Solving the Mystery of the Auto Market: How Difficult for Independent R&D

CCTV2 “China’s Financial Report” April 18th manuscript unveiled the mystery of the auto market (5): How hard is it for independent research and development? The following is the program content.

Moderator: Hello everyone, here is "China Financial Report". I am Jia Zhihong. In the previous issue of the Mystery of the Auto Market, we discussed issues such as buying a car, selling a car, and repairing services. This issue, we have to say is a problem that has been plaguing auto companies - independent research and development. In the "Eleventh Five-Year Plan", the state clearly proposed to "increase the auto industry's ability for independent innovation" and "to increase the market share of self-owned brand passenger vehicles." However, our reporter's investigation found that for auto manufacturers, especially large number of joint ventures, it is not so easy to master core technologies and key technologies and engage in their own R&D. Then, how should the auto company's independent R&D road go? How to overcome difficulties? We will open this question mark today.

On April 10, SAIC Motor Manufacturing Co., Ltd. made its public appearance for the first time in an ordinary hotel in Shanghai. The company, which is known as the "Dream Team" of SAIC Motor Corporation's own brand, was established just two months ago. Its main task is to take full responsibility for SAIC Motor's own brand building. Previously SAIC Motor Corporation had only Shanghai Volkswagen and Shanghai GM. The largest automotive joint venture does not have its own brand.

Wang Xiaoqiu, general manager of SAIC Motor Manufacturing Co., Ltd.: “The development of SAIC Motor actually produces R&D, including two pieces. One is for me. That is the vehicle body development capability. This is what I must have.”

According to Wang Xiaoqiu, the initial investment of SAIC's own-brand projects was 3.68 billion yuan. The goal is to achieve an annual production capacity of 120,000 vehicles and 170,000 engines. The first SAIC-branded mid- to high-class sedan is expected to be available at the end of this year.

While SAIC Motors vigorously developed its own branded products, the independent research and development of Dongfeng Motor Group also made new progress. As Dongfeng’s Shenlong Motors Co., Ltd., a new model jointly developed with PSA Peugeot Citroen, is a product developed and produced in China, Shenlong Company owns 50% of the intellectual property rights. In the future, if Peugeot Citroën is to produce triumph cars in a joint venture plant in other countries or regions, it must pay a technical transfer fee to Shenlong.

However, from the payment of technology transfer fees to others, to the transfer fee from others, this road is not easy to go. Yi Chuanfang, Vice Minister of Shenlong Automobile Technology Center, has been working in the product development department since the establishment of the company. Speaking of the way these years passed, he told reporters that since the company was established as a joint venture, what kind of technology was introduced? What kind of product was developed, the Chinese did not have enough right to speak at first.

Yi Chuanfang, vice president of Technical Center of Shenlong Automobile Co., Ltd., said: “We imported some cars, but the imported vehicles are not very targeted for the Chinese market. Therefore, its performance in the market has also been seen by people. It has always been very Mean, not very good performance."

Yi Chuan Fang said that initially when Shenlong cooperated with the French side, the products were mainly based on the French side, and the Chinese side could only do some minor applicability improvements, but this and the company’s original intention of developing its own core technology through the introduction of foreign technologies. The difference is too far. Dinglong, which is hampered by technology, can only seek to participate in R&D as much as possible by repeatedly discussing with foreign parties. After hard work, Peugeot Citroen finally began to shift its development focus to China in 2003, and designed and developed the Triumph series for the Chinese market. China finally has its own independent intellectual property rights.

Shen Chuanfang, Vice Minister of Technical Center of Shenlong Automobile Co., Ltd.: “Now we are jointly developing and both parties have independent intellectual property rights. After Shenlong Company has independent intellectual property rights, we can transfer intellectual property to others. Others must pay us.”

Yi Chuan Fang said that in the past when it came to automotive joint ventures, one word would be mentioned: the market for technology. However, in fact, we must make unremitting efforts to win the right to speak and make strategic decisions.

Yi Chuanfang, Vice Minister of Technical Center of Shenlong Automobile Co., Ltd. said: “We also have a very grand plan. By this time in the end of 2007, we must achieve 80% to 90% of this autonomy in all majors.”

