BAIC to Double Production in Next 5 Years

　　Editor's Note: On September 16, 2010, the curtain of Global Automotive Forum rises in the city of Chengdu. The theme of the meeting is "Shaping the future of an industry in transition". This year's discussions at the Forum will cover the key issues and challenges shaping the future of the auto industry as it goes through a critical era of transition - including the impact of China's auto industry emergence and the center of world auto industry shifting.

　　During the meeting, Beijing Automotive Industry Holding Co., Ltd. General Manager Wang Dazong received an exclusive interview with Sohu Auto

　　Complete listing of Beijing Automobile Co., Ltd. before the end of September

　　Moderator: Currently, we are concerned about listing of Beijing Automobile Co., Ltd., so how about the time and plans of listing? 

    Guest: Our work goes smoothly, and we held meeting of shareholders on September 13 with disclosure of basic plan. Our goal is to complete listing before the end of this month, but it is a very complicated process.

　　Moderator: Now Beijing Benz hasn’t been included in assets of Beijing Automobile Co., Ltd., why?

　　Guest: It consists of several phases. First, we need to set up a strong company and injected related assets into the company gradually so that achieve overall listing. This is our plan, but it takes several phases to achieve the goal.

　　Moderator: As we can see, BAIC introduced new investors based on original Beijing Automobile Investment Co., Ltd. This is based on what considerations? One view is that BAIC is lack of funds, how do you see this view?

　　Guest: This is actually the Beijing State-owned Assets Management Center, which aims at support the development of Beijing.

　　We are in very good profitability. Profit of BAIC increased by 234% last year, and we predict profit to increase further year-on-year this year. Our profit is higher than any time in history, but the auto industry needs a lot of money to achieve development. Consequently, we welcome the new investors.

　　Moderator: What details will be announced in the process of Beijing Automobile Co., Ltd. listing ceremony?

　　Guest: For example, name of general manager and chairman will be announced. It needs many conditions for registration, but doesn’t request all the details to be completed in time for registration, so we will disclose information as possible as we can.

　　Moderator: How do you manage overall listing process of BAIC after listing of Beijing Automobile Co., Ltd.?

　　Guest: Listing of Beijing Automobile Co., Ltd. is a key part of overall listing, which has milestone meaning. Of course, it will take some time to complete listing, and this is a very complicated process. First of all, we have to inject all assets, which should meet many requirements, including China Securities Regulatory Commission's requirements. We will try to do these things, but the date is not certain.

　　Light hybrid and pure electric sedans will be listed in 2011

　　Moderator: Currently, new energy vehicle is another hot issue of China’s auto industry. Can you reveal plan of BAIC on developing new energy vehicles?

　　Guest: We are paying great attention to new energy vehicles and we divide our plan into two parts, including commercial vehicles and passenger cars. For instance, Foton had about 1500 units last year, including the buses and defense vehicles, which are mainly hybrids. This year we plan to launch more pure electric vehicles. Speaking of commercialization, BAIC's commercial vehicles lead the industry when others are still in development stage.

　　We first emphasize on passenger cars, so a new energy company has been established by us. Last year, we made about 30 passenger cars, and meanwhile we have set up a battery company. Now we are improving manufacturing capacity in other fields.

　　Moderator: What kinds of core technologies BAIC have grasped?

　　Guest: In accordance with national requirements, we have own battery business. The company is an important part for us though it is not our wholly-owned subsidiary. Additionally, we have own electrical and electronic control technologies, and we have been seeking for strategic partners to explore the possibility of further cooperation.

　　Moderator: Does BAIC want to break through battery technology?

　　Guest: We made significant progress of battery technology, though it still has a long way to go. A hundred years ago there were trams, but then industrialization couldn’t come true, for relatively large gap between the battery, energy density, price and cost. However, battery technology has been in rapid growth over the past decade with the battery energy density increased 5 even 6 times. As a result, now there is still much basic work to do, but we are hopeful to achieve it.

