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The “uptimating” of China’s auto industry

The 9th China Automobile Bluebook Forum, organized by Automotive Business Review or Qiche Shangye Pinglun (ABR) on May 5-6 in Beijing, had another very interesting theme – “uptimate” – for an annual event that has always had unorthodox themes over the years.

“Uptimate” is my English creation of the theme in Chinese – shengji – which transliterally means “upgrading to the ultimate.”

The organizers tweaked the Chinese for “upgrading” or shengji with a different character for “ji” that had the same pronunciation but different spelling and meaning: ji in the sense of ultimate or extreme rather than ji meaning level or grade. The point that the organizers was trying to drive home was that the process of merely “upgrading” was not enough for the industry but everyone needed to try to reach for the extreme, or simply, strive for the best as the incumbents confront newcomers and the entire industry faces the inevitable trend of vehicles becoming ever more connected, autonomous, shared and electric.

Over a course of two days and 16 panel discussions pitting different players – domestic and global, old and new – along the industry value chain discussing a wide array of topics such as new manufacturing movement alliance, design and styling, globalization, C2B manufacturing, telematics, AI & autonomous driving, mobility and sharing, used vehicle e-commerce and OEM-supplier relationship, the forum wanted to find out the answer to how China can “uptimate” its auto industry.

Some of the comments made at the conference that stood out for me were those that came from the “faceoff” from William Li, founder and chairman of Nio and Xu Heyi, chairman of BAIC Group. There were some fireworks flying initially but at the end of the “debate” there was a cordial understanding that both the new and the traditional carmakers needed to learn from each other and China has the unique opportunity to integrate the two entities if it were to build a strong automotive powerhouse. Basically the two gentlemen came to a conclusion that no one was going to disrupt or replace anybody else, but rather they needed to work together for the industry to “uptimate.” Nio’s agreements with JAC and Chang’an over the last half year, what Li says represent “deep manufacturing partnerships,” is a case in point.

The other speaker that had outspoken comments was Li Xianjun, director of Tsinghua University’s Automotive Development & Research Center, who analyzed why China has not yet become an automotive powerhouse via an academic style critique using his own “kite” model. His major conclusion was that past industry regulations were not conducive to helping the industry become stronger but rather hampered industry development. He suggested that the industry simply had to adopt a “survival of the fittest” mindset and allow more free competition rather than regulatory restriction.

Not sure if his comments will be taken seriously by China’s leading decision makers but at least the recent Auto Industry Mid- to Long-Term Development Plan, which gives clear indication of a more liberal market environment, is a move toward that direction.

To “uptimate” its auto industry, China may just have to adopt “unorthodox” measures that are only unique to China.

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