Lu Xi:four reorientations ofauto industrial

　　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, Deputy Director of Ministry of industry and information technology Lu Xi made the speech the current industrial situation and a few points about accelerating the transformation of industrial development of automobile industry. The following is the record of the lecture.

　　Deputy Director of Ministry of industry and information technology Lu Xi:

　　Dear leaders, distinguished guests, friends, Good morning! Very pleased to participate in this meeting!

　　Here I few comments on the situation in the automotive industry for your reference:

　　Firstly, the auto industry has achieved great results. Since the auto industry development policy promulgated in 2004, the auto industry has developed quite rapidly. In 2009, the auto production and sales ranked the world No.1. With great importance, the auto industry has become one of the pillar industries.

　　1. China has become a world's big automobile manufacturing country. Car production increased rapidly from 4.44 million in 2003 quickly grew to 13.79 million in 2009.Global ranking of China was enhanced from the fourth place in 2003 to the first place in 2009. China auto production and sales topped that of U.S. and Japan to become the world’s largest auto producer and consumer.

　　2. The auto industry has become the pillar of the national economy. As a major driving force, though impacted by the international financial crisis, the auto industry has recovered rapidly and driven the development of the related industries as well as expanded employment and tax revenue since 2007. In 2009, the main business income of nearly 20 auto groups reached 1.5 trillion Yuan, up 29.8%.

　　3. The independent brands have achieved significant results. The Chinese automobile brands not only continue to maintain dominance in the commercial vehicle market, but also have made significant progress in the passenger car field represented by the sedans. The production and sales of independent brands accounted for 44.3% in 2009. The proportion of sedans has reached to29.7% in 2009 from 17.5% in 2003. Major car brands have had the R & D ability and production capacity of the engines and key parts.

　　4. The effect of energy saving is remarkable. In recent years, Chinese government has formulated and implemented a series of policies including vehicle exhaust emission control, fuel economy standards, and r fuel tax system. Automotive industry has made significant progress in energy saving. The fuel consumption of new passenger cars per100 km has been decreased. At present, China has initially established regulations, including emissions and noise. The harmful pollutants and carbon dioxide of the vehicles emissions have been significantly reduced.

　　5. The new energy automotive industry is making headway. A part of the technologies has reached the international advanced level. The major car companies have all introduced new energy automotive products. Automobile enterprises have successively joined in the development and production of new energy vehicles. So far, according to the Department of Industry and Information Technology, the new energy vehicle companies have reached more than 60 and new energy automotive products more than 240. The popularization of new energy vehicles in 13 demonstration cities has made positive progress.

　　6. Mergers and acquisitions have achieved great progress. Driven by market competition and government departments, during these six years, the key car enterprises such as SAIC, Chang’an and Guangzhou Automobile have carried out strategic restructuring of various forms. Till 2003, our 13 major automotive groups sold 3.42 million vehicles, accounted for 78% of the total car sales. By 2009, the number grew to 12.57 million, 92% of total car sales.

　　7. The expansion of the international market has made significant breakthroughs. China’s auto exports volume in 2007 was only 43,000 and 173,000 in 2005, exceeded imports for the first time. From 2004 to 2007, the average annual growth rate reached 102%. Impacted by the financial crisis, export growth fell to 5% in 2008 and continued to decline in 2009. Despite the financial crisis in 2009, the auto parts exports reached 28.99 billion U.S. dollars and the average annual growth rate reached 24.5%. The rapid growth of Chinese exports changed deficit of automotive products started from 2006 to surplus. In addition, in order to meet the trend of economic globalization, a part of domestic business has actively participating in international mergers and reorganization. And some have tried to invest in overseas factories, some of which have been put into production and achieved excellent results. During six years, the automobile industry development policy has played an important role to the rapid development of China automobile industry.

　　The situation China auto industry facing

　　In recent years Chinese and foreign auto industry are changing drastically. The development of China automobile industry is facing new problems and challenges.

　　1. Energy and environmental issues become increasingly prominent. With the increase in car ownership, the proportion of car fuel consumption of the total has increased year by year, which has led China’s increasingly dependent on the imports crude oil. However, the level of China’s oil consumption is still much worse compared with foreign countries. In 2008, the average fuel consumption of the new passenger car per 100 km was 8.03 liters while in Europe 6.0 liters and Japan 5.9 liters. Although China automobile industry has fully implemented China III emission standards, a large number of vehicles in use can only meet the II emission standards.

