conventional automotive companies have shifted into enterprises that themselves own hi-tech which gives them a great advantage. Many of these companies have seen several global financial crises, both the world wars but have remained strong and energetic. Automobiles neither are small household appliances nor are they the Internet. But automobiles integrate both of them. Automobiles propel the development of hi-tech and are the carrier of the applications of hi-tech.” said Li.