　　Moderator: New energy vehicles consist of hybrids with pure electric vehicles and so on, what kinds of new energy vehicles will BAIC launch?

　　Guest: There are many samples of our hybrid vehicles, including light hybrids, heavy hybrids and pure electric vehicles. In terms of industrialization, we are optimistic about micro hybrids and pure electric, which are important parts involve industrialization. Our pure electric will be listed next year and we plan to sell light hybrids in the future.

　　Moderator: Currently, the cost of pure electric vehicles is still relatively high, and how about the cost of BAIC’s ongoing product?

　　Guest: We know that pure electric vehicles have three major challenges, and cost is one of them. This is a worldwide problem. Batteries are expensive than the car itself, however, Chinese government has subsidized the purchase, which is beneficial to commercialization. The second is to cut battery prices significantly through R & D. We plan to cut half of the current battery cost in 2015. Several measures can help us achieve the goal, including enlarging scale and using some advanced technology and better materials.

　　Launch own-brand medium and high-end sedans based on Saab technology next year

　　Moderator: In the traditional automotive field, BAIC has purchased part of Saab's technologies. How about BAIC’s application and digestion of Saab’s technologies now?

　　Guest: It goes very smoothly. On one hand, we will develop own-brand medium and high-end sedans based on Saab’s platform, which will be listed next year. On other hand, we try to developing, absorbing, and digesting technologies. We have set up a special team, and Saab engineers also help us.

　　Moderator: In your opinion, what it means for improvement independent R&D capability through purchase assets of foreign auto manufacturers?

　　Guest: Shortening product development time because these materials and platforms help us shorten the time to grasp core technologies.

　　Moderator: Do you think where the biggest benefit lies in, in entire vehicle platform, engine or transmission?

　　Guest: All is considered, including engine, transmission and entire vehicles, which enable own brand products reach international advanced level step by step. How can Chinese auto enterprises go to the world? First of all, we must have products that match international advanced level. The study and digestion of these materials help us improve the core development capabilities, not just products, but also the formation of development capabilities.

　　Moderator: Could you tell us scale of BAIC’s R & D team?

　　Guest: BAIC at least has three research centers, that is, passenger cars, commercial vehicles and joint ventures with combination of 2000 or 3000 employees. There are more than 500 employees in R & D center of passenger cars.

　　Moderator: How about the composition of the personnel structure?

　　Guest: In this field BAIC’s performance is imperfect, so now we try our best to improve it. R&D centers need a lot of talent. Last year we introduced a lot of talent who have many years experience in automotive production and development, and they are from China and world.

　　BAIC to double production during the 12th Five-Year Plan

　　Moderator: This year, all companies are making plans for the 12th Five-Year Plan. What are BAIC’S considerations?

　　Guest: Now we are doing this work, and the basic idea is clear. We believe that the 12th Five-Year Plan 12 5 is an important period of opportunity for China’s auto industry and Beijing’s auto industry. We must seize the opportunity and further develop and expand. Our measures are as follows. The first is to expand the scale, called "Scale BAIC". The Second is to be strong, called the "Strength BAIC". The third is to take the road of internationalization, called the "International BAIC". The fourth is to strengthen good corporate culture, called” Harmony BAIC”. This is the direction and guidelines, and BAIC hopes to double its production during the period of the 12th Five-Year Plan.

　　Moderator: A few days ago, on International Forum on Chinese Automotive Industry Development, official of National Development and Reform Commission warned that China are faced with risk of overcapacity, how do you see it?

　　Guest: It is necessary to conduct healthy competition. But from our point of view, BAIC is faced serious capacity constraint. Plants have been in overtime since last year.

　　Moderator: So the problem BIAC are faced with are not overcapacity?

　　Guest: At least this is the case for us, and we are optimistic about development of China’s auto industry in next five to ten years. A common feature of various forecasts for development of China’s auto industry is conservative, including mine. In 1995, we predicted China’s car sales would be 5 million units, which is 300% lower than the actual figure. History tells us that China's potential is endless. (Translator: Qinghua/Wade)