Economic review

Chinese automaker makes inroads into S Korean market

2017-05-19 09:42:00 (Beijing Time)         Global Times

0

BAIC Yinxiang dealer to import more KENBO 600s

With reasonable prices, fashionable appearances and advanced technologies, Chinese automobiles are becoming more competitive in the South Korean market.

Seoul-based Yonhap News Agency reported on May 10 that local demand is on the rise for 1.5-liter gasoline-powered KENBO 600 SUVs produced by China's automaker BAIC Yinxiang Automobile Co.

Zhonghan Automotive Co, the South Korean dealer of the BAIC Yinxiang, plans to import 320 more KENBO 600 SUVs by the end of June to meet growing demand for Chinese automobiles, said the Yonhap report, citing a spokesperson for the dealer.

It is rare for Chinese automakers to export automobiles to the country, as South Korean consumers tend to show great loyalty to their national brands such as Hyundai, said Zhang Zhiyong, a Beijing-based industry analyst.

Chinese vehicles' fashionable appearance, competitive prices and advanced technologies are contributing to these cars' popularity in South Korea, experts noted.

The biggest advantage for the KENBO 600 is that the car has higher cost performance than its competitors, Zhang told the Global Times on Tuesday.

KENBO 600 SUV is priced at between 19.9 million won ($17,800) and 20.99 million won in South Korea, according to the report.

In China, the price of the -KENBO 600 is between 79,800 yuan ($14,220) and 116,800 yuan, while that of its competitors such as the DX 7, produced by Southeast (Fujian) Motor Corp, is between 96,900 yuan and 139,900 yuan, data from domestic industry website pcauto.com.cn showed on Thursday.

In addition, Chinese vehicles' appearances, relatively low prices as well as advanced technologies such as automobile electronics, make them more competitive than South Korean cars, Cui Dongshu, secretary-general of the China Passenger Car Association, told the Global Times on Tuesday.

However, Zhang is taking a wait and see attitude on whether BAIC Yinxiang will be able to open up the South Korean market, given the small amount of vehicles currently being exported to the peninsular country.

Feng Shiming, a car analyst with Menutor Consulting, said that many Chinese automakers have tried to enter international markets, but almost all have been unsuccessful.

Chinese car manufacturer Qoros sold 51 automobiles in the Czech Republic, but failed to sell more and finally returned to the Chinese market, he told the Global Times on Wednesday. The negative factors include the higher prices of the cars Qoros sold in the country, an insufficient sales network and lack of brand recognition, Feng explained.

Bounce in exports

Chinese automobile exports had grown for a nine straight months through April, with 68,000 cars exported in that month, up 26.3 percent year-on-year, data from the China Association of Automobile Manufacturers showed on May 11.

The growth mainly comes from countries including Iran, the US, Mexico and Russia, according to Cui.

"With the establishment of the Belt and Road initiative, large numbers of infrastructure projects and capital are flowing to countries along the route," he explained. "Meanwhile, Brazil's and Russia's economy have recovered a little thanks to the price of materials picking up. These two favorable factors are directly boosting China's vehicle exports."

After automobile exports saw a contraction in 2014 and 2015, the sector has seen growth rebound since 2016, with exports around 200,000 units per quarter, Cui said, noting the country's car export bottleneck still needs to be broken.

China primarily exports mid-range and high-end vehicles that are priced around $10,000, Cui noted.

Many competitive Chinese auto manufacturers start by exporting vehicles before gradually setting up factories overseas.

Chinese independent automaker Chery Automobile Co has promoted globalization in an all-round manner, according to a statement on the company's website.

An employee from Greater Wall Motor Co also told the Global Times on condition of anonymity that the company is changing its "go global" strategy by reducing its reliance on exports while setting up auto plants overseas.