BEIJING – China’s investment in the development and industrialization of electric vehicles and other alternative forms of vehicle propulsion will be “substantial” over the next five years, according to SAE-China director at a symposium here on June 26.
“The investment level during China’s 12th Five-Year Plan Period (2011-2015) will be on par with what is being done globally,” said Fu Yuwu, secretary general of SAE-China, at a seminar organized by the U.S.-China Auto Exchange and the Beijing Municipal Bureau of Overseas Chinese Affairs.
Fu revealed that the central government and the Ministry of Finance have decided to pump in R&D money in support of developing electric vehicles in the next five years, with amount “comparable with the U.S. and other leading industrial nations.”
The symposium was a small gathering of about 40 Chinese automotive executives, most of whom are returned overseas Chinese from Detroit to take up senior-level positions at automotive OEMs and suppliers.
Fu, an industry veteran, does not believe that China is level with the rest of the world as far as development of electric vehicles is concerned. “China still lags behind in electric vehicle development in many areas, such as battery/battery cell, and electric motor technology,” said Fu. Fu thinks that the three major issues facing China’s auto industry right now are how to overcome core technologies such as electronics, vehicle R&D, vehicle weight reduction and chassis modularization; how to develop and popularize new energy vehicles; and the problem of talent utilization.
“It all boils down to the issue of talent,” said Fu. “China’s auto industry lacks leaders and the biggest bottleneck is the external environment, whether it’s the academia or the working environment.”
Wang Dazong, president of Beijing Automotive Industry Holding Corp. (BAIC), echoed Fu’s concerns. Wang, who worked at GM in the U.S. and briefly at Shanghai Automotive Industry Group Corp. (SAIC) before becoming president of BAIC, said that the biggest difficulty he’s facing is lack of talent, especially international talent.
“The so-called overseas Chinese returnees have played an important role at BAIC as well as in the Chinese auto industry overall, but their efforts are not enough. We lack talent who can take over top-level leadership positions,” said Wang.
Currently, all three of BAIC’s R&D centers (one each for Beijing-Hyundai, Beiqi-Foton and BAIC’s independent vehicle project) are headed by overseas Chinese who have returned to China after having worked at major OEMs in the U.S.
According to Wang, BAIC’s next important step is to become a top OEM in China through developing its independent brand and a new energy vehicle industrial park. BAIC is also building its newest R&D center close to the T3 terminal at Beijing’s Capital International Airport. “Capacity and talent are the top issues we are facing in becoming a major automotive powerhouse in China,” said Wang.
Benjamin Zhai, a consultant with Egon Zehnder International, an executive search firm, said that the talent market for overseas Chinese who have returned to China can be summarized into three phases since the early 1990s: skill-honing in the 90s, passionate-dedication in the first decade of the new millennium, and the current “rational thinking on the part of both returned overseas Chinese and automotive employers.”
“Chinese companies have become more rational when it comes to hiring,” said Zhai. “Overseas Chinese who have returned to China seeking employment have also become more rational and hold more realistic expectations.”
Nowadays, more and more foreigners are joining Chinese companies and Chinese are joining foreign-invested companies, according to Zhai. “The talent market in China in the last couple years has changed significantly,” said Zhai. “Based on my knowledge, 90 percent of expatriate CEO-level managers that our companies have approached have at least considered about joining Chinese companies. Chinese companies now have a lot of wealth, and they are willing to consider annual salary levels of 2-3 million dollars to attract top-level executives.”
But still, said Zhai, that Chinese companies should be careful about pitfalls of hiring. The first thing they need to have is respect and avoid a “bottom-fishing” and inflated mentality. Secondly, they should avoid giving an executive “expert” salary with unrealistic expectations of what they can achieve overnight. Thirdly, certain benefits, such as family member arrangements, maybe more important than salary itself.