Market Worries for Technology Worries Chinese Automobiles Face Life and Death Path Selection
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At the 3rd China Automobile Industry Summit Forum on November 28, Zhao Jie was still reflecting on events that had taken place just a few months earlier. During that time, his team had captured the attention of over 3,000 journalists from more than 2,000 global media outlets. "We recognized that the world market is huge for Chinese cars and we are very confident," he said, recalling the moment he stood on stage with Chairman Li Shufu, raising the five-star red flag in Frankfurt.
Zhao Jie, Vice President of Zhejiang Geely Holding Group and President of Geily International Group, led a delegation to the 61st Frankfurt Motor Show in mid-September. This marked the first time Chinese automakers had officially participated in one of the world’s top five auto exhibitions. Since entering the automotive industry in 1997, Geely had built an annual production capacity of 200,000 complete vehicles, 200,000 engines, and 150,000 transmissions. Yet, as leaders of a company with 6,000 employees, Zhao and Li felt a deep sense of frustration.
The frustration came from witnessing how German engineers and experts reacted to their cars—some squatted on the floor, others laughed. “I was very uncomfortable at the time,†Zhao admitted. He was told that Japanese and South Korean automakers had faced similar skepticism decades ago. “People think Chinese cars are low quality, cheap, and not reliable.†Though angry, Zhao felt powerless at the time.
This experience wasn’t unique. The Chinese auto industry has been growing for over 50 years, but it still lacks strong independent brands. With over 120 manufacturers, only 37 out of 100 car brands are independent. Foreign brands dominate the domestic market, holding about 90% of the share through joint ventures.
The debate over independent brands reflects deeper issues in China's auto industry. Long Yongtu and He Guangyuan once clashed over whether China should focus on building its own brands or continue with the "market-for-technology" model. Zhu Huarong, vice president of Changan Automobile Group, pointed out that China lags behind in competitiveness, with only 41.7% of U.S. levels and 47.3% of Germany’s.
Zhu criticized the lack of innovation and core technologies in Chinese automakers. He warned against the "Latin American model," where foreign companies dominate the market, leaving little room for local development. “If we don’t develop our own brands, we’ll lose control,†he said.
In contrast, Japan and South Korea focused on independent R&D, supported by government policies. Their success showed that building strong brands and technology is key. Zhu urged China to follow this path instead of relying solely on joint ventures.
Li Shufu of Geely emphasized the importance of self-reliance. His company boasts four unique capabilities: developing automatic transmissions, EPS systems, world-class engines, and full vehicle integration. Geely aims to expand internationally, including participation in the Detroit Auto Show. The Ministry of Commerce is also supporting Chinese automakers with independent brands.
However, challenges remain. Geely faced backlash in Malaysia, where local authorities demanded that CKD-assembled cars be exported fully. Despite these hurdles, industry experts like Ivan Hodac believe Chinese automakers will eventually succeed, provided they comply with international standards.
Looking ahead, the next decade will test the strength of Chinese brands. As Professor Christian Mohrdieck noted, technology and brand are closely linked. BMW’s success highlights the importance of differentiation and emotional connection with consumers.
With over 100 automakers in China, industry consolidation is inevitable. Mergers and acquisitions are expected, driven by the need for innovation and compliance with intellectual property laws. As Pedro Reynolds predicted, the weak will be eliminated, and only those with strong brands and technology will survive.
China’s auto industry is at a turning point. While growth has been rapid, it has also led to overinvestment and inefficiency. Economists like Wu Jinglian warn against excessive investment, urging caution and reform. The future depends on whether Chinese automakers can build strong, independent brands and compete globally.