Return of the Dragon: China's new car-assault on SA
Cape Town - During the year of the Rat (2008), hardly a month passed in the South African motoring calendar without the arrival of a Chinese auto brand. It was a momentum of new product and players that threatened to irrevocably alter the local market, yet it didn’t.
Tellingly, far too many of these Chinese arrivals were symptomatic of the stereotypes we attribute to certain manufactured goods from the People’s Republic. They make a very good iPhone, in Apple’s Zhengzhou factory, but they can’t design, execute or build a quality automobile. Right?
Imagining that China will lag in its ability to deliver quality cars to export markets is a fallacy of logic akin to what Japanese analysts suffered in the 1980s – when they supposed Korean car companies would never have impact beyond their domestic market.
In a country with a history of innovation that predates literacy in Germany, graduating 600 000 engineers a year, the notion of Chinese auto brands continuing to be as awful as those who failed after arriving in South Africa a decade ago, is disingenuous. And to prove that, is Haval.
Looking over the Wall
The only Chinese brand to retain some semblance of credibility – instead of customer ire – has been Great Wall Motors (GWM). If your company is named after the great wonder of Chinese engineering, one would expect something superior to the unspeakably awful cars and bakkies many first-time South African car buyers were duped into buying locally, by joint venture distributors during the initial wave of Chinese imports.
Haval is GWM’s SUV brand. That sentence, alone, says much of the differentiation it brings. GWM has the sensibility to know that a differentiated brand is important when you are Chinese and attempting to conquer foreign markets. More crucially, GWM has also realised that SUVs are the now the only game in town.
Image: Lance Branquinho
Very little pomp and ceremony has accompanied Haval’s entry to South Africa this month. It is unsurprising, as GWM South Africa is no more, with the distributorship having been suspended in favour of a renamed company, called Haval South Africa – controlled directly from China. The initial new vehicle offering is Haval’s H2, a Qashqai-type Chinese SUV, generously equipped and powered by engines which are not copies of three-decade old Japanese designs and built with imitation tooling.
H2 in SA
Predicting product success for SUVs in the South African is challenging, but Australia is effectively our twin market and Haval’s been achieving success Down Under.
With its H2 Haval will be marketing the best Chinese car ever offered in South Africa. Altering perceptions in the local market range between devilishly tough to impossible – ask the French brands – but Haval’s combination of price and product features could prove pivotal in achieving that.
It’s the Huawei analogy, you know it’s not the best Smartphone – but for the price, it’s awfully compelling by not being awful.
And that’s where the Chinese auto industry is at, now. Evolving from awful to average.
Since the 2008 financial crisis most of the world’s economic headlines have been dominated by issues in the European Union and the collapse of Brazil. China’s been quietly evolving its economy from inefficient industrialisation to modernisation and with a change an increasingly educated labour force, generating more discerning domestic customers, the demand for better vehicles have been inevitable.
Underestimate at your peril
From the ashes of the Second World War, Germany and Japan should theoretically never have gained the ascendancy as dominant automotive nations. America was poised to entrench itself and assist its allies in France and Britain to become unassailable. In the fullness of time, the unexpected became fact.
Japanese and German brands have come to dominate in markets beyond their own, at the expense of others. American auto company bosses, blinded with arrogance from the golden age of American manufacturing in the 1960s, never foresaw changing consumer habits or the onset of dwindling product quality and appeal in their own cars. By the early 1980s, Japanese cars were commonplace in suburban America. More established neighbourhoods garaged the German ones.
Image: Lance Branquinho
Despite having been the beneficiary of this strategic arrogance, instead of awareness, on behalf of the American auto industry, the Japanese repeated Chrysler, GM and Ford’s mistakes. In the 1980s, the Korean car industry was in its infancy and before Samsung and LG became a household brands, few people even knew where South Korea was. Today? Hyundai/Kia is the world’s fifth largest car brand, and its market share is not one sustained by discount pricing, it’s buoyed by actual customer demand for products considered desirable.
China Auto 2.0 ready to go?
American executive belittled the first wave of Japanese cars to arrive Stateside as insignificant toys. They weren’t classed as ‘proper’ cars. By the 1990s, Japanese brands had full-sized bakkies and sportscars expertly tailored to what American consumers desired and arguably superior to what GM, Chrysler or Ford could offer its domestic market.
The South African experience with Korean cars, were much the same. Indifferent at first, in the 1990s, but by 2017, they’ve become respected brands. China certainly won’t be the Asian auto outlier. The trend of Asian automotive ascendancy appears destiny for Chinese brands.
Korean car companies conquered global markets – and South Africa - because they had a lot of cash to burn and reinvested it in research and development. German engineers were lured to Korea and the results have been obvious. Chinese companies have even more cash to fund research and development initiatives, money they’re not shy at spending – especially if it means contracting skills beyond the Chinese mainland.
Image: Lance Branquinho
Preceding Haval’s arrival in South Africa there was a startling bit of news from Germany, in May, to prove this point. An electric Chinese hypercar – the NIO EP9 – had set a new Nurburgring lap record, for its part, the most revered record of all for any road car wishing to illustrate superiority of performance.
Debates about the EP9’s status as a ‘production car’ aside, it’s the collaborative nature of NIO’s global design bureaus, linking project teams from Munich, London and San Jose to those in Shanghai, which reveal the transforming way Chinese car companies are starting to function.
With demand for SUVs and crossovers showing no sign of waning, Haval’s poised to profit from that trend and leverage the evolving ability of Chinese engineering and manufacturing to transcend the traditional stereotype of Dragon auto brands.
Six of the world’s top ten Smartphone companies are Chinese. None of the world’s top ten car companies are. But it will change. Soon.