The joint venture is blooming all over the world. Is it good or bad for the auto industry? Should we promote self-development? Do you want to engage in national brands? Please look at the dialogue between former general manager of FAW Group and Chairman Zhao Zhaojie and reporter Cheng Yuan.
The development of China's autos is driven by joint ventures. After the joint venture, we learned how to produce cars. No joint venture or even today's Chinese car industry. Judging from economic interests, the joint venture is beneficial to us. The joint venture also trained many people for us. In such a large market, giving up part of it is generally beneficial to us.
Reporter: This year marks the 50th anniversary of the birth of the Chinese auto industry. Joint ventures are blooming all over the world. How do you see this phenomenon?
Qi Zhaojie: This is a huge improvement. Through joint ventures, the output of Chinese cars in the local area has greatly increased, which has led to a huge increase in the national economy. Now that our country's economy is developing so fast, it is very important that the automobile industry pulls, and the development of the automobile is driven by joint ventures. The new growth point of the automobile is mainly in joint ventures, in Shanghai Volkswagen, FAW-Volkswagen, Shanghai GM, etc. Joint venture.
Reporter: What is the role of the joint venture in the auto industry itself?
Qi Zhaojie: Before the joint venture, we can basically say nothing about building cars, or only book knowledge. After the joint venture, we know how to build a car factory, how to manage it after it is built, and learn how to produce cars. From a manufacturing perspective, we have entered the “university†threshold. If it weren’t for a joint venture, it would be impossible to make such a big progress in such a short period of time by relying on its own exploration. There would be no joint venture or even today’s Chinese car industry.
Reporter: Are you saying that if you do not have a joint venture, the development of Chinese autos will be less than today's level. This is a macro-level analysis. Is this true for companies?
Qi Zhaojie: If you do not join the joint venture, FAW will not be the same as today, FAW is not a car, the situation is disastrous, may have been paralyzed. There are too many people in our state-owned enterprises and the burden is too heavy. Trucks can't save the FAW, and they can't save the two cars. Therefore, during my tenure of office, I strongly pushed FAW from the truck era to the era of cars. To dry a car, it must be a joint venture with others.
Reporter: It seems that you have a positive attitude toward the joint venture.
Qi Zhaojie: Now 80 percent of FAW benefits come from cars, and 80 percent of car profits come from FAW Volkswagen. The enormous benefits that FAW-Volkswagen produces each year are obtained by the Germans, and the Chinese also get them. Even if they get a lot of benefits from technology transfer, spare parts sales, etc., the Chinese get more benefit from joint ventures than foreigners. Judging from economic interests, the joint venture is beneficial to us. The joint venture has also cultivated a lot of people for us. Many of our talents have grown up after studying and communicating abroad. If we are closed, we will not have so many talents.
Reporter: Is this the benefit of "global economic integration"?
Zhai Zhaojie: Now that the trend of internationalization of the economy has become more pronounced and resources have been redistributed, China’s big market, to a certain extent, is generally beneficial to our country. The result of such development will not only drive the entire automotive industry, but even the tertiary industry will start to fire.
Reporter: This is also the reason why all regions compete for cars.
The way of joint venture must be affirmative, but it is not the final result of our hope.
The joint venture has added Chinese cars to the internationalization cycle. After 50 years of work, there is no brand of her own. Ignoring the development of our own products is a phased tendency in the development process.
Qi Zhaojie: The joint venture is a kind of integration, because we have taken this path, and foreign companies have come in one after another. This has enabled China to join the internationalization cycle and begin to integrate with the international automobile. This is also of great significance. This path of joint venture should be affirmative, but we must not stop at this step. This is not the final result of our hope.
Reporter: How do you say this?
Zhai Zhaojie: We have been doing 50 years of work, but we still haven't got our own brand. Whatever people are, it means that all the athletes are invited to the Olympic Games. Especially as a veteran who has worked on the automobile front for 50 years, we are very reconciled to such results.
Reporter: This situation is the inevitable result of the joint venture, or the problem of improper operation?
Qi Zhaojie: It should be said that it is a phased tendency in the development process and neglects the development of its own products.
Reporter: Why does this stage of sexual orientation occur?
