Deep Think：Making cars in China, rather die than surrender！Why is a war that can't be lost
From "Family Country Vision" and the official account: iamhtd
Nowadays, it seems that any company with a little money in hand will vowed to build a car. The number of which is even larger than the vehicles you could see during commute. There are always several days in a month that people can look through relevant news updated in all kinds of press platforms even though these companies are not even prepared in design drawings. They are ambitious and determined to be the top one in global automobile industry and claim that once their dream come true, the domestic automobile industry will prevail internationally.
Then our confusion comes up, is the auto market really so well? Afterwards, we realized that the more superb the powerpoint is, the better the vehicles can be built; The further our dream reaches, the longer our vehicles can run. So idealized that CCTV couldn’t stand and criticized that “Be careful not to be turned over while driving so fast at the corner.”
The coincidence is that Lei Jun, CEO of Xiaomi Group declared that they are willing to fight for Xiaomi auto with adequate fund and personnel on March, 30. Just like the other 999 companies earlier: we are fully prepared to make fantastic cars and we can be trusted.
It was really awkward, people were saying that it turns out that Xiaomi is one of them, too. When someone says that no one is born to be a king, others would feel shocked and believe he is capable of achieving something. However, if everyone makes such speeches, people would feel bored.
People would say, “See! Another one joining the game.” Xiaomi gets annoyed and talked back,“You think we just want to join for fun? We are serious about this on the guarantee of our reputation.” With more words afterwards which doesn’t make any sense, like “ Getting chocked by dreams” or “The last fight of life”, the whole science and technology field are amused.
Today, we will cover four points.
Firstly, how long will it take to overthrow an industry? For Detroit, the Motor City, the answer is one night.
Secondly, why the giants of real estate, mobile phone, air-condition and Internet want to dig in automobile across industries?
Thirdly, as the world’s first manufacturing country, how important is the auto industry for us?
Fourth, with feudal lords vying for the throne, who can get the best shot?
Detroit is referred as the heart of the manufacturing industry of the United States. A hundred years ago, Henry Ford creatively launched the classified Ford Model T. Before that, all vehicles are hand made. Normally it took a team several months to make the vehicles and the price was very high.
Henry Ford believes that they can not just provide services to wealthy people, so he invented the production line - the division of labor cooperation, which greatly improved the production efficiency. How good is the production line? In today’s words, this is the 2.0 version of industry. Ford enabled the auto to be an affordable product for citizens. How cheap is the Ford Model T? It takes a Ford worker eight months’ salary to buy a new car, which is a huge bargain. The United States thus became “the country on the wheel”.
Then Detroit officially became the “Motor City”, the Detroit motor exhibition was the largest motor exhibition worldwide（the record is not valid anymore). Usually, with the processing of technologies, Detroit could keep getting benefits depending on its developed auto industry and auto patents. Who would thought that in 2008, just the year marking the 100th anniversary of the born of the Ford Model T, this city announced bankruptcy. Yes, you are not mistaken, Detroit, the Motor City, is bankrupt.
Among the three pillar auto enterprises, two applied to the government for bankruptcy protection - GM and Chrysler. As Ford had the same intention, the government replied, “ Sorry, Dear. We can’t save all. You are on your own.” So Ford had no option but to sell Volvo to a Chinese person and cashed out 2 billion dollars.
What happened on earth to the Motor City？There are two events happened in the United States in 2008: Obama elected as the President and the financial crisis broke out.
Besides Wall Street, the auto industry was also battered badly, causing millions of people losing their jobs. As the new President, we do not expect Obama to be a savior, but at least try to cheer people up and express your attitude to people working in auto industry.
The truth is he did express his attitude, but instead of Detroit, he went to Silicon Valley. The press even used an astonishing title - It is the end of Detroit! When you read this, you may think that Obama is silly to waste time in Silicon Valley rather than rebuilt the confidence of unemployed workers in Detroit.
