SMM News: in 1950, China and the former Soviet Union identified a number of key industrial projects to assist China's construction. The first automobile manufacturing plant is one of the 156 key industrial construction projects, and even China's first Red Flag sedan also imitated the drawings of Volga. In the early days of the founding of the people's Republic of China, 80% of our leaders drove Volga cars from the former Soviet Union.
passing of night. On June 5, 2019, witnessed by the heads of state of China and Russia, the Great Wall Russian Tula plant (hereinafter referred to as the Tula plant) was completed and put into production, and its first new car, the Harvard F7, was officially listed in Russia. "this project is by far the largest investment by China's equipment manufacturing industry in Russia." Wei Jianjun, chairman of Great Wall Motor, told reporters excitedly.
Just as unexpected, the Harvard F7 and Harvard H9 produced by the Tula factory drove into the Kremlin, and the heads of state of China and Russia signed the "Global car" Harvard F7, a unique "global car" that recorded the highlights of the Great Wall car.
Why did Great Wall build a factory in Russia? Wei Jianjun said, "the independent brand in Russia for many years, only the Great Wall car benefit is better, the current ownership of more than 120000, the Russian market characteristics and Great Wall car suv product attributes have a lot to do, used to enter the Russian market in the form of trade or CKD. Later, after research, it was found that the absence of its own factory was unstable, and Russian industrial policy required localization. The construction of Tula factory is based on the combination of vehicle and CKD. "
Compared with China, the world's largest auto consumer market, the Russian market, which sells about 1.8 million vehicles a year, is not big. Why did Great Wall enter the market? Wei Jianjun said: "if the independent brand does not go out, it has no influence in the world. The dividend of China's automobile development brought about by reform and opening up has been wasted in more than 20 years. If our independent brand wants to go out, we still have a good chance of living. If we don't go out, we have to die."
If you don't go out, you'll have to die.
Just a week before the Tula plant was completed and put into production, Wei Jianjun said in an interview with reporters that China's automobile market has experienced more than 20 years of continuous growth. Great Wall Motor has laid a solid foundation in corporate culture, technical personnel, and product reserves. "in the past two years, we have been advocating globalization. As an automobile company, it is incomplete and risky without globalization. In particular, it has been more prominent in the past two years. Globalization is the future development direction of Great Wall Automobile, and sustainable profits in the future are bound to take the direction.
What value can globalization bring? From the brand point of view, globalization can bring higher value to the brand. In terms of cost, a single product of its own brand sells 10, 000 units a month in China, while for a global car company, a single product can sell 1 million units a year, which greatly reduces the cost. "in the life cycle of a product, the gap between 30,000 and 300,000 is obvious. At the same time, the gap between R & D efficiency, logistics efficiency and factory efficiency is also very obvious. " Wei Jianjun said.
"Globalization has to go. We have only two choices. Whether to die at home or abroad. I think there is hope only if we go out." Wei Jianjun stressed this point again in an interview in Russia.
Targeting Korean cars in Russia
As the largest Chinese manufacturing project invested in Russia, Great Wall Automobile Tula Factory is the first overseas vehicle manufacturing plant for Chinese automobile enterprises to cover four major production processes: stamping, welding, painting and final assembly, with a designed annual capacity of 150000 vehicles and an annual production capacity of 80, 000 vehicles in the first phase.
Are Great Wall car products popular? Can the capacity of 80,000 vehicles be digested in the future? In 2017, Great Wall sold 1894 vehicles in Russia, up 78 per cent from a year earlier; 3213 units in 2018, up 69.6 per cent from a year earlier; and 2055 vehicles from January to April 2019, up 192.3 per cent from a year earlier.
"our main model in Russia, the Harvard F7, is priced 10, 000 to 15000 yuan lower than similar South Korean cars, much lower than Tuguan." Wei Jianjun told reporters that although the Great Wall does not emphasize performance-to-price ratio abroad, but it is still a cost-effective brand, the Great Wall aims at the competitor is the Korean car.
Andre, sales manager of Great Wall Motor in Moscow, told reporters that Russia's cold and long winter, every day the streets will be sprinkled with salt to remove ice, this industrial salt in addition to salt, there are a variety of alkaline ingredients, this is a great test of car paint rust prevention and chassis corrosion resistance. After a few winters, Harvard models do not have any problems in this respect, the same level of other countries brand models are not necessarily. Now 50% of new customers are made up of old customers who continue to buy Harvard and introductions from friends and relatives.
According to reports, in addition to supplying the Russian market, Great Wall Motor takes the Tula factory as a springboard, and the high-quality products produced in the Tula factory will also radiate Kazakhstan, Azerbaijan, Moldova, Kyrgyzstan and other neighboring countries of Russia. Its superior geographical location makes it an important node for Great Wall Motor to open up the Asian and European markets, and will also promote Tula to become an important export base.
The Tula factory can be used as a contract manufacturer for other car companies.
Earlier this year, Great Wall launched its "Harvard 5-2-1 Globalization Strategy", which takes five years to sell 2 million vehicles a year, making it the number one professional SUV brand in the world. Wei Jianjun told reporters that the sales target of 2 million vehicles is the sum of domestic and foreign markets, and the proportion of overseas markets should be between 30 and 40 per cent.
That means Great Wall will sell 600000 to 800000 vehicles overseas by 2024. How to develop rapidly in overseas markets? Wei Jianjun believes that on the one hand, "Belt and Road Initiative" has created an external environment for enterprises to go out; on the other hand, it is the brand that ranks first in terms of overseas strategy, followed by markets, commodities, technology, and so on.
"the most important thing to enter a foreign market is not products and technology, but how to deal well with the local people and how to respect the local culture and laws." Wei Jianjun said.
In addition, Wei Jianjun believes that Chinese brands go out to cooperate, can product sharing platform, factory cooperation, technical cooperation. "when Chinese car brands come to Russia, many enterprises can't make money, not because the products are bad, but because of the local marketing environment. The Tula factory will provide security for the development of Chinese brands in Russia. We have started negotiations with some car companies, and many of them have the intention to cooperate, and some foreign-funded enterprises even have the idea of contract manufacturing. " Wei Jianjun said.