Data show that China’s automobile export volume has surpassed Japan’s for the first time, ranking first in the world.

According to data from the General Administration of Customs, China's complete vehicle exports reached 2.34 million units in the first half of this year, a year-on-year increase of 76.9%. Among them, 795,000 new energy vehicles were exported, a year-on-year increase of 112.7%, which means that China has become the world's largest automobile exporter.

China's domestic new energy vehicles have strong competitiveness and obvious cost-effective advantages in the fields of electrification and intelligence. At present, China has built a complete industrial chain system from key materials, core components to complete vehicles, allowing the new energy vehicle industry to grow rapidly. This growth momentum not only opens up new market space for Chinese automobile companies, but also brings new development opportunities to the global automobile industry.

However, Chinese car brands have smaller shares in most single markets and face competition from European, American, Japanese and Korean car brands. In addition, the European Union is evaluating launching a "double-reverse" investigation against Chinese new energy vehicle companies and may impose additional tariffs - these are all real problems faced by China's new energy vehicles.

At the same time, most Chinese car companies mainly focus on local production and radiate to the global market. In contrast, established automobile powers and multinational automobile companies have adopted a multi-center and outward-radiating strategy and transformed overseas exports into overseas production. Against this background, many Chinese car companies, such as Great Wall, BYD, Changan, Nezha, GAC Aian, etc., are also actively deploying overseas, hoping to achieve two-wheel drive through overseas production and cross-border trade.

So, what signal does the growth of China's automobile export trade send? Will this become the norm in the future? At the same time, which areas of export trade will show positive trends? How should we view the current and future export trade conditions? To this end, Chinese and foreign management media conducted an exclusive interview with Zhang Wei, former vice president of the China Council for the Promotion of International Trade.

"Three new things" replace "three old things"

Chinese and foreign management media: In the first half of the year, China's automobile export volume surpassed Japan for the first time and became the first in the world. So, will the export situation of the automobile industry become a normal trend? Does it have a driving and demonstration effect on other industries?

Zhang Wei: Let’s first look at the data from January to June this year. The “three new items” of foreign trade exports—lithium-ion batteries, solar cells, and electric passenger vehicles—are growing rapidly. In the first four months of this year alone, the total export volume of the "three new items" was 353.48 billion yuan, a year-on-year increase of 72%, which increased the export growth rate by 2.1%. Among the "three new items", lithium-ion batteries increased by 220 billion yuan from January to June, a year-on-year increase of 69%; solar cell exports increased by 180 billion yuan, a year-on-year increase of 17.9%; electric passenger vehicles (i.e. The export volume of electric vehicles increased by 132.8 billion yuan, a year-on-year increase of 183%.

Judging from such a high growth rate, the "three new things" driven by electric vehicles will show a very good development trend in the next 20 years or even longer. What impact has the development of the “Three New Things” brought to China’s foreign trade?

First, the “three new things” have driven industry and production capacity substitution. Twenty years ago, China's exports mainly consisted of the "old three" items: clothing, home appliances, and furniture. The "new three items" brought about the transformation and optimization of foreign trade structure, reflecting the upgrading of industrial capabilities.

Secondly, the "three new things" drive the development of the electromechanical industry. The mechanical and electrical industry is China's largest export category. In the first half of this year, my country's mechanical and electrical products grew rapidly, with exports reaching 6.6 trillion, a year-on-year increase of 6.3%, accounting for 58%-60% of the total export value. With global trade declining this year, it is not easy for mechanical and electrical exports to achieve such growth.

Thirdly, the “Three New Things” have driven the development of the service industry. We exported cars and batteries, followed by a series of supporting services such as maintenance and spare parts, right? For Chinese companies, this business has just begun, and the market space it can stimulate is very large.

We estimate that for the whole year of 2023, my country's new energy vehicle sales will be 14.1 million, an increase of 29% from 2022. 60% of global electric vehicle sales are in China, and we are the largest market. This year, domestic sales of electric vehicles in my country are expected to be 8.8 million units, and are expected to exceed 10 million units. In addition, Europe and the United States are our second and third largest markets, with estimated consumption of 3 million and 1 million vehicles.

At present, the global new energy vehicle market penetration rate has reached 18%-20% (Note: It has exceeded the 15% critical point in the new technology diffusion curve, which means that the expansion of new energy vehicles will continue to accelerate, and user groups will also start from early adopters. consumers transform into mainstream consumers). Therefore, in the next 20 years, the new energy vehicle market will undoubtedly show a prosperous scene.

In addition, the “Belt and Road” markets, such as ASEAN, are emerging new markets. There is a huge amount of investment in Hungary, Thailand, Russia and other countries. Currently, 90% of electric vehicles in the Russian market are produced in China. Therefore, there is still broad room for development in overseas markets.