The reason is simple - a genius who is about to step on the top of auto industry was waiting for him. “I will save the auto industry of the United States, but in Silicon Valley, not Detroit.” This is the decision made by the President 13 years ago. Obama met Musk and allocated 600 million dollars to him at one time from the ministry of finance just because Musk 100% focus on new energy vehicles.
A few years later, we witness that Musk continuously refresh our perception. His envision becomes true and Tesla become the synonym of the technology. And his company becomes an auto enterprise with the highest market value in the world, higher than all the other auto enterprises mounting together.
Of course, we are not saying how fantastic the Tesla car is, what we are trying to say is that when there is a huge revolution happening in an industry, there are always some people standing out to change the industry with brand new approaches.
Surely there will be pain and suffering during the process. Think about Detroit in 2008. While everyone is preparing the 100th anniversary celebration, what they “celebrate” was the bankruptcy and unemployment.
“Why the domestic giants of real estate, mobile phone, air-conditioner, and Internet are so determined to build cars?” The reason is simple, this is the trend. Let us review the development course of China as the world’s second economy entity: Household consumption, dominated by real estate, ended; Chinese manufacturing ended up with a massive increase; The urbanization expansion through government financial support is over; even for the Internet industry which has been developing for 20 years, the competition has entered the white-hot stage.
So what else could keeping developing at a high speed? Maybe you would answer, “Let’s create our own brand and high-end products.” Well, let me tell you, it is not an easy trip to march ahead. In 2008, The world's top ten mobile phone brands include European companies, American companies, Japanese companies, South Korean companies and Chinese companies from Taiwan. By 2018? All the European companies disappeared, as did the Japanese companies, leaving one American company, two South Korean companies, and seven Chinese companies.
Why? Because the core technologies have changed completely, so are the relations and means of production. How about ten years later? Maybe the mobile phone will disappear too! With the development of communication technology, VR technology and flexible screen material technology, the mobile phone of the future can be folded continuously, and may end up as a decoration on our glasses.
It may even be a transitional product. With AR technology, "you can gently wave your hand and remove a cloud from the screen." When brain-based interfaces are developed, you don't even need a physical entity to be able to think and connect with a person.
Take a guess, if mobile phones don't exist, will these brands still exist? The answer is yes. Back to our topic "why domestic real estate, mobile phones, air conditioners, Internet and other business giants, must cross over to manufacture cars?" Because the trend is here, more people need to step up.
What is the trend? With the application of 5G technology, the general trend of "all cars connected to the Internet." With the popularization of industrial interconnection, the general trend of "automobile is the new electronic terminal." With the development of artificial intelligence, the general trend of "intelligence will eliminate non-intelligence". What changes will this trend bring about?
Think back: 286 computers, all connected to the Internet, then we have Wikipedia and email; PC, all connected to the Internet, then there are QQ, portal sites, Taobao; Smartphones, all connected to the Internet, then you have Didi, Meituan and Tik Tok.
How much business value can this change bring out? Here is an example, let people in the elevator leisure time to see advertising "Focus Media", on the current market value of 100 billion. So how much leisure time will people have in a smart car that drives itself? A conservative estimate is also dozens of times in the elevator, according to the market value of "Focus Media" accounting, it is at least a few trillion.
You must know that the market value of the A-share Big Shot "Mao tai" is only 2 trillion yuan. More importantly, this is only part of the commercial value of car networking! What will happen if the cars are all connected to the Internet? What will change? What will it bring? How many industry iterations can it drive? How many jobs can be created? How much labor can be released?
Can we lose or hand over this opportunity to others? We also know that car building is a capital-intensive (asset-heavy, heavy investment) and personnel-intensive industry, so we have seen the world’s heroes, each with their own magical powers, to compete in main battlefield.
"As the world's largest manufacturing country, how important is the automobile industry to us!?" China is the world's largest manufacturing country. In the 40 years of reform and opening up, the biggest change in China, and the change we are most proud of, is the rapid progress of manufacturing, which has become the base of our economy. We must know that China's manufacturing industry accounts for 28.7% of the world's manufacturing industry, far exceeding that of the United States.
But it is undeniable that all the four advantages of China's manufacturing industry for a long time have begun to change quietly today.
