The Chinese Are Coming - #31


Page 1: The Chinese Are Already Here (106 Companies)
Page 2: Electrics • Autonomous • Ride-Sharing • New Deals

The central purpose of this newsletter has been to awaken us all to a new reality: Chinese auto companies are going global.

Today, ZoZo Go is pleased to present some compelling evidence that shows - well, guess what -  the Chinese are already here, and in great numbers.

We began tracking Chinese investments into America in 2015. Some highlights from our study:

  • 106 Chinese-funded auto and auto-tech companies in the US.

  • 192 facilities stretching from California to South Carolina.

  • More than $15 billion invested

Chinese investments are focused in two areas:

1) Auto parts production and engineering, concentrated in Michigan and the Midwest. Companies like Yanfeng, Joyson and Wanxiang employ tens of thousands. 

2) Advanced R&D centers for electric and autonomous cars in Silicon Valley.  Leading names include Baidu, NIO, Byton, Tencent and Didi. 

Background: Chinese companies started investing in the U.S. during the global financial crisis, buying distressed assets at good prices. Investments accelerated again after 2015 when the Chinese government encouraged its companies to go global as part of the Made In China 2025 initiative. 

OEMs: Major Chinese automakers, such as Guangzhou Automotive, Shanghai Automotive, Great Wall and Geely, already operate R&D centers in the U.S. They are busy preparing future vehicles for American consumers. 

US-China tensions: Current trade tensions have slowed the pace of investments. But Chinese firms are determined to compete globally, whatever the obstacles. 

Zotye: Earlier this week, the young Chinese automaker announced plans to sell compact SUVs into the United States. I spoke with Duke Hale, CEO of Zotye USA earlier today, who shared a few highlights:

  • The “last 48 hours have been crazy” with an overwhelming response from dealers

  • Zotye will start with gasoline engine vehicles but “perhaps add electrics at some point” in the future

  • Timing is “Fall of 2020”

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The Zotye T700 SUV. Powered by a 2.0 liter turbo gasoline engine, starts at around $25,000. Sales are projected to reach 35,000 units in China in 2018.

ZoZo Go's database of 106 Chinese firms, the first of its kind, was published last week by Automotive News as part of a special feature titled “China’s U.S. Ambitions.”  If you would like to learn more about the companies on this list, connect with ZoZo Go senior advisor Bill Endemann:

China Genius Series - January 2019

Oh and one more important development to share. On January 17, 2019, Automotive News and ZoZo Go will co-host the first-ever China Genius Series featuring CEOs and founders from Byton, NIO and Yanfeng.

Register today for what will be a terrific event:


- PAGE 2 -



>> Guangzhou Automotive. Toyota, Honda, FCA and Mitsubishi all plan to sell electrified versions of the same Guangzhou Automotive GS4 model under their own respective joint venture brand names. 

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Guangzhou Auto's best-selling model, the GS4 compact SUV. What to call it? In Toyota, Honda and FCA showrooms, the product will bear the GAC brand name on the front end and foreign joint venture names on the backside.

Takeaway:  Marketing a (borrowed from third party) product as your own is scandalous in any other market in the world. But this is China. The Chinese say: "The top makes the policies, the bottom takes counter-measures." Whenever Beijing issues policies like the new electric vehicle mandate, the cities and province quickly develop workarounds. Placing the GAC GS4 in their showrooms allows global joint ventures partners to meet Beijing's electric vehicle mandates without investing too much capital in new products. Clever, that. 

>> Tesla. Plans are to produce 12,000 Model 3s per month at the Shanghai plant by the end of 2020. 

Takeaway: Tesla does not make official mention of the Model Y. But to reach sales of 150,000 per year or more, the forthcoming compact SUV must be part of the production equation, too. 


>> Baidu/Apollo. China's leading autonomous tech company announced new deals with Ford, First Auto Works and Volvo. CEO of Ford's autonomous vehicle subsidiary, Sherif Marakby, will also be a Baidu Apollo board member. Volkswagen has joined the Baidu Apollo initiative. 

Baidu President Zhang Ya-Qin (left) and Sherif Marakby, CEO of Ford Autonomous Vehicles LLC (right) join hands to test autonomous vehicles in China under the Baidu Apollo initiative.

Takeaway:  Up until now, foreign companies have called their participation in the Baidu Apollo initiative a kind of "good citizen" hedge.  It is better to be seen participating, even if there has not been much deep substance to the program. But with each new announced initiative, Apollo is gaining girth and credibility. The Baidu Apollo partner count is now up to 130. 

>> China Leadership.  Autonomous vehicle sales in the People's Republic will reach close to 15 million per year by 2040 and account for half of the world total, according to IHSMarkit.

Takeaway:  The core technologies might still be developed in Silicon Valley and Southern Germany. But, look for China to be the first to commercialize and scale. Chinese regulators can work magic with the rules with a stroke of a pen. 

>> Tencent. China's most valuable company is quietly entering the autonomous vehicle arena, evidenced by a new hiring offensive in Silicon Valley. 

Takeaway: Tencent is already an investor in Tesla and NYSE-listed NIO. And the company is also working with Guangzhou Auto on connectivity services. Tencent intends to be a force in China's auto-tech industry, covering autonomous, electric and connected disciplines. 


>> Hello Chuxing. 
One of Softbank's earliest big bets was Alibaba. Now the powerful Japanese investment house is expected to invest in Alibaba-backed Hello Chuxing. 

Takeaway:  China’s two largest bike-share companies - Ofo and Mobile - are beating each other into oblivion with massive subsidies. Alibaba-backed Hello Chuxing (formerly Hello Bike) sees the carnage and it’s steering clear of saturated large cities and one-dimensional bike services. That explains the change of name from 'Hello Bike” to “Hello Chuxing” ( Chuxing means "Travel"). 

>> Shanghai Automotive (SAIC). China's No. 1 automaker ( with sales of 7 million vehicles in 2017) has formed a new company to deliver car-sharing services. 

Takeaway:  One by one, China's traditional auto industry companies are entering the ride-sharing space. Now wonder, China's ride-sharing industry at $23 billion is larger than that of the rest of the world combined. 


>> Zotye. 
This bold but still small (300,000 sales in 2017) Chinese automaker based southwest of Shanghai announced plans this week to be one of the first Chinese brands to sell in America. 

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The Zotye SR9 looks more than a little like the Porsche Macan. Pricing of the SR9 starts at $15,000 vs $85,000 for the Porsche Macan.

Takeaway: Zotye USA executives tell me they are looking at two models for the US market - one a small SUV about the size of a RAV4 and the other a mid-size SUV.  They will keep the Zotye brand name but model names have yet to be determined.  Look for the company to go after young buyers in America - possibly via short-term leases. Zotye has a reputation in China for styling cars that look a lot like Range Rover and Porsche models. 

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