Future of Mobility #3 — China: Agile Development with an Intercultural Mindset
China is the most important car market in the world, according to Prof. Dudenhöffer.
Not without controversy, but this market is highly important in terms of business, innovation and growth with an impact for many sectors.
Forty years ago the Chinese government put the automotive industry on their strategic map, according to the CAR Symposium reporting from the Auto Shanghai.
National automotive companies over time were allowed to form joint ventures with international companies. This has increased their own knowledge to build the national brands, companies and technology.
The automotive industry is rapidly changing, even with more and more stringent exhaust emission requirements, the electrification, connectivity and autonomous modes are reshaping the needs and technology — disrupting the whole industry. The traditional way does not work anymore, grasp this opportunity or go bust!
VW will have a production capacity of 1 million BEVs by 2024 in China, there will be a ramp-up period with full utilization by 2026/27. In addition to VW also Audi, part of the Volkswagen Group will build PPE-based vehicles. For autonomous drive, VW is aiming at level 2–3 autonomy, developed with a Chinese tech partner. There are plans for a level 4 with another Chinese tech company.
The ICV concept in China is very much taking the approach of V2X, meaning that the vehicle is communicating with an intelligent surrounding, e.g. traffic lights, traffic control systems, other vehicles etc. According to Stephan Wöllenstein, CEO Volkswagen Group China.
This is contrary to the American approach where the vehicle is decoupled and doing everything by itself.
Probably this is also a sign of the different political systems, where China centrally dictates and coordinates to overhaul the whole system, while in US the decentralized and less coordinated effort allowing for the commercial interests play out individually. The two approaches will be highly interesting to follow.
Building Intercultural Mindset with Belts and Roads
The Belt and Road Initiative, earlier One Belt One Road (OBOR), the ambitious program to link China with the rest of Asia and to both Duisburg in Germany and Athens in Greece is also a way to grow international trade and innovation. And reflecting over the Suez channel blockage it might be a good alternative. Very frequently new agreements with companies and national level are announced. It does not come without risks and challenges. The collaboration between the German Rhein-Ruhr area with China is key in terms of global logistics, including the automotive supply chain and transportation of battery packs. Of course this type of close cooperation requires cultural understanding and developing a good intercultural fit.
Western straightforward thinking and communication versus the Asian way of polite and more defensive way of communication needs to be understood, as Klaus Steinmann of Mercuri Urval highlighted. Language barriers should also not be underestimated, even though English is a common business language. Agile development requires risk takers. The world is coming even more together and plans are moving ahead even during the pandemic still holding a grip on us.
The worlds’ most important car market is projected to expand
According to Steven Cai, of Accenture Greater China, the Chinese car market is projected to expand to 30–35 million cars by 2025 and 40 to 45 million cars by 2030.
The NEV share is forecasted to grow to 25% in 2025 and 40% by 2030 according to reports quoted by Steven Cai.
China is an R&D hub with an expansive innovation eco system with consumer-lead development.
The mindset in China is set for accelerating growth with direct investment opportunities. Understand the cultural differences, if you are a risk taker and want to develop/grow rapidly the Chinese market might be something for you!