Firstly, the cost advantage disappears. Our labor costs, land costs, and raw materials costs are beginning to become more expensive, and products will only become more and more expensive in the future;
Secondly, decline of scale advantage. The advantage of scale attenuates the cost advantage brought about by the advantage of scale in the past has become insignificant under the brand premium ability. In addition, in the economic crisis, a company of 50 people or a company of 50,000, who is under great pressure?
Third, policy advantages have declined. We had various policy subsidies in the past, but with the exit of the policy and the implementation of the big data-supported taxation plan, corporate taxation has become transparent, and the original scale advantages, cost advantages, and tax advantages have disappeared.
Fourth, the environment cannot be sacrificed. In order to develop, we choose to sacrifice the environment in some places in the past. Is it still possible now? With the absence of the advantages of my country's manufacturing industry, which direction should we head for? What to develop next?
Do you remember the fashionable new word "Internet+" at the end of 2013? How popular was it this time? It is said that all powerpoints with these 3 words had a scary chance of successful financing, and they were even included in the "government report" by Premier Li Keqiang in 2014.
Even the "Thirteenth Five-Year Plan" creatively proposed the supply-side structural reform of assisting manufacturing through the "Internet +". But now the Internet is no longer a separate industry. It has become an infrastructure like hydropower, penetrating into various industries, and each penetration has basically reached the end.
So in which direction should we go now? What to develop?
The "14th Five-Year Plan" clearly stated that it is necessary to "understand the new development stage, implement the new development concept, and build a new development pattern." I have a picture for you to understand.
It shows that it is necessary to meet consumption upgrades and demand changes, and drive the entire manufacturing reform. Which direction is it? The 14th Five-Year Plan proposal clearly states: the first category is artificial intelligence; the second category is robots; the third category is the Internet of Things; the fourth category is new energy and environmental protection technologies. And what is their Complex? It is a new energy smart car. It can be seen how important this car is to my country's manufacturing industry.
"Who is more hopeful when the crowds compete for smart cars?" China's car manufacturing is roughly divided into two stages. In 1986, the automobile industry was listed as a pillar industry by the state, adhering to the "market for technology" and a large number of joint ventures to enter the Chinese market. At that time, our leader made this calculation: "These joint ventures are teachers when they come. Our people work with them for a long time. Had not been eaten the pork, but had seen the pig run. Soon we will be independent. Make a car!"
Something strange happened! In the 18 years since then, China has never developed a new model that can be put into mass production. Why is the distance still far? In Japan, Toyota produced the first sedan of its own brand, which was sold to the United States two years later and became popular all over the world.
Twenty years later, this scene was repeated in South Korea. Hyundai Group established its plant in 1967 as a Ford car foundry. Only 6 years later, Hyundai began to design its own models. In 1975, Hyundai's first self-designed model "Little Pony" was put into production. Then, the Korean automobile industry began to explode.
Of course, there are many reasons for this: First, does the joint venture manufacturer really let you learn it? The second is the core technology, we can't see or touch it? In the end, you can produce parts, but you can’t put them together. There are too many problems. Li Chunfu said that "A car is just four wheels and two sofas,isn’t it?" Such sayings don’t exist any more.
Li Shufu really did this in the first place. I saw a documentary and there was no drawing and the car body was hammered out by hand. But starting from Li Shufu, Chinese cars began to cross the river by feeling the stones, then stumbled through the river for 18 years, and finally they could pat their chests and say, "Quality Leverage!"
Mercedes-Benz once dismantled 7 Hafei (Harbin Aircraft Industry Group) "Zhongyi" vans. What is the final conclusion? I read to you "Mercedes-Benz can't provide correspondingly competitive products at the corresponding price." Mercedes-Benz is good, but the Chinese market is large, especially in the low-end market, Chinese cars basically have no rivals.
As early as 2009, the output of China's automobile industry had ranked first in the world, and cars were sold to more than 80 countries and regions including the Middle East, South America, and Africa. There are Geely, BYD, BAIC, GAC, GWM, Hong Qi and so on.
