In mid-June, a large enterprise delegation headed by Chinese Premier Li Keqiang visited the UK – 78 companies and more than 180 entrepreneurs, covering equipment manufacturing, energy conservation and environmental protection, energy construction, energy-saving electronics, automotive, aerospace and many other industries – It has aroused the high attention of the Chinese and British political and business circles.
At present, the UK produces 2 million cars a year and produces 2.5 million engines, of which nearly 80% are made in the UK for export, especially to the European market. Globally, 25% of manufacturers will establish manufacturing bases in the UK. For example, BMW puts engine manufacturing in the UK.
The UK's policy advantages of full market opening and its strength in R&D and manufacturing have attracted many multinational auto giants to establish product development and production bases in the UK. There are some pathfinders in the Chinese delegation to the UK.
“Intergovernmental high-level meetings and visits have laid a good political tone and established a platform for the cooperation between the Chinese and British auto industries.†On July 1, the Commercial Counselor of the British Embassy was in charge of the Vice-Chairman of the Advanced Manufacturing and Transportation Industry, Wu Qide. (Chad Woodward), in an exclusive interview with 21st Century Business Herald, said that the British Embassy has been organizing exchanges and interactions between Chinese and British entrepreneurs on different topics throughout the year. The theme for July is - about racing technology How to apply to automobile production.
Open market and leading technology are what China needs. Reporter: What do you think is the real demand for Chinese auto companies to invest in the UK? How can the UK market meet their needs?
Wu Qide: Chinese companies hope to create products like BMW, Audi and Jaguar in the future to compete. To this end, they need to make a large amount of investment in research and development, and the UK can meet the relevant needs in this regard.
Over the past decade, the UK has been accumulating relevant experience and technology in engineering manufacturing. Representative technologies are automotive powertrain systems, automotive control systems and automotive core components. One of the important performances is the huge development in the field of racing. There are 8 teams in 10 F1 teams around the world who put their R&D centers in the UK. In the professional development system of the racing field, their technology has been developed and expanded and applied to automobile manufacturing and parts manufacturing.
In order to obtain these opportunities, in fact, Chinese auto companies can have some different ways. For example, Chinese companies can buy and acquire these technologies from the UK and then use them in their domestic development. On the other hand, Chinese companies can also build their own R&D bases in the UK. For example, SAIC and Changan Automobile have established their own R&D in the UK. center.
In addition, the UK is also developing very rapidly in the field of electric vehicles. For example, Nissan built the Leaf's European manufacturing base in the UK in 2010, and they have established a new battery factory here. Nissan is interested in the UK's relevant potential in this area, allowing them to develop more competitive products.
Reporter: What are the current policy and market advantages of Chinese auto companies investing in the UK?
Wu Qide: There are some opportunities for Chinese companies to invest in the UK. We believe that the most important opportunity or a policy advantage is that the UK market is completely open, whether it is a Chinese auto company or a car company in other countries. When entering the UK market, they are treated completely and fairly. There are no barriers to competition and no special treatment. All car companies compete on a fair platform. We call them British companies. Business model.
Why do we think this is a very good business model? Because the diversification of investment can bring further competition and stimulate more new ideas, new technologies and new products. In the long run, this is very important for the economic development of the UK. beneficial. At the same time, we believe that through this platform, we can bring many opportunities for Chinese companies, especially when expanding the UK market.
In addition, the corporate tax rate in the UK is very low, and this tax rate will continue to decrease. By April 2015, this tax rate will drop to 20%, which will be the lowest corporate tax rate among the G20. At the same time, there will be further tax incentives for intellectual property rights and patents. If intellectual property rights or patents are developed and applied in the UK, the tax rate will be reduced by another 10%. At the same time, we have some basic government and industry funds that can be applied to the reconstruction and development of a particular area.
£3 billion spare parts supply gap Reporter: For Chinese auto companies that have entered the investment, what kind of opportunities or how can they compete with rivals of multinational auto companies?
Wu Qide: On the one hand, the opportunity of the market, the improvement of products and the construction of the brand will make it easier for Chinese car companies to succeed in the British auto market. In addition to the market for vehicle sales, Chinese car companies can also explore some different opportunities. The demand for the entire automotive parts sector in the UK is also relatively large. The UK currently has a £3 billion gap in the auto parts supply chain, which we believe is a very good opportunity. Chinese auto companies can participate in the production of parts and components and enter the UK market. At the same time, Chinese auto companies can also build their own production bases, manufacture and sell cars to enter the UK market and further open the door to the European market. It can also cooperate with the British manufacturers of the existing local supply chain system and penetrate each other's market.
