Dr.Dominik Declerc: Volvo joins European

　　September 3, 2010, China Automotive Industry Development Forum entitled the reputation of “Automotive Industry Davos” held in Tianjin Binhai New Area.

　　Focus on the annual theme of he restructuring and upgrade of China automobile industry, the senior leadership from government, industry and corporations will start in-depth discussion. More than 600 government officials, industry leaders, business leaders and scholars have participated in this forum. On the spot, SOHU AUTO interviewed Dr. Dominik Declercq, China representative for European Automobile Manufacturers Association.

　　Sohu Auto: let’s welcome the representative of the Beijing branch of European Automobile Manufacturers Association. His Chinese is very good. Please play greetings to the users of Sohu.

　　D: Hello, everybody.

　　Sohu Auto: What’s the main function of your office in Beijing?

　　D: Let’s firstly talk about the members of the European Automobile Manufacturers Association, including 15 of the most important European trucks, bus and passenger cars companies, all of them have investment in China without exception. The European headquarter of the European Automobile Manufacturers Association represent them to express their common views, positions and interest as the Beijing office dose, representing them to discuss automotive technical regulations, standards and development-related issues with Chinese Government. We participated in the work of the National Automotive Standardization Committee and communicate with the Chinese Press in this role since 2004.

　　　Sohu auto: What’s the progress at present, such as that of participation in the formulation of China's auto policy?

　　D: We have participated in the regulations of fuel consumption standards and promotion of the electric vehicles development. We participated in all the work related to standards for electric vehicles. With the development of the automotive industry in China, we are concerned about any related activities.

　　Sohu auto: You will give feedbacks to the 15 car makers?

　　D: Yes.

　　Sohu auto: Do you have ever heard of some Chinese Electric Car Association? Are there too many such organizations in china?

　　D: I have heard one recently, led by the SAC. I think it is a unique power of China. We don’t have this model in Europe, so it is interesting to see how this new kind project will go.

　　Sohu auto: Do you think it is good for the formulation of the Chinese electric car standards if other joint ventures and foreign companies are not included in electric vehicle association of central enterprises?

　　D: From the general principle, we expect Chinese automotive standards and regulations to match international markets as far as possible. Electric cars, which China auto industry expects to manufacture, even developed in domestic, will also have potential attraction in the foreign market. In order to achieve this more easily, the Chinese standards are expected in best accord with European, American and Japanese standards.

　　SOHU AUTO: Now every automaker, Japanese and European brands in each region are implementing their own standards for electric vehicles. Besides, Japanese are promoting its own standards to the European Commission. How do you see unity in the worldwide?

　　D: Japan, Europe, the USA have not reached a very mature stage, so everyone would like to appeal to their own standards. I think in every region, there are still much to do about the uniformity. We are constantly maintaining dialogue with Japan, the U.S., and China in order to get a more consistent standard. It is more difficult to reach the uniformity between the auto and the power sectors.

　　China’s most important historical strengths

　　SOHU AUTO: China electric car enterprises have their own advantages. Now a number of wealthy overseas are investing on BYD, do you think China automobile industry has the scale or technology or historical advantage?

　　D: I think historical strength is the most important, which is repeatedly mentioned by many people. In China, the automotive industry does not have a history as long as Europe and the USA. In the minds of Chinese consumers, the shift from traditional internal combustion engine for the new energy vehicles may be a bit easier.

　　SOHU AUTO: The main issue to be discussed in this forum is China automobile industrial structure and technological comprehensive upgrade, which the views you bring to us?

　　D: I think there are two structural changes, which should be said to be equally important. One is the shift from traditional cars to the new energy vehicles, a major problem the world facing. The other has been discussed for a fairly long time, that is industrial restructuring, not only the product, bus also production capacity, the number of vendors as well as mergers and acquisitions. The latter is more obvious than the United States and Europe.

