Let's talk about the development of China's automobile after entering the 21st century.

In 2001, after marathon negotiations, Huaxia officially joined the WTO.

At that time, the developed countries in Europe and the United States were facing excess automobile production capacity, and in their eyes, this emerging market was nothing less than a super cake. The negotiations in the field of automobiles have become a key tug-of-war in the process of negotiations on China's accession to the WTO, and the Chinese side is worried about the excitement and pride of the foreign side.

There is a reason for the foreign representatives to be proud of the outcome of the negotiations -- the Huaxia automobile market in 1986 was a protected market, and the import tariff was as high as 220 percent, and according to WTO regulations, the tariff must be reduced to 25 percent by July 2006, and the import quota was gradually abolished. The emergence of this "supervariable" of the WTO is no less than dropping a nuclear bomb in a pond.

China's accession to the WTO has become a key point in China's automobile industry

"The Chinese automobile industry is in danger", this is the common anxiety of practitioners at that time. For the Chinese automobile industry, the three most famous words of the year were "the wolf is coming". On the eve of China's accession to the WTO in 2000, an automobile expert submitted a letter of request to the top management, advising the Huaxia automobile industry to deal with the impact of the WTO -- "If we continue to control investment in the Chinese automobile industry, it will be equivalent to using state power to protect a piece of the market, which will be handed over to foreign automobile manufacturers in the future." Rather than allowing foreign products to directly enter and defeat our automobile enterprises in the future, it is better to let foreign capital expand investment in China's automobile industry and let China's private funds enter the automobile industry. ”

This strategy of "razing and razing" gradually gained the upper hand in the controversy in the industry at that time. Under the advice of all parties, the policy began to loosen. In 2000, the high-level revised the "Law on Foreign-funded Enterprises" to no longer limit the localization rate, and the Huaxia automobile market saw a second joint venture climax.

The overall pattern of the global automobile industry has always been said to be "6+3" in the past, that is, the six major brand automobile groups: General Motors, Ford, DaimlerChrysler, Peugeot-Citroen, Volkswagen, Renault-Nissan, plus the three independent brand car companies Toyota, Honda and BMW, basically dominate the global automobile industry. Counting the foreign manufacturers who took the lead in entering the Chinese market during the "three major and three small" period, plus the total number of foreign manufacturers who entered around 2000, the "6+3" manufacturers have all entered the Chinese market.

For the automobile industry, China, which joined the WTO, suddenly entered the "Great Plains Era". Without the protection of the "natural risk" of tariffs, immature independent brands were directly pulled to the Great Plains, and competitors with rich experience, advanced technology and complete industrial chains fought on the same stage.

Once the gears of upheaval start turning, they don't stop, and everything changes wherever the hurricane sweeps.

It is not only the vehicle manufacturers that are affected, but also their upstream industry chains. Some officials were worried that China's automobile industry might be seriously impacted after China's accession to the WTO, and the first of them was the parts and components, which had more than 700 parts enterprises in China at that time, with sales of 34.05 billion yuan in 1999. Due to the low technical level of domestic auto parts, and the industry is fragmented, the production scale is small, and the cost remains high. After joining the WTO, the average tariff on parts and components will drop to less than 10%, and the country's measures for localization will no longer be coercive and attractive, because the preferential tariff rate may be abolished. In this way, under the pressure of reducing costs, automakers will tend to global procurement, and the domestic industrial chain will be impacted.

However, after China's accession to the WTO, the industrial chain has taken on a new atmosphere. The expansion of many car companies has brought a lot of demand, bringing a new round of integration to the upstream and downstream industry chains. The competitiveness of the Chinese people is beyond the imagination before, after years of learning and game, the level of Huaxia spare parts manufacturers has advanced by leaps and bounds, whether it is in the production line of joint venture car companies or local brand production lines, more and more products of Huaxia spare parts manufacturers have to be adopted. The mature upstream and downstream have given the independent brand better accessories resources.

The WTO is a major variable, which has also brought about changes in the entire consumption environment.

During the "three big and three small" period, the main group of automobile consumption was official cars and a small number of "people who got rich first".

After China's accession to the WTO in 2001, China's economy grew rapidly, and more and more people had the desire and ability to consume automobiles. The change in the size of the number of consumers does not only affect the sales level. Under the original small-scale market, the reverse influence of users on the product is very weak, and the product is almost unilaterally defined by the supply side. In a large-scale market, the monopoly of the manufacturer's right to define the product collapses, and the customer begins to participate in the definition of the product.

Without the protection of the government, enterprises can only survive by ability. Competitors on the "Great Plains", in addition to competing for manufacturing capabilities, also compete for product design capabilities, technology research and development capabilities, integration capabilities for the upstream and downstream of the industrial chain, and pre-sales and after-sales service capabilities.