Reporter: Can you talk specifically about the gap of £3 billion in the UK auto supply chain?
Wu Qide: The gap of £3 billion is actually measured by the market demand of the British automobile industry. At present, many parts of the UK are imported from overseas. If this part of imported parts can be produced locally from the UK, then Car companies that invest in the UK can be procured locally in the UK, so they can get parts and components in a timely manner, better manage their inventory, and also collaborate on joint research and development locally. We all know that local parts supply is very helpful for production.
Reporter: How do Chinese auto companies seize this opportunity? How do Chinese and British cars complement each other in the parts industry?
Wu Qide: First of all, the British government itself does not particularly advocate a certain kind of strategy to enter the market. Therefore, for Chinese car companies and auto parts manufacturers, different methods can be adopted, such as establishing a factory directly in the UK, or Local companies in the UK set up joint ventures and entered the supply chain of production. Or through some investment methods, such as equity investment or equity acquisition. The overall principle is that the UK market is very open, and Chinese auto companies can enter the market in different ways by observing the market conditions.
We believe that China and the UK have complementary aspects in the parts industry. For example, UK parts manufacturers have a variety of technologies and products, especially their long-term experience in cooperation with OEMs in developed economies.
For Chinese component manufacturers, technology is what they need, and more importantly, their longer-term judgments. At the same time, Chinese manufacturers are also trusted partners of British manufacturers, which can help them gain access to the huge Chinese market. This mutual cooperation and the penetration of the mutual market are all win-win for both Chinese and British auto companies.
Chinese companies can take the lead in new energy Reporter: China and Britain have reached a series of cooperation in energy. How can China and Britain cooperate in encouraging the development of new energy automobile industry?
Wu Qide: The UK has developed a great deal in marine wind energy and is at the leading level on a global scale. At present, China also wants to further develop energy in the ocean, which is also a place where cooperation can be carried out, as well as in solar energy and nuclear energy. At the same time, during Premier Li Keqiang’s visit to the UK, China and the UK also signed important agreements to decide on nuclear energy cooperation in the UK.
The automotive industry plays a key role in the development of a clean economy. The automotive industry not only needs to develop technology, but also other topics to discuss, such as consumption and technology applications, which can be continuously developed. There are also specialized market segments on the market. In this regard, the UK advocates that all countries should cooperate and share technology and talents to promote this development.
We have already cooperated with Chinese auto companies. A typical example is cooperation with BYD. Not only is product development in China, but it also helps them enter the UK market. We help BYD to collect market information, understand the overall situation of the UK market and key companies in the UK, help BYD to conduct field visits to the UK, meet local UK partners, and collaborate on technology and other aspects.
Reporter: Specifically, what are the opportunities for cooperation between China and the UK in terms of new energy vehicles, whether in the parts and components sector or in the vehicle sector? What are the advantages and investment value of the UK in the new energy vehicle industry?
Wu Qide: The UK's new energy market is a brand new market, so any new brand can directly enter and compete. As long as you have technology, products, and correct brand positioning, you can be more mature in this market. Brands compete. Because the new energy vehicle market is a brand new market, consumers and their ideas are of different types, so for any subject, there is an opportunity to enter and compete. In addition, we can also cooperate in technology, for example, we can produce batteries with smaller size, faster charging and longer use time.
Reporter: BYD is a typical representative of China's domestic manufacturing of new energy and electric vehicles. What opportunities and challenges do you think BYD's new energy vehicles will enter the UK market?
Wu Qide: We believe that in a brand new market, opportunities are first come first served. Therefore, Chinese auto companies must enter the UK market and take preemptive opportunities through new technologies and new consumer claims. It can also be seen in history that as long as a company adopts new technologies and is willing to take risks and open up new markets, it will usually succeed. A good example is Siemens in Germany. They came to the UK and started investing in wind energy at the beginning. They also cooperated well with local governments and self-employed companies. We believe that the way to enter the market is that Chinese companies can learn and learn from it.
What I think I can't do is to wait for the development of the market itself, and wait for other international companies to develop this market. It will be more difficult for the market's post-entrants to participate in the competition. This is what BYD is doing. They hope to seize this opportunity.
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