International automakers are expected to increase production and investment in China, despite an ongoing European Commission subsidy investigation into imported electric vehicles from China. Huang Fei spoke to Deloitte's auto industry consultant to discuss what this means for the world's largest auto market. 

ANDY ZHOU Offering Portfolio Leader, Deloitte China Enterprise Technology & Performance Consulting "Because European companies haven't been proactive enough in cutting costs and raising quality, they have fallen behind in the EV race. The EU probe will buy them some time. Chinese cars are popular because they are more advanced and suit consumers' needs. In a rules-based market competition, Chinese automakers have continued to capitalize on supply chain advantages at home, and are creating international products that are both attractive, and affordable. The EU is understandably alarmed, but the question of whether China is succeeding because of market-distorting practices requires a fair, transparent and appropriate assessment." 

HUANG FEI CGTN Reporter "The investigation comes at a time foreign companies are investing in Chinese supply chains and technology. Are we going to see a slowdown in joint-ventures in China?"

ANDY ZHOU Offering Portfolio Leader, Deloitte China Enterprise Technology & Performance Consulting "I believe multinational automakers will continue to make China a very important manufacturing base for global deliveries. But their business model will evolve. In the past, foreign firms must invest in a 50:50 ownership, but now, they can explore other structures. For example, Volkswagen bought stakes in Xpeng, and Stellantis invested in Leapmotor. International partnerships will become more diverse. China's market and consumers are also evolving. For example, many young people and families are looking to buy their second car. It's a level-playing field, and whoever can keep up with the market will win."

HUANG FEI CGTN Reporter "In the face of global reshuffling of supply chains and increasing uncertainties in the geopolitical landscape, how would you advise companies reduce their risk exposure?"

ANDY ZHOU Offering Portfolio Leader,Deloitte China Enterprise Technology & Performance Consulting "Indeed, the words de-coupling and reverse globalization have come up a lot in the media. But for automakers, collaboration will bring more profits. Every region is unique, and comes with certain risks. We don't advise companies to blindly follow the trend. They need to have a comprehensive plan and a good pace to enter. Today, the auto industry is already highly-globalized, disconnecting supply chains is unrealistic. Chinese companies need to learn how to run their operations on a global scale."

(Source: CGTN)