Chen Zutao, a full-time member of the Ministry of Science and Technology: “Now it’s time to go to a turning point. So now I’m saying that the Chinese auto industry is actually three phases. One is a planned economy, one is an open joint venture, and the third is one’s own. Because the Chinese market is so big, you have to His own brand has no place in the world."

Moderator: Although SAIC and Dongfeng Shenlong have taken a big step on the road to independent innovation, during the interview, there are quite a number of automotive joint venture companies that told reporters that it is not easy to really create their own car brand. Because foreign companies often use mature technologies as weights in joint ventures, China needs to pay a high technology transfer fee for every car it produces. This directly affects China’s profits. There is no money for R&D. What about?

According to relevant foreign statistics, a self-developed mid-range car, from design, testing to final mass production, usually needs to invest more than a billion dollars. This kind of capital investment is simply unacceptable to most of China's auto manufacturers. According to industry sources, although many domestic auto makers have announced that their R&D investment is more than 4% of sales revenue, which is consistent with international industry practice, in practice, in order not to squeeze profit margins, few manufacturers can meet this standard.

So, where is money coming from? Is there good experience to follow? Some experts in the interview pointed out that the power of a single company is certainly not enough. Japan’s practice is to support government legislation.

Zhang Xiaoyu, vice president of the China Machinery Industry Federation, said: “From the aspect of digestion and absorption technology, Japan has its unique place. On the one hand, the government supports it. It specifically engages in a law to revitalize the automobile industry, that is, the government has come up with a considerable amount of funds. Support enterprises and turn foreign technologies into their own technologies."

The road to independent research and development of the Korean automotive industry has also been largely supported by the government. At the time of the 80s of the last century, South Korean auto production was not ranked in the world auto industry. However, with the support of the Korean government, all foreign automakers must acquire the Korean auto companies at the expense of technology exchange. Through this method, Korean auto companies have acquired a large number of core technologies. At the same time, the Korean government requires auto companies to export-oriented, vigorously expand the international market, and give loans to support, which also provided the impetus for the independent research and development of Korean cars.

Zhang Xiaoyun, vice president of the China Federation of Machinery Industry, said: "The government must support and enterprises must work hard. The people must understand that only this multifaceted ability can truly promote the products of their own brands."

Moderator: It is understood that the National Development and Reform Commission is currently working with relevant departments such as the Ministry of Finance to initiate the designation of the "Eleventh Five-Year Plan" for the development of automobiles and to study specific measures to provide special funds to support auto companies in their own research and development. Then, with capital investment, can independent research and development be successfully implemented? During the interview, our reporter found that even if there is a fund for R&D, various problems will be encountered. The Chinese sedan bought a lot of lessons for its own money. Let's see what kind of experience this is.

The Chinese car of the Brilliance Automotive Group was once a banner of independent innovation of the auto companies. The striking “Chinese” character on the front of the Chinese car was even used as one of the signs of the Chinese car brand. However, few people know that Brilliance also paid a lot for the development of Chinatown. Due to the limited design capacity and the hope that the product will be successfully launched on the market, Brilliance will delegate all the design of the CMC to a famous Italian car designer and spend US$50 million on it, which also makes China a Chinese car. The most expensive car in industrial history.

However, despite the large size of the Chinese car body, fashionable styling, made the consumer's eyeball at the time of listing, but the market performance did not continue. In 2002, China Motors sold more than 8,800 vehicles in four months, and sold 25,600 vehicles in 2003. However, in 2004, China’s sales volume declined rapidly and sold less than 11,000 vehicles. In 2005, it sold only 10,000 vehicles.

Liu Bin, technical director of Beijing Huachen Automobile Sales and Service Co., Ltd.: “Since the end of 2002, when China was listed, the earliest first batch of vehicles, the rate of repairs was indeed quite high. About 40 percent.”

Why China's quality will be a problem? The design made by famous designers, car engine assembly and main parts and components are also commissioned by internationally renowned auto parts companies. What is the problem?

Chairman of Brilliance Automotive Group Yu Yumin: “At the time, I think that from a starting point of view, it is a self-owned technology and its own brand. This is not controversial. The problem is in our own technology, this is our own core technology. How much, how much can I master?"