　　SOHU AUTO: what do you think of these big and small mergers and reorganizations promoted by Chinese government? What are the changes after the European and the U.S. market finished the transform.

　　D: their sales will increase, their capital will be more sufficient, which can be invest in new energy vehicles.

　　If the scale is too small, on the one hand there is no money, on the other hand, it will lead to vicious competition, which will do harm to the development of the entire automotive industry.

　　SOHU AUTO: what major problems do you think China auto industry is now facing? Overcapacity? Structural adjustment?

　　D: I have made it clear just now. Although there are problems, Chinese market is still developing rapidly, which can help enterprises solve the problems faster.

　　SOHU AUTO: during the 12th Five-Year Plan, what will be main directions of China auto industry? Do you have any predication?

　　D: that is, I have just mentioned the three most important more structural adjustments, product adjustment and the industrialization of new energy vehicles.

　　SOHU AUTO: Ford has just talk about its promotion in China. What strategies do you think we can learn from the European and American firms?

　　D: I think overall speaking, we are facing similar problems. European companies also are developing new energy vehicles, like China. Perhaps the speeds are a little bit different. Maybe the supports from Chinese government is more in China than in Europe support and compare the degree of concern on the leading and than in China. However, the scale of Europe and the U.S. auto manufacturers have reached a higher level than China.

　　SOHU AUTO: We would like to know what are the issues discussed or concerned by the experts or scholars in the European car industry?

　　D: I think the big issues are just the same as the Chinese government, about environmental protection and R&D. European manufacturers agree that allowing further optimization of internal combustion engine can meet the emission standards made by the EU governments. Many companies believe they need not transfer to new energy so rapidly, which is inapplicable to China.

　　Chinese automakers need to develop technology independently

　　AUTO: Speaking of technology, I just suddenly thought of a problem, the history of our automobile industry is almost 30 years. Since Premier Zhou opened up China auto market to 50%:50% JVs, although now the market has been expanded, the technologies are mainly handed by the JVs and the foreign corporations. Take Dongfeng for an example, its main income depends mainly on joint ventures because its independent brands are not so strong. How do you think this problem?

　　D: I do not think any one will deny that the foreign investments have transferred many technologies to China. If the Chinese partial in the JVs think they are not enough, on one hand, they can resign the contract. On the other hand, they should not forget to develop technology independently. Like Chery and Geely, the improvement of their technologies is almost the same as the SAIC and FAW. So I think if all companies adopt the right approach, they should be able to keep up with foreign technology timely.

　　Brand image is important

　　SOHU AUTO: during the recent years, in terms of sales, independent brands such as Geely, Chery are developing so fast. How do you think Chinese independent brands?

　　D: yes, they are really developing rapidly. The current problems maybe not even technologies since they can be bought in the free market instead of the JVs. The most important is the platform management, how to establish their brand images, how to make their brands successful, even in the international stage.

　　SOHU AUTO: we are gradually exploring the problem you mentioned. Now Chinese automakers are launching their high-end and medium-class models. After the international financial crisis, we have also acquired a number of famous international brands. What do you think of these acquisitions?

　　D: they are further illustrating the growing maturity of Chinese auto industry. The acquisition of Volvo by Geely Automobile is in particular a milestone in China, quite eye-catching both at home and abroad. With great historical significance, I believe it will be successful. There is one thing I need to mention, last week, Volvo join our European Industry Association, we are not familiar with Geely previously, but now there is a chance to start.

　　Consumer behavior more consistent in China and Europe

　　SOHU AUTO: personally, I would like to know the differences between consumers in Europe and China in purchasing power, standards as well as spending habits?

　　D: I would like to say the gap is smaller and smaller.

　　Needless to say, the purchasing power of only a few Chinese people can reach the in Europe level. However, now the Chinese government is paying more attention to the environmental protection. After the new standards published, we can see that there are more and more smaller cars on the road. I would like to consumer behavior be more consistent in China and Europe.

