China's automotive industry needs to move beyond exporting vehicles and build integrated overseas operations covering manufacturing, supply chains, after-sales services and data management, said industry experts and executives.

"China's auto industry is at a critical juncture for its globalization strategy," said Shi Jianhua, vice-president of the China EV100 Research Institute, at a recent summit held in Chengmai, Hainan province.

Vehicle exports from the country in the first nine months exceeded 8.2 million units, up 65.8 percent year-on-year, according to statistics from the China Association of Automobile Manufacturers. They are estimated to hit 10 million units this year, said the CAAM.

Meanwhile, major carmakers including BYD and Great Wall Motor are acquiring or building plants overseas, from Southeast Asia to South America and Europe.

The industry's overseas expansion is moving from exporting individual products toward coordinated development of a broader industrial ecosystem encompassing research and development, manufacturing, services, finance and infrastructure, said Shi.

One of the most pressing challenges is the development of after-sales services, as rapid overseas growth has exposed weaknesses in spare-parts supply, maintenance and technician training.

Zhang Xiaodong, deputy director of Geely Auto Group's Technology Management Center, said spare-parts forecasting and allocation, as well as vehicle maintenance and repair, are among the first problems to emerge as automakers expand overseas.

Demand for parts varies across markets because of differences in regulations, road conditions and driving habits, making it difficult to predict requirements accurately, he said.

Geely is responding by developing regional central warehouses and local warehouses in key markets, while working with local partners to establish service standards and train technicians.

The company also needs to strengthen local capabilities in servicing electric powertrains and intelligent vehicle systems, Zhang said.

For component suppliers, building local distribution and service networks is equally important.

Zhou Lingkun, president and CEO of Linglong Tire, said the replacement market accounts for about 75 percent of global tire demand, making local sales and installation networks essential to serving customers.

Linglong has established sales networks in 173 countries and regions, with about 200,000 partner stores worldwide, he said.

The company seeks to build what Zhou described as a "full life-cycle service loop centered on local responsiveness", combining product adaptation, timely delivery and standardized installation services.

The need to adapt to local markets also extends to manufacturing and investment decisions.

"Investors should look at the entire business ecosystem that supports production, operations, expansion and customers, rather than focusing only on the cost of building a factory," said Siwadee Suksawate, director of the Guangzhou office of Thailand Board of Investment.

Thailand's established automotive manufacturing base, supplier network and access to the wider Association of Southeast Asian Nations' market make it an attractive location for companies seeking to develop regional operations, she said.

The country has 84 industrial parks and offers access to an ASEAN market of more than 600 million consumers. Its network of free trade agreements covers 24 economies.

Thailand's investment incentives cover various parts of the electric vehicle value chain, including vehicle assembly, batteries, key components and charging infrastructure.

Eligible projects can receive corporate income tax exemptions and other incentives, subject to approval and applicable conditions.

Thailand has been a popular location for Chinese carmakers to build plants, including SAIC and BYD. More such companies are selling cars in the country.

Suksawate encouraged them to work with local suppliers, adding that the investment authority could help connect investors with potential Thai partners.

The discussions also highlighted the growing importance of regulatory compliance, supply-chain resilience and data management as companies expand into more markets.

Zhou said Chinese companies could no longer rely on producing in one location and selling worldwide. Trade barriers and regulatory requirements have made diversified production networks and localized supply chains increasingly important.

He cited the European Union's trade measures on Chinese-made tires and its evolving compliance requirements as examples of the challenges facing exporters.

Zhang at Geely proposed developing a centralized overseas service platform in places like Hainan, alongside one-stop testing and certification services, cross-border data infrastructure and bonded spare-parts warehouses.

Zhou called for an integrated cross-border supply-chain service platform in Hainan, using the province's free trade port policies and geographic advantages.

Such a platform could help smaller suppliers consolidate shipments, complete certain value-added processing before export and reduce logistics costs, he said.

Zhou also proposed a digital hub to help companies manage cross-border data transfers in compliance with Chinese and overseas regulations, as well as combining sea and air transport to balance delivery costs and urgency.

Hainan could also build a test and certification center for vehicles and components targeting overseas markets, particularly in Southeast Asia, he said.

Zhan Xingshuang, a Chengmai official, said the county is well-positioned for NEV exports, thanks to liberalized flows of trade, investment, capital, talent and data, preferential policies including the dual 15 percent income tax and zero tariffs, plus its port access and proximity to the provincial capital, Haikou.

(Source: China Daily)