Qi Zhaojie: The direct use of foreign products for production, the economic benefits come quickly, and does not require huge investment, so the risk is small. To engage in product development requires a lot of investment, with relatively slow results and a lot of risks. Therefore, many people adopt “acquisitionismâ€. In particular, large companies have such conditions, the state can give it approval for projects, and funds can also be supported. At the same time, because the company's reputation is relatively large, it is relatively easy to find well-known foreign companies for cooperation. This is often a very easy route. However, once they have tasted the sweetness, they are not willing to go the hard way and give up their own development. Although I also realized that we should engage in development in my heart, I would not want to do it because I was doing too hard. Some old comrades responded very strongly and expressed their anger. They do not understand that these problems have emerged at present, with historical reasons. They see it as the ultimate.
Reporter: This is not a matter of saying that this issue is not relevant. Will it naturally change sooner or later?
Qi Zhaojie: If you do not pay attention, it is dangerous. Now there is a peculiar situation, that is, those enterprises that do not have conditional joint ventures, but actively engage in self-development; taste the joint venture sweeteners, the more profitable enterprises in reality, the more reluctant to engage in independent development.
Large companies have joint ventures, and passions developed independently cannot be reduced
Large companies cannot rely on joint ventures, and the function of independent development is degraded. The quality of large business leaders is reflected here. Independent development, the support of national policies is very important.
Reporter: At present, large-scale enterprises have taken the path of joint ventures. On the contrary, small enterprises with unqualified conditions are engaged in independent development. If large companies adopt such an attitude, the future development of Chinese automobiles will depend on Chery and Hafei. Will this delay the development of our own business?
Qi Zhaojie: This should be the case. After a large-scale joint venture, the desire and passion for self-development will never be reduced. The joint development of the self-determination function will be degraded. The quality of big business leaders will be reflected here.
Reporter: Under the conditions of a market economy, the interests of enterprises are very prominent. We cannot rely solely on the quality of business leaders. Should the country reflect its policies?
Zhao Zhaojie: The support of the policy is very important. The country originally had some policies. The first product of the joint venture could be taken over in full, but the second product must be jointly developed, otherwise high development costs would be levied. Encouraging foreign companies to set up joint R&D institutions in China can begin to be developed abroad. However, the degree of alliance must be continuously deepened, and products must be localized, which is the intellectual property of both parties.
Reporter: Are these policies effective?
Zhai Zhaojie: When we introduced the Audi A6, we proposed joint development. The Germans did not agree with it. They said that they had already finished development and what were they developing? At that time we had a very powerful card that was not jointly developed. The government did not approve it. He had to agree. The joint development has widened the rear row of the Audi A6, and its appearance is more beautiful. In line with China's situation, the market is very popular. Joint development has to do a lot of hard work. Now many companies do not take this route, and take products from people to produce.
Reporter: This can be considered as a classic case of government support for joint development.
Yan Zhaojie: Similar examples include the Jetta modification. At that time, we introduced the second generation of Jetta. The chassis was very good. It was a poor shape. We proposed to change the appearance and the Germans did not approve of it. We said that the old lady is the old lady and the make-up is also the old lady. Jetta A3 and A4 are both Come out and use our new product directly. What else?"
Reporter: Why didn't we directly produce A3, A4?
Zhai Zhaojie: The transnational corporations often use the old ones, and we have bought them out of the tooling molds in Wes Moran, USA, in order to get out of the car. If we change the A3 and A4, all these equipments are wasted. In addition, we have made preparations for the first two or three years before, and we have changed our appearance and investment. He said that you will change FAW? It's up to us to do it. We talked with them about Changchun Airport, and we had an agreement to make a bid. The two companies each carried out a plan, which was compared on the board of directors and who was good at whom. We were all eight children. We took data and photos to meet in Wolfsburg. They hadn’t had a start. We didn’t expect we could do it. The Jetta has been selling well since it was remodeled. The benefits of FAW-Volkswagen in the past few years have mainly come from the Jetta A2. If it does not change shape, it will have been extinguished.
Without independent development capabilities, joint ventures may not be able to do a good job
Having no product development, it is just an assembly plant and has no control over the joint venture. The two networks should not be merged. The use of networks by foreign capital must be conditional, and we must not fall without fighting.
Reporter: It was originally said that there are two modes for the development of Chinese cars. One is to take the road of joint ventures, and the other is to engage in independent development, which is the practice of red flags and liberation.
Yan Zhaojie: Companies that do not have the ability to independently develop their own joint ventures may not be able to do a good job. We have engaged in joint development, learned a lot of things, and made people aware of FAW. The former president of VW said that FAW is a real car, and that is the impression that he got from here, so he is willing to cooperate with FAW. Toyota is also willing to find a joint venture with FAW.
