China’s Automotive Industry: Navigating the “Juàn” Phenomenon

Introduction

The Chinese automotive industry has been experiencing a transformative phase, marked by intense competition and a relentless pursuit of excellence. This phenomenon, known as “Juàn” (卷), has become a defining characteristic of the industry’s landscape. As the industry enters its second half of development, industry leaders and executives are grappling with the challenges and opportunities that lie ahead. The 2024 China Automotive Chongqing Forum, held on June 6th, brought together industry experts to discuss strategies for winning the “endurance race” and excelling in this new era.

The Concept of “Juàn” in China’s Automotive Industry

The term “Juàn” has become a buzzword in China’s automotive industry, encapsulating the fierce competition and the drive to outdo rivals. It refers to the relentless pursuit of excellence, innovation, and market dominance. The “Juàn” phenomenon has been fueled by the rapid growth of the Chinese automotive market, technological advancements, and the emergence of new players in the field.

The intensity of competition has led to a “fast-forward” mode, where the “elimination game” is accelerating, and the fate of companies seems to hang in the balance. Industry leaders, however, caution against a short-sighted approach and emphasize the importance of long-term thinking and sustainability.

Insights from Industry Experts

At the 2024 China Automotive Chongqing Forum, industry experts shared their perspectives on the challenges and opportunities that lie ahead for China’s automotive industry.

Wang Xia: Embracing Long-Termism

Wang Xia, President of the China Council for the Promotion of International Trade Automotive Industry Committee, stressed that the second half of the industry’s development is not merely about the endgame but rather a long-term endeavor that may even extend into overtime. He emphasized the importance of embracing long-termism and preparing for a protracted battle.

Wang Xia believes that while the second half may have started with price wars, the ultimate victory will be determined by technological prowess and value creation. He highlighted the need for establishing a new, stable, and win-win industrial ecosystem as a prerequisite for high-quality development in the second half. Additionally, he pointed out that globalization is an urgent requirement for the industry’s future success.

Li Qi: Addressing Challenges in New Energy Vehicles

Li Qi, Vice President of the China Machinery Industry Federation, acknowledged the unprecedented scale of technological innovation driven by new energy vehicles (NEVs) in China. NEVs have become one of the most important application scenarios for cutting-edge technologies such as new-generation information technology, artificial intelligence, 5G, and the Internet of Things.

However, Li Qi also highlighted the challenges that need to be addressed in the NEV sector. Battery technology still has significant room for improvement, with safety and low-temperature performance being pressing issues. Moreover, the high cost of NEVs remains a concern for the sustainable and healthy development of enterprises. As Chinese automotive brands venture into overseas markets, they must also navigate the complexities of anti-globalization sentiments and violations of World Trade Organization (WTO) rules.

Zeng Qinghong: Predicting the Future Energy Structure

Zeng Qinghong, Chairman of GAC Group, emphasized the importance of profitability and sustainability in the industry’s development. He predicted that by 2030, NEVs, including plug-in hybrid electric vehicles (PHEVs), electric vehicles (EVs), and range-extended electric vehicles (REVs), will account for 70% of the market share, while traditional fuel vehicles will hold the remaining 30%. This forecast is based on China’s energy structure and the need for environmental protection, energy conservation, and energy security.

Zeng Qinghong suggested that the long-term approach should involve the coexistence of PHEVs, REVs, and EVs, rather than a complete shift to pure electric vehicles. He also proposed that when NEVs and pure electric vehicles reach a 50% market share, the government should consider implementing “equal rights for oil and electricity” policies.

Zhu Huarong: Embracing Healthy Competition

Zhu Huarong, Chairman and Party Secretary of Changan Automobile, views the “Juàn” phenomenon as a natural process of “good money driving out bad money” and the best way to quickly restore healthy competition in the industry. He believes that in the next decade, more Chinese brands will emerge as world-class brands through this process.

However, Zhu Huarong cautioned against low-end competition and emphasized the importance of user-centricity. He advocated for truthful and realistic advertising to avoid undermining the trust of society and users in the industry. Additionally, he called for strengthening scientific and technological innovation to quickly break through and solve the industry’s pain points.

Duan Jianjun: Focusing on Long-Term Value Creation

Duan Jianjun, President and CEO of Beijing Mercedes-Benz Sales Service Co., Ltd., believes that the “Juàn” phenomenon will continue to exist in the automotive industry. As a mature car dealer, he emphasized the importance of not being solely fixated on sales growth and relying on the “internet celebrity economy.” Instead, he advocated for long-term value creation and resonating with social development.

The Rise of the “Four Old Men”

One of the most intriguing aspects of the “Juàn” phenomenon in China’s automotive industry is the emergence of the “Four Old Men.” These industry veterans, namely Li Shufu (Chairman of Geely Holding Group), Wei Jianjun (Chairman of Great Wall Motors), Yin Tongyue (Chairman of Chery Automobile), and Zhu Huarong (Chairman of Changan Automobile), have been at the forefront of the industry’s transformation.

The “Four Old Men” have embraced new marketing strategies, such as livestreaming and e-commerce, to engage with consumers directly. This shift in approach has garnered significant attention from the public and has become a talking point among industry observers.

Zhu Huarong, in particular, has been vocal about the “Four Old Men” and their role in shaping the industry’s future. He humorously mentioned seeking permission from his fellow “Old Men” to discuss their collective efforts during the forum. Zhu Huarong expressed optimism about the “Juàn” phenomenon, viewing it as a process of excellence-seeking that will ultimately benefit users and elevate Chinese brands to world-class status.

Netizens’ Reactions and Perspectives

The intense competition and the rise of the “Four Old Men” in China’s automotive industry have sparked lively discussions among Chinese netizens. The public’s reactions offer valuable insights into the perceptions and expectations surrounding the industry’s development.

Many netizens have expressed admiration for the adaptability and innovation demonstrated by the industry leaders, particularly the “Four Old Men.” The veterans’ willingness to embrace new trends and engage with consumers directly has been seen as a positive sign of the industry’s evolution.

Some netizens have praised the “Juàn” phenomenon for driving technological advancements and pushing Chinese brands to strive for excellence on the global stage. They believe that the intense competition will ultimately benefit consumers by delivering higher-quality products and services.

However, concerns have also been raised about the potential drawbacks of excessive competition. Some netizens worry that price wars and a focus on short-term gains may compromise product quality and user experience. They have called for a more balanced approach that prioritizes long-term sustainability and customer satisfaction.

Additionally, there have been discussions about the social and environmental responsibilities of the automotive industry. Netizens have emphasized the importance of developing eco-friendly vehicles and promoting sustainable practices to address climate change and reduce carbon emissions.

Conclusion

The “Juàn” phenomenon and the rise of the “Four Old Men” have reshaped China’s automotive industry, ushering in a new era of intense competition and innovation. As the industry navigates the challenges and opportunities of the second half of its development, striking a balance between short-term gains and long-term sustainability has become a critical concern.

Industry experts have emphasized the importance of embracing long-termism, addressing technological challenges, and creating value for users. The “Four Old Men” have demonstrated adaptability and innovation by embracing new marketing strategies and engaging with consumers directly.

Netizens’ reactions have highlighted the public’s expectations for the industry’s future, including a focus on technological advancements, user-centricity, and environmental responsibility. As Chinese automotive brands strive to become global leaders, they must navigate the complexities of the international market while upholding their commitment to excellence and sustainability.

The path ahead for China’s automotive industry is filled with both challenges and opportunities. By fostering healthy competition, prioritizing user needs, and embracing

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