KITA News and Reports
  • Need to Rush into China’s New Energy Vehicles Market
    2018-07-27

    Need to Rush into China’s New Energy Vehicles Market

    - Vice-president of WM Motor, top 18 Unicorn company in China, suggests 'Enter into China through Korea-China joint venture' -

     

    It has been pointed out that Korean companies should actively develop and invest in technology and cooperation strategies with local companies in order to reach China’s new energy automobile market, which shows explosive growth of more than 50 percent every year.

     

    According to a report titled ‘China's New Energy Automobile Industry: Status and Implications’ released by the Shanghai Branch of the Korea International Trade Association (Chairman, Kim Young-joo), the production and sales volume of China's new energy automobiles last year increased by 53.8 percent and 53.3 percent to 794,000 units and 777,000 units, respectively. It is assessed that since new energy vehicles accounted for only 2.7 percent and 2.6 percent of the total automobile production and sales volume, respectively, the industry is highly likely to grow in the future.

     

    The Chinese government is phasing out its direct subsidy program for new energy vehicles while building indirect support system. Under the so-called cap-and-trade policy, which was announced September last year, carmakers that manufacture or import more than 30,000 traditional vehicles annually must manufacture a certain amount of new energy vehicles from 2019. Otherwise, they have to buy new energy credits from other companies. Furthermore, by 2018, the restrictions on foreign investment in new energy automobile companies will be eliminated, and deregulation policies such as the removal of restrictions on the number of joint-venture companies in foreign-invested enterprises in pilot free-trade zone will be followed. Therefore, it is projected that the entry into Chinese market will be easier.

     

    Local government policies, including l new energy cars first for license plate issuance and no alternate driving rule for new energy cars, in large cities such as Beijing, Shanghai, Shenzhen, Guangzhou are also contributing to the sales increase of new energy vehicles.

     

    Lu Jun, vice-president of WM Motor electric car start-up, top 18 Unicorn company in China, said in an interview with the Korea International Trade Association (KITA) that the era of traditional fossil-fuel cars is already over and he anticipated that the sales of new energy cars will significantly increase, centering on young consumers who are concerned about environmental protection and energy savings.

     

    The vice-president Lu Jun said, “We suggest that Korean companies will consider to collaborate with young and trendy new energy car companies in China, to establish new joint ventures, and to cooperate regarding the cap-and-trade policy.” He also added, “It is essential to pay attention to the development direction of China’s automobile industry and work on the long-term production and marketing strategies.”

     

    Seo Wook-tae, head of the Shanghai Branch of the Korea International Trade Association, said, “As the new energy automobile industry grows fast, related industries such as charging equipment industry, used car distribution, and battery collection will also become promising industries.” He also mentioned, “Korean companies are also required to develop and invest in new energy-related core technologies and to research and develop (R&D) parts with various specifications by intensively monitoring the Chinese government’s policies on automobiles.

     

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