　　SOHU AUTO: besides small cars, while high consumption in China, have you noticed the growth of SUV market. There is distinct difference in between China and the rest of the world after the economic crisis. Why do you think Chinese consumers like SUVs?

　　D: I believe this is a transient phenomenon rather than a long-term trend. The Chinese government is considering how to adjust product structure, how to encourage consumers to buy economy cars. Though incentives are not published, I think in the future they will surely improve the market share of the small cars.

　　SOHU AUTO: There is a set of different routes about the new energy vehicles. Some people think we should take the electric car line, others say we should develop multiple technologies. You, as chief the representative, you think 14 European car companies have consensus in electric vehicle technology?

　　D: There is no consensus, actually. We think that eventual choice will be electric cars, but time is hard to say. It has been said the real popularity of electric cars will take 20 or even 30, 50 years.

　　SOHU AUTO: is the form of the meeting in China similar to the Europe?

　　D: yes, I think so.

　　SOHU AUTO: the keynote speech firstly and then come the discussion?

　　D: maybe more time for questions and answers.

　　SOHU AUTO: Do you think including the scholars and government officials and representatives of automobile manufacturers, what can they from this meeting?

　　D: I think definitely they can hear different voices, and they would carry out discussions about major policies. So I think such a large meeting will be quite effective.

　　China also needs a five-year plan

　　SOHU AUTO: The Chinese Government is now formulating the 12th automotive industry, including the 2004 automobile industry development policy, while Europe and the U.S. government is unlikely to do basically industrial policies and planning things.

　　In your view, is there any need for China there is no need to do five-year plan and industrial development policies according to Chinese current situation? If necessary to do so, what kind of five-year plan do we need?

　　D: I think China still needs a five-year plan. I suggest that the purpose of five-year plan is to set a target rather than to provide formulating ways. If we only set objectives in the five-year plan, then it becomes a neutral guide, I think, especially as local protectionism still exists in the case, and the great guide from the Central Government is necessary.

　　SOHU AUTO: Speaking of local protectionism, many local state-owned car makers show a poor asset management. In order to improve local economic and employment, local governments will blindly support the Land collateral loans. In this case is there any way for the Central Government to control it?

　　D: I can not comment on the central government's specific approaches, but I think the Central Government has its own goal in the improving of such situation you just mentioned. The reason for making this goal is that many local automotive makers are too small and lacking funds to support the development of new energy vehicles, so let all makers in this aera to compete with each other. If the local government does not give much support to these car makers, it should lead to mergers of these small car makers and a better industrial structure. It helps to achieve the whole target of automotive industrial transformation and upgrading. I would like not to comment whether local governments will follow Central Government’s guide, but I believe this guide is still necessary.

　　Automotive Brand marketing management laws are necessary

　　SOHU AUTO: I want to know your views about a specific policy, which is the Automotive Brand marketing management laws in the automobile distribution industry with a history of 4-5 years. China's car dealers are unhappy about these laws, and the main reason is that according to this law foreign car companies should set up trading agencies in charge of total import affairs in China. Now this law is under modifying, but the progress is poor. What’s your opinion about the original intention and ultimately effect of this law? Does it cause the passive situation of China's car makers, as well as dealers?

　　D: As you have just mentioned, the amending of Automotive Brand Marketing Management laws have been discussed for at least two years, but little progress has been achieved. It’s hard to say what’s the ultimately result. I do not have some specific views about the amending of Automotive Brand Marketing Management laws. However, as I have just mentioned that the ideas of brand management were not very advanced. These laws will help foreign automotive makers build their strong positions in the Brand forming and promoting. I could not give my ideas whether they are good or bad for dealers, but obviously they are good for promoting of brand management. I do not want this brand management law to be thoroughly developed too fast.

　　(Translator: Yalong/Jessie)

　　See original Chinese report Please click:

　　http://auto.sohu.com/20100904/n274705447.shtml