Beijing Motor Show begins on Monday.
The Detroit Auto Show has long set the tone for the global car industry, but a new player on the other side of the world could prove to be a bigger player. As the Beijing Motor Show begins on Monday, it’s worth taking a closer look at China’s auto industry.
True, China has a long way to go. The world’s second largest economy still doesn’t have any top-notch car manufacturers. Western companies look at the Chinese market as important for their sales, but not with regard to technological innovations.
Just how could China get the upper hand? The key race in the global automotive industry is all about the connected car – what China’s automotive industry leaders dubs the “Internet of Vehicles.” It is important to realize that China has a number of natural advantages in this arena – as well as less “natural” ones.
China’s first advantage is that it does not have to contend with the rather small, “balkanized” markets found in Western countries. That makes the required scaling up much easier in China than elsewhere.
The second is the ease of industrial and regulatory integration. Consider all the industries and sectors that have to align their interests and technologies in order to make the connected car a reality. These include smartphone makers, telecom firms, Internet companies, satellite navigation and traffic management firms, insurance firms, as well as car manufacturers themselves.
In Western countries, there are many established players, each with their own particular agendas and conflicting goals. These incumbents exercise a lot of power, both politically and in the marketplace itself. All too often, their primary objective is to jealously protect their own turf against any other company, sector or industry in the connectivity field – even if the net result is mutual paralysis.
Contrast that with China. There, industry operates in a more top-down way. Industrial policy, actively shaped by the government, is embraced, not resisted. There also is discernably more readiness to cooperate at the behest of the government. In addition, China’s domestic market is so large that most players have a sense that they should be able to get a viable share of the pie.