In March 2004, the assets of the headquarters of CAIC and its affiliated enterprises were transferred to SAIC. In the same year, China Automotive announced its delisting. In December 2007, the liquidation of the assets of Huaxia Automobile Industry Company was finally completed, and the Reform Bureau of the State-owned Assets Supervision and Administration Commission (SASAC) issued an announcement stating that China Automobile would be revoked in the future and would no longer be a central enterprise supervised by the SASAC. This once embarrassing China Automotive Company has finally ended its historical mission. Different from high-speed rail, airplanes and other major heavy equipment, the automobile, an industry that is fully marketized and has strong consumption attributes, no longer needs a strong central enterprise to lead its development.

Huaxia's own brand is also ushering in spring at this time.

At the beginning of the 21st century, when the huge potential of the Huaxia automobile market began to sprout, it was difficult for joint venture car companies to meet the rapidly growing market according to the characteristics of local demand due to the dominance of their products, and they were unable to shape and promote the development of the market. By solving the problems that cannot be solved by joint ventures and imported car companies, they have successively shared the market share of foreign brands step by step in the fiercely competitive market.

From about 2000 to 2014, Huaxia's automobile industry has entered a stage of independent innovation. After more than ten years of fission, the market share of independent brands has increased from less than 5% to almost half of the country.

In 2002, Li Shufu, who had just obtained the automobile production license, once again said surprisingly at a meeting of middle-level cadres of the company held in Zhejiang Province: "We are going to buy Volvo, and we should prepare from now on!" 8 years later, when Geely acquired Volvo at a sky-high price of 1.8 billion, it was still not favored by the Chinese people - a world brand that even a century-old Ford could not play well, what could it be like by a private enterprise in Zhejiang Province, China?

But Li Shufu, a "car maniac", brought Chinese-style wisdom. In addition to fulfilling the promise of making Volvo continue to make profits, it also used one of the world's best original car companies to give wings to Geely, a local tiger. Geely, which has digested Volvo's core technology, has greatly improved its car-making level in just a few years, and has successively launched amazing models such as Emgrand, Borui and Boyue, which have quickly won word of mouth and sales in the Chinese domestic market.

From Shiyi's long skills to independent innovation, in addition to Geely, each family also has its own way. Great Wall, Changan, Chery, BYD, SAIC, GAC, ...... Even the red flag of the "national car", which has been angry with netizens for many years, has now stumbled out of its own way in the local market.

The WTO has brought a torrent to the Chinese market, which has reshaped the pattern of China's automobile industry.

China's independent automobile industry, which has begun to take shape and is still immature, has not been stifled after joining the WTO. On the contrary, the Huaxia automobile industry, which has stepped out of the greenhouse, has been reborn and thrived on an open plain.

But it's not like there's no other voice.

Among them, the most intense discussion is the success or failure of "market for technology".

The purpose of the automobile industry policy in 1986 was to gradually realize the localization of parts and components through the introduction of technology, and eventually enable the Chinese automobile industry to embark on a road of independent development - "Santana Road".

Taking 2001 as a watershed in the era of joint ventures, let's take a look at a set of data from that year.

In 2001, Huaxia Automobile sold 2.34 million vehicles, of which 700,000 were cars; almost all Huaxia car enterprises relied on the joint venture model; more than 95 percent of the cars were foreign brands; the "old three" -- Santana, Jetta and Fukang -- occupied 60 percent of the market share, and the "North and South Volkswagen" accounted for 50 percent.

At this moment, people finally realized that the introduction of production technology and product development capabilities are completely different things.

The vast majority of what the joint venture has brought to Huaxia Automobile Industry is only the right to produce licenses, that is, to assemble according to the molding design provided by the foreign party, and drawings + data are not equal to product development capabilities. As an endogenous capability of an organization, product development capability is grown and accumulated over a long period of time in its development path – design drawings and equipment can be introduced, but product development capabilities cannot be introduced.

It is also not possible for a joint venture to carry out innovative activities that are contrary to the interests of the foreign parent company of the joint venture, allowing the development of products that are in direct competition with the foreign party's products. In the case of a foreign party dominating the product rights, it is difficult for the foreign party to allow an active R&D organization to exist in the joint venture. The endogenous contradictions of the joint venture model have set up various obstacles for "market for technology", but the loveliness of the world lies precisely in its complexity, and if you consider it from another level, you can read different information.

After China's accession to the WTO in 2001, the wave of joint ventures in Huaxia's automobile industry began to enter a new stage. At this stage, in addition to competing with each other, joint venture brands also have to compete with the rising local car manufacturers in the market, and even cannibalize with imported models of foreign parent companies.

So this exchange of the market for technology, do we make a profit or a loss?

At first glance, it looks like a loss, but in fact it is not, and we actually gain a lot.

The first is people.