China's automobile manufacturing industry has struggled for 40 years and has been catching up with the Western automobile industry. It was not until the rise of new energy vehicles in 2015 that China achieved overtaking in the technological field. Looking forward to the next 20 to 40 years, China is expected to lead the development of the global automobile industry.

The new energy vehicle industry chain has a bright future!

Home and Abroad Management Media: How can Chinese companies seize the market opportunities in the new energy automobile industry and what efforts should they make?

Zhang Wei: The industrial chain of new energy vehicles is very long. We must continue to focus on this market and be deep, specialized and stable. Of course, our new energy automobile industry also has some problems, such as chip problems, resource problems, etc.

At the same time, we must form our own systems and standards, and we cannot just sell cars without paying attention to other aspects. Recently, the launch of Huawei's Mate60 has become a hot spot. Although the United States has been trying to block us, it has not blocked us. Therefore, it will definitely create more troubles for us and set up more barriers. From the perspective of manufacturing process, Huawei mobile phones can compete with Apple, but currently they can only be sold domestically because the legal challenges faced by exports are still unavoidable.

In addition, we need to face up to a real problem, that is, we have not yet made a breakthrough in technical standards. Taking chips as an example, although there has been new progress in the manufacturing process, reaching the level of 7 nanometers, we must realize that the limit of global DUV (deep ultraviolet lithography) technology has reached 2-3 nanometers, which will have a huge impact on us. The manufacturing process and processing capabilities put forward higher requirements. Therefore, manufacturing capabilities are very critical for us. Only by having a better yield rate in the industry can we achieve profitability. If we can't achieve 60% or 70% yield, then product development will lose money.

I believe that with the wisdom and ability of the Chinese people, we can catch up with the international advanced level in the next two to three years. We must be realistic about the current gap and work to close it. Just like the "Three New Things", we only have an explosion after decades of hard work. Moreover, technological innovation is no longer a problem for large enterprises. Small and medium-sized enterprises also have strong innovation vitality. In European and American countries, innovation by small and medium-sized enterprises accounts for 60% or even 70%.

I believe that "science knows no borders". As long as science reaches a certain level, no political force can stop it. Just like music and art, others may be able to block it for a year or two, but they cannot in the end.

Four major challenges to China’s foreign trade situation

Sino-foreign Management Media: Currently, due to the increasingly tense international economic situation and political environment, what challenges are Chinese foreign trade companies facing?

Zhang Wei: Data from July this year show that my country’s exports, imports and total import and export value are all declining. This trend is not only reflected in China, but also in other regions, such as ASEAN, the European Union and major trading partners such as the United States. Among my country's top ten trading partners, in addition to Australia and Africa, the total import and export value has increased, the other ten trading partners such as Taiwan, South Korea and the United States have all experienced declines, with Taiwan having the largest decline.

Therefore, this phenomenon reflects the decrease in global demand. It is not just caused by the lack of efforts of Chinese foreign trade companies themselves or the occurrence of problems. It is the result of structural changes in the entire foreign trade.

It is worth mentioning that the foreign economic and trade relations between my country and Russia are continuing to heat up. Judging from July data, the total import and export volume between China and Russia increased by 36%.

So, what exactly are the challenges we face?

First of all, what we need to challenge is the global foreign trade market, not any particular country.

It would be too simple to just challenge the United States. The biggest challenge we face is not to challenge the low-growth or negative-growth global foreign trade structure, but to find new products and new ways to maintain orders when the global "foreign trade plate" is shrinking. Foreign trade cannot hold back China's economy, which requires us to find new products and multiple innovation strategies, including finding new market opportunities, strengthening cooperative relationships with other countries, and adjusting product structure to adapt to changes in market demand.

Secondly, the mode of trade must be transformed from general trade to other trade modes.

In the past 40 years of reform and opening up, we have mainly relied on trade methods such as general trade, processing with supplied materials, and processing with imported materials, accounting for 30%-40% of the total market share. However, from January to June this year, general trade fell by 4.5%, processing with supplied materials dropped by 3.8%, and processing with imported materials dropped by 5.4%. The joint containment of Western countries has set up many obstacles to China's development, such as tariff barriers and technological barriers. Therefore, we must accelerate the pace of changing the way we trade. Some trade has been transferred to Africa, such as clothing, shoes and hats, and other industries; processing trade from Japan, South Korea, and the United States has also been transferred to Southeast Asia and the ASEAN region.

Therefore, our urgent task is to adjust trade methods, especially enterprises in the lower reaches of the industrial chain, to make adjustments as soon as possible. Some Chinese clothing and furniture companies have moved their production bases to Cambodia, Vietnam and other places.

The third challenge is that Chinese companies must dare to challenge the rules of the game.

At present, many standards and rules are set by Western countries, which is unfair to Chinese companies. In order to achieve a fair market environment, we must respond proactively. Leading companies, in particular, need to create and formulate standards that are in line with Chinese characteristics and strive to adapt to and overcome the limitations of existing standards.