Yan Yumin told reporters that after analysis, they discovered that the reason why the Chinese sedan suffered setbacks was that, although money was introduced to advanced technology, it was not digested and absorbed, especially in accessory production. Meet the design requirements of quality standards.

Chairman of Brilliance Automotive Group Yu Yumin: “In fact, the so-called technology, this research and development is a fundamentally important link. This research and development has the distinction between appearance and intension. Some people have spent a lot of money and bought foreign technology, although it is our property rights. , but in fact did not grasp its connotation. For example, the Chinese car, then spent a lot of money."

Another lesson is that with advanced technology, strict management is also required to ensure that Sui Yumin told reporters that when Chinese cars sell a large amount of goods, they blindly pursue output and relax the monitoring of quality. Once the brand is damaged, The damage of R&D results is also huge.

BAI Yumin, chairman of Brilliance Automotive Group, said: "This is the northern dialect called radish fast not to wash the mud. We were pursuing one output in a one-sided manner. We continued to make mistakes in terms of quality continuity and after-sales service."

Learning from the lessons of China, Brilliance changed its approach in the subsequent development of new products Junjie.

The chairman of Brilliance Automotive Group Yu Yumin: “Junjie is not buying in full amount, it is all done by our people who engage in system integration and engineering design. Of course, our design and R&D is an open type. Abroad, for example, the Porsche chassis technology, the Italian model design technology, and some other German technologies, we have integrated it into this car. Engineering design, integrated design, whether it is based on me or foreign companies Lord, it was the fundamental difference between whether it was designed by myself or whether it was spent to buy and buy it."

Relying heavily on its own design and production capabilities, this not only saved Huachen’s R&D expenses, but also significantly reduced product costs. On March 18 of this year, Junjie entered the market with the price of a mid-range car equipped with an economical car. In less than a month, it has already had more than 10,000 orders.

Consumers: “The first is to support this domestic brand and national brand. The other one looks from the outside, but at first glance, it looks really beautiful and more like it.”

Deng Zhenghong, general manager of Shanghai Jintai Automobile Sales Co., Ltd.: “The order we have now has about 50 or 60 units, which is exactly what we are now.”

Beijing Direction Huachen Automobile sales service company sales director Duan Guofeng: "We have 455 units so far this order."

The new independent research and development model also enabled Yu Yumin to deeply realize that, in addition to digesting, absorbing, and integrating advanced technologies, independent research and development is more important for mastering technical resources and talents.

Chairman of Brilliance Automotive Group Yu Yumin: “We will build Brilliance into an important research and development base for our country’s automotive industry, from a manufacturing base to a research and development base. We have three goals. The first goal is independent innovation with a high starting point, and the second One is the high quality independent brand, the third, the high goal, and the leap development. By 2010, we tentatively determined that we have 400,000 complete vehicles, 400,000 engines and some other parts and components.Brilliance sales are expected to reach 800 Billion, this is our lowest goal."

Relevant experts pointed out that at present, the entire automotive industry is actively exploring how independent research and development of technologies can be effectively implemented. Practice has proved that simply adopting doctrine does not work. For China’s auto industry, how to achieve technology linkage is currently the most critical step.

Liu Shijin, deputy director of the Development Research Center of the State Council, said: “There is a modular theory, which proposes that the structure should be open, and the other is that there should be a good interface between different parts and the whole. That is, you take the module of your different aspects. After coming, after these elements and elements are brought in, they must be well-organized."

Zhang Xiaoyu, vice president of the China Federation of Machinery Industry, said: “The general plan is based on me. Part of the plan is that if we introduce technology, I will introduce technology. It is one-way; The joint development, so I am active. Then the brand, of course, I have the final say, than the joint venture, a simple set of full technology introduction of the company, have more autonomy."

Moderator: During the interview, a technical engineer at Brilliance left a deep impression on the reporter. He said that his deepest understanding is that it is indeed very difficult to talk about independent research and development because it is subject to human, material and financial resources. limits. But as long as you make up your mind and do it in a down-to-earth manner, it is actually not that difficult. If you in front of the TV have any good suggestions for the development of cars with independent brands in China, you are welcome to send text messages to communicate with us. OK, this time China’s financial report is here, and we’ll see you on the next show!

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