Fifteen years ago, most of the Chinese people acted as team leaders and custodians; 10 years ago, engineers and deputy positions in departments were basically Chinese; five years ago, the heads of various departments, directors, vice presidents, presidents, and heads of the Asia-Pacific region were all Chinese personnel, and even many overseas and foreign-funded local factories, middle management, and even senior management were not a few Chinese. These people, a large number of influx into the domestic independent brand enterprises, the establishment of a modern enterprise management model, domestic brands can also achieve minute factory, can also complete positive development.

Then there's the supplier system.

Fifteen years ago, local suppliers could only make simple parts, and more than half of the screws had to be imported, at least joint ventures. Ten years ago, local suppliers were already able to supply sub-assemblies and modular seats, exteriors, interiors, and body parts, such as Yanfeng and solid-state. Engine core parts, electrical parts, transmission gears, local suppliers have become common. In a few years, domestic suppliers will be able to provide global support for high-end foreign brands, such as Mercedes-Benz pistons and Aisin's gearbox gears. These companies have greatly reduced the price of parts, and their own brands can also be easily selected.

Then there is the production equipment.

Around 98 years, most of the equipment of the joint venture automakers were Dürr, KraussMaffei, Mitsubishi, and Toshiba, and the screwdrivers and rivet guns were basically imported. 15 years later, a machine tool, two machine tools, Shanghai electrical appliances, Heli, the proportion of domestic manufacturers is increasing, and it is normal for domestic enterprise equipment to account for more than 30%.

Raw materials.

Domestic steel has gone from being able to only do non-appearance, non-key parts to basically 100% domestic. Plastic particles and domestic textile materials can also be 80-90% domestic, which is achieved by trying to adapt to the standards of foreign-funded enterprises over the years.

Periphery.

Supply chain management, vehicle logistics, parts logistics, basic domestic enterprise monopoly. The lubricating oil was originally Shell and Mobil, and now most of them are Kunlun and Great Wall.

The joint venture has been 30 years old, and has cultivated fertile soil for Huaxia automobile industry. A group of independent brand car companies that were originally drawn from the cracks in the stone have finally been able to branch out on this fertile soil.

It can be said that from the mid-80s to the end of the 90s, in the first half of the joint venture era, Huaxia Automobile Industry was the first to make up for the bottom of the smile curve - the ability of the manufacturing end.

Through the introduction of drawing data and advanced production lines, Huaxia people are the first to have the ability to manufacture. Then slowly began to extend from manufacturing capabilities to both ends, one end is product development and design, starting from product definition, then styling design, and then to product design and engineering development. At the other end of the spectrum, there is sales, brand marketing and after-sales service.

In the second half of the joint venture era, the fledgling Huaxia automobile industry gradually marched to a high level of added value.

Another interesting phenomenon is that the connotation behind the word "core technology" that has been said by automobile companies for a long time has actually been changing - for multinational companies, when Huaxia people will not develop the whole machine, the whole machine is the core technology. When Huaxia enterprises will develop the whole vehicle, from 0 to 1, the strategy of multinational companies will also change. At this time, the core technology became: "A certain part of the car, you Huaxia people can't do it, I will be stuck in my hand, without this piece you can't install a car." This component may have been a price ten years ago, but now you won't do it, and then the price will rise wildly, and you can't get around, this is the core technology. ”

Such "stuck neck" things are the most common in the field of equipment manufacturing. At that time, almost all of the Huaxia shield machines were imported abroad, and now the Huaxia people have mastered the development technology of the whole machine. But there's a core component in there that you won't do. Okay, I used to sell for 100,000, but now I sell for 1 million, and you have to buy me. No way, this is the core technology.

The same is true for cars. For multinational companies, the "core technology" that can still hold the neck of the Chinese people may be a new material in the engine, or a valve or pump at the core of the engine.

This is a question of the industrial base, there are no shortcuts. Either continue to globalize, or self-reliance to make up for shortcomings.

And it can also be seen from here that the biggest problem that Huaxia has been facing is actually stuck in the neck, so we can only continue to rely on ourselves, until the days before Zhou Fangyuan's rebirth, Huaxia has stood up again, especially in industry, with an almost complete industrial chain, maybe there is still a big gap between some places and the Western world, and it is not one or two, it is a lot of places. But even so, what a complete industrial chain brings is a strong manufacturing capacity, which is not stuck. Even if you are stuck, there are alternatives at worst, unlike most other countries, once you are stuck, the entire country's industrial system may collapse in an instant.

This is what makes China different from other countries.

Therefore, there is another advantage of Zhou Fangyuan's entry into the game at this time, that is, the domestic car part has not yet fully risen. A large number of domestic car companies are still struggling to explore, and in the next ten years, it is true that domestic cars will occupy half of the country, but now, it is still the world of imported cars and joint venture cars, including the development of upstream and downstream. Therefore, at this time, the Yuanfang Group suddenly intervened, and there was a good space for development, coupled with the external support of Shijue, some relatively advanced technologies and concepts could also be well integrated into it, becoming a big help for the Yuanfang Group.