By the way, for the new energy vehicles sold all over the world last year, can you guess which brand sold the most? Is it the price butcher "Tesla"? I tell you -It is WULING MINIEV!
By the way, in addition to passenger cars and trucks, China has always been independent innovation. Take a look - trucks running on the road are basically domestic brands.
By the way, Mercedes-Benz has not only studied Hafei, but also heavy trucks made in China such as Jiefang and Dongfeng. After the analysis, they admitted that they couldn't make a truck with the same performance at this price in any case. Then began to accuse China of "forced technology transfer." But the question is, did I go to your house to pry the door? Did I hang you up and beat you to transfer technology?
The face of the United States has actually exposed a huge advantage of China. We have the ability to know what we lack, and then we may be able to digest technology, and continue to upgrade on their basis, through negotiation, through mergers and acquisitions.
The stage of the development of China's auto industry to this day actually shows a problem-we have reached this stage, we just want to do it! And if you have the ability to do it, you have to do it well and beautifully! Although there are many detours or mistakes in the middle and we move ahead by feeling the stones, and so what?
In the face of difficulties, our nation has never flinched! The War of Liberation, surrounded by strong enemies, we did not counsel; to resist US aggression and aid Korea, if the enemy is strong and we are weak, we dare to do and dare to win! In the field of smart cars, I still believe that victory belongs to us. We are still capable and able to win and can reverse the situation of no technology, no patents, and no intellectual property rights.
Going back to the question in this section, "Who is more hopeful when the crowds compete for new energy?" I think it depends on several conditions:
1.It must be a good smart car that most of people can afford that produced by this Chinese manufacturer. The reason is simple: If we regard the car as hardware, consumers may only need to consume it once, but the autopilot software and OTA pay on-demand for the car, all kinds of game software can be consumed unlimited times, which will be the core source of profit for smart car manufacturers in the future. Therefore, it must have a strong capability of automotive supply chain .
2.This Chinese manufacturer must have a complete ecological chain, which means that "at least all the functions that mobile phones can provide in the car", that is, smart TOT can form a scale effect, which Xiaomi and Baidu have certain advantages;
3.This Chinese manufacturer needs to have the ability to realize artificial intelligence. A friend of mine who specializes in running cars in the "Technology Daily" said more than once that "the first scene of artificial intelligence is in the smart car."
4.Strong software development capabilities, such as: autopilot software, human-computer interaction games and so on.
For example, a famous American analyst said: Tesla 2022 FSD( paid software) business revenue will not be less than $5 billion, accounting for nearly 9 percent of Tesla's auto revenue, but can contribute 25 percent of the gross profit of the car business! !!
This is why Tesla is a "price butcher "? Because he wants to seize the market and let people experience his software. Of course, in the field of smart cars, the first has the advantage of first-mover, the latter has the strength of late, as for who is the master of ups and downs, I believe —— It will be China!
Remarks
The auto industry has been around for 38 years, from joint ventures to independent production to the rise of new car-building forces today —— which may be the most difficult and magnificent innovation we can witness in our lives, because it covers a wide range of fields with many difficulties.
But whoever occupies this highland first will solve the problem of consumption upgrading, manufacturing upgrading and getting rid of the chassis position of production and processing in China. Just imagine that at that time, the value of any application in the car will be times greater than the value of the car itself; who will overcome this difficulty first, its system will occupy the first advantage of the system as now IOS、Android; who will first be widely used, build ecology, and even rewrite the process of the times.
This will be the imagination brought to us by the automobile industry. And this turning point has come, my generation of people, how can give in! You can't back down! Moreover, many inventions invented in human history were not carried forward by inventors.
Last question: dear friends, who do you think will be the ultimate winner of this 「Car Race」?
About the author: Xie Xiaobai, the veteran who fights in the media front line, pays close attention to the economic policy change for a long time, I will bring you the next trend of the country and the organization through the hot topic, the policy interpretation, is to grasp the trend and the development clue, identifies the real focus and the emerging trend.
