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Audi "empathizes" SAIC: win-win or lose-lose?
Last Updated: 2016-12-29 08:43 | CE.cn
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By Yang Zhongyang

Because the same desire for the luxury car market, Audi and SAIC insist to come together. Some people think that this will be a win-win situation. But on today that the government vigorously promotes independent innovation, SAIC still stays in the thinking of joint venture in the past and hopes earning more interests in the domestic market with the help of Audi imputing molded products. The "harm" brought by it to the automotive industry is worth keeping alert and self-examining. At present that the market has become a strategic scarce resource, China, as a country having the world's largest car market, should innovate and pursue change with the confidence to adhere independent innovation.

After the incident of Audi empathizing SAIC was reported on media, the public opinion it triggered is still continuously fermenting. Although under the pressure of the dealer, Audi has to use a delaying tactic of suspending its negotiation with SAIC on sales and outlets, but it is not the end. SAIC chairman Chen Hong said at a general meeting of shareholders held in December 1 that there is not much change in cooperation, the specific content and time will be announced in a timely manner. People are full of worries, argue is one after another.

Audi's empathy is not accidental. On the one hand, it is the inevitable choice of Audi pursuing the maximum interests. At present, Audi has only 10 percent shares in the FAW Volkswagen, not much of the large profit in the joint venture can fall into its pocket. In this regard, Audi has been brood on. On the other hand, it is due to the pressure of the competition of luxury car market. Data show that last year, Audi sold in China 570.9 thousand cars, down by 1.4 percent year-on-year, which is its first negative growth in 26 years after it entered into Chinese market. In the first 10 months of this year, Audi cumulatively sold 487.3 thousand cars in Chinese market, an increase of only 5.7 percent year-on-year, while the growths of its competitors BMW and Mercedes Benz are all double-digit. It can be said that regarding Audi's weakness at present in Chinese market, its throne of luxury cars will soon be replaced. At this time, seeking another partner is maybe the emergency prescription obtained easiest.

If it is only Audi's wishful thinking, perhaps the incident of "having an affair" will not occur. Coincidentally, SAIC is worrying about its lack of strong luxury brands in its product series as well. It is not difficult to find after carding last year's performance that although SAIC has produced and sold cars up to 5.9 million sets, but the average profit of the single car is not as much as the Great Wall Auto even as there is no decent luxury brand to support it. It is the common aspirations that make the two companies want to marry each other with the infamy regardless.

For the marriage between Audi and SAIC Volkswagen, many comments think that it will be a win-win situation, but the Audi dealers of FAW and FAW-Volkswagen think it a lose-lose situation. Whatever, it is only a shallow interpretation of the interests distribution from the perspective of enterprises. On today that the government vigorously promotes independent innovation, SAIC still stays in the thinking of joint venture in the past and hopes earning more interests in the domestic market with the help of Audi imputing molded products. The "harm" brought by it to the automotive industry is worth keeping alert and self-examining.

A very important reason of why the result of "exchanging market for technology" of China's auto industry is far less than expected is that some state-owned car companies have suffered a serious disease of depending on the joint venture. For a long time, these conglomerates have only attached importance to the introduction of finished products rather than to the digestion and absorption of technology, resulting in weak innovation. If the joint venture is only a passive choice under the background of "no money, no technology and no talents" at early stage, why SAIC who should concentrate resources for independent production still want to run on the road of joint venture considering today's profoundly changed market conditions that China has had stronger financial strength and good industrial base?

Some people may ask that joint venture or not, isn't it the freedom of enterprises? But the problem is that many automotive multinational companies just take advantages of the competition between two Chinese joint venture partners to occupy the active position in the joint venture company and set the snipe and clam at each other and then take advantage of both. Such a situation makes Chinese parties loss the right of speech continuously. Although the form of Audi's marriage with SAIC this time is different from the above, but its strategy of coercing the FAW with the incident is actually the same.

In contrast, the reason of high-speed rail making success is firmly held the steering wheel of innovation rather than blindly pursuing the road of joint venture. Like cars, high-speed rail in China grown up from the introduction of technology as well, but the difference is that in the introduction and absorption of technology, high-speed rail enterprises always adhere to the principal of Chinese party taking the initiative and independent innovation. They have played excellent skills in negotiation to stick to the bottom line and finally made it the pride of Chinese brands. Although some people think that the automotive industry is in a competitive market and high-speed rail is a monopolistic industry, making the two are not comparable, however, the high-speed rail development path still has some enlightenment for the automotive industry on how to avoid foreign enterprises restricting the technology learning process of Chinese enterprises through capital. Moreover, at present that the market has become a strategic scarce resource, China, as a country having the world's largest car market, should innovate and pursue change with the confidence to say "no" to the way of joint venture.

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