　　2. The development of independent brands facing great challenge. Although during these years, the independent brands have made fantastic progress, but on the whole their strengths are not strong and facing greater competitive pressures. Firstly, technological innovation capability is not strong. And they lack independent intellectual property rights in key technological areas. The enterprises’ investments in R & D are insufficient. Besides, they also are suffering a lack of R & D personnel, and technical experiences. Secondly, generally speaking, the independent brands are lack of loyalty and good reputation. Third, the independent brand enterprises lag far behind foreign enterprises in R & D, manufacturing and management.

　　3. The industrial base of energy saving and new energy vehicles still need to be strengthened. Currently, in China passenger car market, only a few models can meet the III emission standards. In 2009, there were only 500,000 passenger cars with a displacement of lower than 1.6 liters could reach these standards, accounted for 9%. New energy vehicles are also facing a range of problems. Products, batteries, and prices can not fully meet the needs of consumers. The key components such as battery, power, and control system still need to be developed fatherly.

　　4. Irrational structural problems are still prominent, mainly in four aspects: First, the slow progress in industrial structure adjustment. The current sliced structure makes cross-regional mergers quite difficult. Second, structural optimization is not obvious enough. The proportion of large displacement cars is too high while that of small cars too low. Third, the coordinated development and competitiveness of the domestic automobile industry have been affected since the components have been neglected in a long term. Fourth, the development in rural areas has lagged far behind the cities.

　　The trend of the new polices

　　1. Compared with 2004when the Automotive Industry Development Policy was issued, the domestic and foreign industrial situation, energy problem and the trend of macroeconomic policies China auto industry facing are changing largely. Especially, global financial crisis has imposed far-reaching effects on the global auto industry. A new round of restructuring of the global automotive industry is speeding up. In order to promote China auto industry to develop stably and healthily and constantly as well as the make the automotive industry stronger, Department of Industry and Information Technology together with the relevant departments have carried out the version of the 2004 automobile industry development policy. Under the guidance of the restructuring and revitalization planning of the automobile industry and the requirements on overall transformation of economic development mode issued by State Council, taking the structural adjustment and optimization of resource allocation as the main line as well as opening up and independent innovation as the means, energy conservation and new energy vehicle development as breakthroughs, the government will actively create the policy environment, innovation environment, market environment for the development of vehicle and comprehensively enhance China automotive industry’s international competitiveness.

　　2. the orientation of the new automobile industry are promoting the industrial restructuring as well as mergers and acquisitions, driving automobile manufacturing enterprise to achieve independent innovation and R & D increasingly as well as accelerate the fostering of independent brands and new energy automotive industry, and actively to promote energy conservation and emission reduction of traditional vehicles to properly address issues about energy, transportation and environment caused by the rapid development of automobile industry. The target is to build China a strong automaker till 2020.

　　To this end, we should grasp the following principles:

　　First, combining the market orientation and government regulation and controlling. Let the market play its basic role in the resources allocation and build a fair market circumstance. Furthermore, continue to improve the measures of government regulation and controlling, so as to promote restructuring as well as merger and reorganization of auto industry as well as its sustainable development.

　　Second, insist on combining policies of bringing in and going out. The government should not only encourage and promote domestic car enterprises to achieve self-brand strategy and further improve the R & D capabilities and international competitiveness, but also continue to encourage foreign car makers to expand investment, improves joint ventures’ technological innovation capability, and support long-term development of foreign automakers in China.

　　Third, adhere to combine the traditional energy saving and new energy vehicle development. It is important to improve the development of new energy vehicles R & D, manufacturing and marketing system and accelerate the development of new energy automotive industry. Besides, it is also significant to vigorously promote energy conservation of traditional vehicles and continue to lower the average car fuel consumption level, reducing the gap between the international advanced level and our own.

　　Fourth, insist on combining the development of industry and the limitations of the environment and resources. When achieving the rapid development of automobile industry, the problems emerging with rapid development of automobile industry, such as energy security, traffic congestion, environmental pollution, land wasting and other issues, should be properly addressed. In this way, it is possible to achieve joint development of automotive industry and transport infrastructure, related industries as well as environmental protection, energy and resources using efficiency.

　　Now, energy-saving and new energy vehicles are becoming the focus of the global auto industry, the world automobile industry has begun a new round of adjustment and reorganization. The demand of Chinese auto market is strong, and it is the great chance to achieve auto industry's structural adjustment. We must seize opportunities to accelerate development and try to build China a strong automaker till 2020.

　　Finally, I wish the forum great success, thank you!

　　Moderator: just now Mr. Lu Secretary introduced the situation the automotive industry is facing and the reorientation of the policy adjustments. We can really learn a lot from the report. Thank you very much! Okay, let us take a rest then.

　　(Translator: Yalong/Jessie)

　　See original Chinese report Please click:

　　http://auto.sohu.com/20100904/n274701893.shtml