Geely Automobile increases exports by building factories overseas [Global Times]
(Global Times Via Acquire Media NewsEdge) Geely Automobile held the export ceremony of the Geely SUV-GX7 in its Chengdu manufacturing base recently. After that, 600 Geely SUV-GX7 vehicles were exported to the Middle East. Geely's SUVs are quite popular with overseas markets this year, and obtain a favorable reception in the Middle East. Export orders keep coming.
According to the figures released by China Association of Automobile Manufacturers (CAAM), Geely's export sales in this July are 12,420 units, which is far more than that of other self-owned brands during this period. For the first time Geely tops the export sales list of self-owned brands.
Such a performance is more admirable if you take into account of the current situation of the world â€" weak economy, fluctuant exchange rate, increasing trade barriers and political turmoil of some countries as well as the overall export decline of homegrown cars.
This May saw the first export decrease of China's vehicles this year. The export sales are 86,400 units, monthly decrease of 3.4 percent and year-on-year decrease of 16.1 percent. The situation did not turn better in June with export sales of 84,400 units, a slight monthly decrease and year-on-year decrease of 21 percent. In July, such a decrease continued with export sales of 79,900 units, a monthly decrease of 5.4 percent and year-on-year decrease of 11.6 percent. According to the latest release of CAAM, the export sales are 70,600 units in August, a monthly decrease of 11.6 percent and year-on-year decrease of 26 percent. The monthly export sales of vehicles have been reduced for consecutive four months compared to the same period of last year.
The insiders argue that the decrease of export sales is caused by two external factors. On one hand, RMB appreciates continually while Japanese yen keeps depreciating. The change of exchange rate undermines the price competitiveness of China's vehicles exported. On the other hand, some export markets undergo great changes. For example, the tariff of the Brazil market becomes higher and political instability appears in some countries including Egypt.
Shi Jianhua, Vice Secretary General of CAAM states that compared to the situation of years past, as export markets are saturated with low-emission cars, export of the China's low-emission cars starts to decelerate; at present China's cars are not capable of entering high-ranking markets and fails to build brand competiveness. Beside the shrinking market demands, the trade barrier also has a negative impact on China's vehicle industry.
Therefore, under such a negative export situation, Geely's positive increase has set a good example for other self-owned vehicle enterprises. Geely owes its success in overseas markets to two factors. One is upgrading of the product structure, and the other is catering to the different requirements of overseas markets. For example, the temperature in Saudi Arabia is over 50 degree centigrade, which has a special requirement on air conditioning and heat dissipation of cars; those freezing areas, for example, Russia, has a high requirement on the windshield wiper. Such adaption efforts contribute positively to Geely's overseas competitiveness.
Considering building brands, Geely has built factories in some overseas countries, such as Uruguay and Egypt, turning its direction from exportation to localization production. Geely also reached a deal with Republic of Belarus in July to build CKD plants. Thus, localization production can be realized and the latest car models can be introduced. Even custom vehicles can be explored to meet requirements of local markets.
Aiming at overseas dealers, Geely also established training centers for after-sales service and regional distribution centers to improve the ability of after-sales service and facilitate regional marketing, according to Zhang Lin, VP of Geely Holding Group and General Manager of Shanghai Geely Meijiafeng International Trade Co., Ltd. (Geely International Corporation). Geely did not wage price war to occupy overseas markets, as China's brands usually do; instead, it cultivates markets continually relying on the brand strategy, which is more mature.
Other indigenous automakers such as Chery and Great Wall are seeking solutions as well to respond to the market decline. By adjusting their overseas strategy and adopting measures like building assembly factories locally and introducing new car types, the export decline can be reversed to a certain degree.
Chery stated that Chery was building a CKD factory in Brazil to raise the proportion of parts locally produced; besides, more new cars would be introduced to Brazil, such as Tiggo and the newly released ARRIZO 7.
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