Recently, Europe passed the "New Battery Law", which poses a huge challenge to Chinese battery companies entering the European market: This regulation requires companies to provide carbon footprint labels and statements to achieve higher carbon neutrality goals; by 2025, nickel battery recycling The recycling rate must reach more than 80%, and the recycling rate of used batteries must not be less than 50%; each battery must have a battery passport and QR code to ensure information disclosure.

This is undoubtedly a very high threshold for small and medium-sized enterprises. For a long time, we have had shortcomings in setting standards, so we must challenge Europe's rules and standards of the game, strive to do better, and proactively change the way we think about solving problems. We need to rise to these challenges and drive our own standards and rules through innovation and collaboration.

The fourth challenge is that foreign trade companies are facing the challenge of the status of the US dollar.

In recent years, the US dollar's quantitative easing policy has led to a loss of 32% of Chinese orders. The reason why the US dollar adopts quantitative easing policy is to maintain low inflation to improve the purchasing power and quality of life of American people. However, the US dollar's quantitative easing policy has brought challenges to the Chinese economy. China needs to maintain stable price levels to avoid inflation and stagflation, which will put huge pressure on the people. Therefore, the challenge facing Chinese companies is the U.S. dollar system.

Although the U.S. dollar may continue to dominate the world for the next 30 or even 50 years, its global influence has weakened. Now, when people use credit cards to pay abroad, they will directly convert RMB into U.S. dollars for payment, which shows that it is no longer as "must have U.S. dollars" as in the past.

From "Made in China" to "Chinese Brand"

Chinese and Foreign Management Media: How can China’s import and export trade break through at present?

Zhang Wei: New energy vehicles and digital industry are two important directions for future development. In terms of foreign trade, the main regions in the next few decades include ASEAN, Russia and regions along the “One Belt, One Road” initiative. In 2022, we will lose 32% of our import and export volume. Without the "One Belt, One Road" initiative, China's foreign trade will face a severe recession.

In addition, bilateral trade between China and Russia reached 790 billion in the first half of the year, an increase of more than 50%. The largest export destination of Chinese automobiles is Russia. In addition, more than 90% of the Russian mobile phone market is produced in China. At the same time, we also export medium and light industrial products and light assets to them. This year, this field will exceed 1 trillion yuan. Our country can import grain, oil, natural gas and other resource products from Russia. It can be said that trade between China and Russia has no boundaries, and has convenient transportation, flexible settlement methods, and complementary resources.

It is worth mentioning that Chinese companies need to strengthen their control capabilities in terms of market sales channels and brand influence.

On the one hand, it is necessary to strengthen the control of market sales channels, which is very important to meet the huge demand. After the market control ability is strengthened, there will be more sales channels for products and prices will be more "dominant".

On the other hand, brand influence is also a key factor. China still needs to further strengthen its industrial brands. Only with strong industrial brands can lifestyle brands achieve greater development. If industrial brands are not strong, Chinese products will always be in the lower reaches of the industrial chain. We must make breakthroughs in core technologies, key components, computing power, and industrial structure.

How to change the way of trade?

Chinese and Foreign Management Media: How should we change the way we trade?

Zhang Wei: First of all, actively enter the European and American markets. This is like fighting a war. We have to create a market and set a standard. We cannot choose an opponent that is easy to deal with. Only by gaining a firm foothold in a highly competitive market can we gain a foothold on a global scale. Therefore, we must launch an attack on the European, American and Japanese markets.

Secondly, industrial upgrading. We used to be mainly engaged in processing trade and OEM manufacturing, but now we want to develop our own brands. This also poses severe challenges to small and medium-sized enterprises.

Third, focus on the international expansion of new energy. New energy is not just cars, but the upgrade and extension of the entire industrial chain. We are a leader in new technologies, new energy, artificial intelligence and autonomous driving. Therefore, we need to expand these technologies to the international market.

Fourth, supply chain construction, especially for new energy vehicles. It is necessary to study the relevant systems and standards established by European and American countries and the International Energy Agency. For the upstream of the new energy supply chain, China is quite short of raw materials. We must have this awareness: Just because we rank first in the field of rare earths does not mean that there is no sense of crisis. In the international circuit, supply chain sustainability is very important and it is critical that we ensure that energy sources are not disrupted for the next 30 or 50 years.

Taken together, these challenges and strategies require Chinese companies to take proactive actions, pursue innovation, strengthen cooperation, and adjust and improve their development strategies according to changes in market demand and international standards. At the same time, it is also necessary to focus on government support and policy guidance to promote industrial upgrading, technological innovation and improvement of international competitiveness.

New business opportunities for foreign trade companies

Chinese and Foreign Management Media: What are the “new business formats” that Chinese companies need to grasp?

Zhang Wei: Data in 2022 show that in the entire 23 categories of big data segments