Reporter: Today's big auto companies do not pay special attention to autonomous development. Some people also say that after China's accession to the WTO, Chinese autos will forever lose the possibility of independent development. Now it is not a question of independent brands, but how to integrate into international autos. China Is to do the world factory.
Yan Zhaojie: I have no product development, just producing other people's brands is just an assembly plant, not a complete automobile company, which is very dangerous, no matter what your share ratio, you have no control over the joint venture. You have to ask for food all day long with people. If you don't give you new products, you can't live. At present, foreign auto companies have become increasingly appetite in China, and they have to obtain matching rights. Auto parts usually account for 60% to 70% of the entire vehicle. He controls the supporting resources, and the joint venture loses the right to match. In the past, we had the policy of “equivalent substitution†and we hoped that there would be a benefit from matching, and we would not succeed in the future. Now foreign companies emphasize that the brand is his, and the supporting parts must also be his system, and our parts and components companies have to change their names and change their surnames.
Reporter: Some foreign companies now want to bring all of their supporting plants into China.
Qi Zhaojie: What international integration is said is actually driven by interests. Global procurement should not have this concept. If each company brings its own parts and components and engages in a set of systems, the scale of Chinese parts and components companies will not be able to expand. The same is true of trade. It emphasizes that the establishment of a network is based on the brand. It must sell his brand. The brand is intellectual property. Although it is produced in China, it is also his intellectual property rights.
Reporter: On the issue of the merger of the two networks, the government and the company have different ideas.
Zhai Zhaojie: The idea of ​​companies and companies is also inconsistent. If we want to maintain our own sovereignty, we should not merge. We cannot always go without fighting.
Reporter: Some people think that the separation of the two networks is also unstoppable, because there is no need for foreign companies to save money. As long as they shake their arms, Chinese sellers will rush to defect, fearing that people will not choose themselves. Foreign companies spend Chinese money and build their own network.
Qi Zhaojie: You have to have conditions, what compensation must be given before allowing him to use the network.
The core of the brand is intellectual property, and joint ventures cannot give up independent development.
The core of the brand is intellectual property. One of the reasons for the failure of FAW and Mercedes-Benz negotiations is that FAW is unwilling to give up the emancipation of the brand. Without self-developed positions, companies have no control.
Reporter: Now some of the products produced by joint ventures do not even have Chinese names, and they are directly called foreign names.
Yan Zhaojie: The core of the brand is intellectual property rights. If it is just a few Chinese words, like the Czech Republic's Skoda, buying the brand in the past has also become the brand of others. If all departments of a company are in full-scale joint ventures with others, it means that they will give up independent development. If the product development department and other people have joint ventures, it will be difficult to keep the brand or its own. There are no brands in the world. There is no precedent in the world.
Reporter: Some people say that FAW also wants a full-fledged joint venture, but it hasn't gone through.
Yan Zhaojie: It is FAW's unwillingness to abandon the liberation of the brand. One of the reasons for FAW and Mercedes-Benz's failure to negotiate is to persist in liberating the brand and leave FAW with a space for independent development. This is right or wrong. It is evaluated by history. It cannot be concluded simply now. I think that we have been liberation for 50 years and now we give up. I am afraid that it is not good for the future.
Reporter: Is it also behind the withdrawal of fire? Otherwise Mercedes will not be so tough.
Qi Zhaojie: There are many disputes in the development of China's automobile industry. The beginning is the relationship between the automobile industry and the national economy. Is the automobile industry a pillar industry? Is it a pillar industry, should we focus on the development of cars? The sedan has developed. Do you want to enter the family? Although the car is far away from home, should it be promoted? How to guide the car into the home? There is now a greater controversy: Is it necessary to promote self-development? Do you want to engage in national brands?
Reporter: Now that national brands are mentioned, some people feel that they are incompatible with internationalization.
Zhai Zhaojie: They reasoned against the background of the internationalization of the auto industry, denying the path of independent development and believed that the localization of production of automobiles was already good. As long as it is produced in China, the national economy can develop. The result of this is that it does not develop itself. Without an independent development position, the enterprise has no control, no sales, no research and development, and no support for the matching. You become an investment company, but it is only a matter of time.
Reporter: It has become a class of "Eaters".
Internationalization has more and better independent development conditions
Instead of engaging in independent development, they finally laid off their jobs. This is tragic. Relying on other people's technology to develop, this is the way all major companies have followed. If we insist on going, this road may go through.
Yan Zhaojie: There are not many things to do. What do so many bosses do? In the end, they laid off their jobs and laid off their companies. This is tragic. Companies that develop in this mode are quick to make money, earn high salaries, and become very squeamish. There is no product development function. On the contrary, companies such as Chery and Hafei are eager to engage in development. Although there is no strong product R&D institution, they can ask others to make up for their lack of strength. However, the more interested them are, the more likely it is that this path will become a climate in China.
Reporter: For Chery and Hafei companies, because of the lack of joint venture conditions, there is no way out if they do not develop independently. It seems that the dilemma is sometimes beneficial, and people are forced to be creative instead.
Qi Zhaojie: Actually, in today’s internationalization, it is not that there is no independent development condition, but there are more and better conditions, that is, relying on the technology of others to engage in development. This is the path that all large companies have followed. Some R&D agencies in Italy specialize in product development for car companies all over the world. If we insist on going unshakable, this road may go through.
Reporter: Some people have said that the road to China Motors is "having property rights and no knowledge." Can this path be passed?
Qi Zhaojie: Its path is more difficult. It depends entirely on the development of others. It must also participate in itself. It must be able to gradually become its own thing. It must pay attention to forming its own development force. Chery is now recruiting talents from the country, and FAW has hundreds of people working there. The so-called development is not a matter of developing an entire vehicle at once. You can use a platform from another person to develop a car body, or you can buy a car body. Ask people to help you improve, and then introduce a small company that makes molds and various parts and components. The road will go wider and wider. Chery's model is quite interesting.
Reporter: Does FAW present more opportunities than crisis, or does the crisis outweigh opportunities?
Qi Zhaojie: Cooperation with Toyota is a key step for FAW's future development. If it works very well with Toyota, no one in the country can do FAW, because no one in the world can do Toyota. Oda had promised in the past that Toyota must cooperate with FAW. At that time, it placed its hopes in Shenyang and it was not done. Now go to Tianjin and still come with FAW.
Without your own brand, there is no place for you in the world
We should not only pursue the immediate benefits. In the long run, we must improve our product development capabilities so that we can stand on our own in the world.
Reporter: What is your unfinished business? Is there any regret?
Zhao Zhaojie: That is the red flag. I have done two brands in my life, one liberated and one red flag. What does the company rely on? By brand, if there is no liberation, red flag, FAW has no place in the world. An enterprise no matter how many cars you produce, if you are producing cars of other people's brands, this is not your glory, it is the glory of others, and people cannot look down upon you. Therefore, I have been working hard for “liberation†and “red flag†for a lifetime. I hope that these two brands will not only have their own positions in China but also in the world. If this is not achieved, our cause will be unsuccessful.
Reporter: How satisfied are you with FAW-Volkswagen?
Qi Zhaojie: They are doing very well. On the tenth anniversary, I told them three hopes and things that I didn’t realize: First, cooperation with foreign production, but I haven’t learned yet, or I haven’t learned technology well, and I’m still relying on others. Products to produce. Secondly, we hope that FAW-Volkswagen will pull FAW in all directions at the time of the joint venture. Although it is now pulled, it is not all-round. Third, we originally hoped that the prices of products in China would be lower because our resources are cheaper, labor is cheaper, and the prices are at least the same as foreign countries. This will be beneficial to the export of our products to the international market, and ordinary people will also benefit, but it has not yet been done. As a result, our car prices are higher than those produced by foreign countries. FAW-Volkswagen has achieved brilliant results, but don't forget that the three points we hoped to build FAW-Volkswagen haven't completely done yet.
Reporter: That means that there are still three goals in the joint venture that were not fully realized.
Qi Zhaojie: Yes, today we are still taking people's products to production. Every negotiation is very arduous. Every product we take has to pay a price. Because we have no development power, we are controlled by others. After further internationalization, the control of foreigners on joint ventures is becoming larger and larger. It may also be less supportive for joint ventures. They simply do their own business. Toyota is wholly foreign-owned in the United States. In China, it is a policy restriction and has to be a joint venture. . Therefore, those struggling in the field should regard self-development as the most sacred goal, not only in pursuit of immediate benefits, but also in the long run, they must improve their product development capabilities so that we can stand on our own feet in the world. After a period of hard work and good use of other people's resources, this road can come out, of course, this is not a short-term can be achieved. I have no ability to do this thing. It can only be accomplished by later generations. This is not a pity. The work one can do is always limited.
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