China has emerged as the world’s largest carmaker thanks to clearly defined strategies and goals, access to high-tech, deserving incentives, admirable management, informed decisions and the Chinese instinct of doing more with less.
Since 2009, annual production of automobiles in China exceeds the European Union, the United States and Japan combined.
After China's entry into the World Trade Organization in 2001, the development of the automobile market accelerated further. Between 2002 and 2007, China's national automobile market grew by an average 21%, or one million vehicles year-on-year.
In 2009, China produced 13.79 million automobiles, of which 8 million were passenger cars and 3.41 million commercial vehicles and surpassed the United States as the world's largest automobile producer by volume.
In 2010, both sales and production topped 18 million units, with 13.76 million passenger cars delivered, in each case the largest by any nation in history. In 2014, total vehicle production in China reached 23.720 million, accounting for 26% of global automotive production.
Mohammad Ali Diantizadeh, a member of the editorial board of Donyaye Khodro (Car World) has delved into ways and means the Chinese have embraced in the key auto industry over the years to become an envy of other world class automakers. He then reflects on the needs, prerequisites and practicality of implementing the China approach in Iran.
A Hot Button Issue
As such, emulating Chinese strategy for developing Iran’s dysfunctional economy, including the abnormally loss-making auto industry, has been a hot-button issue for almost two decades.
History has it that in several steps China completely rewrote its strategy for the automotive industry as part of its economic roadmap and has made eye-catching progress. Officially it is known as the second economic power after the United States. .
Car production in China started in the 1950s with the help of the Soviet Union and in the first three decades of its birth output did not exceed 100,000-200,000 units per year.
China's modern automobile industry goes back to 1978, two years after the death of Mao Zedong and after Deng Xiaoping took over. Deng is better known as the ‘Architect of Modern China’ for the extensive market economy reforms under his unique leadership and the no-nonsense fight against corruption and cronyism.
Although it was an anti-corruption move largely within the ruling elite and cleanse the bloated bureaucracy of corrupt managers. An estimated 10 million people out of 50 million managers and civil servants were fired, dubious entrepreneurs and investors were hauled before the courts because of their reported role in and contribution to financial-administrative corruption.
At the time, almost 88% of the Chinese people were below the poverty line and 70 million had died due to poverty, famine and hunger. The trial and dismantling of the corrupt and their formidable networks and minions had become a key national need and public demand.
Global Interaction
That said, the then leadership in Peking (now Beijing) was well aware that for sustainable economic growth and development collaboration with world powers was crucial.
Deng believed that relying only on its own population would not create the landscape and robust structures to compete with powerful western economies. It also was his strong conviction that untarnished and successful entrepreneurs and managers must be preserved and supported as a national resource.
Involving them as pioneers and promoters of the industrial and economic development process replaced coercive and dogmatic approaches and in the process paved the way for the inception and success of new auto companies.
As the industry moved forward, the government started effectively supporting local carmakers in their search for joint ventures with major foreign brands to improve innovation, quality and quantity. This indeed was a fundamental step in the internationalization of the China’s automobile industry.
Strong management, hard work and intuition in recent decades delivered and China become a major car manufacturer on the world stage. Production of 222,000 cars in 1980 has reached more than 20 million in recent years.
Valuable Transformation
With proper vision and dynamism the destiny of Chinese entrepreneurs transformed from fear, arrest, trial, confiscation of assets to having a meaningful role in sustainable economic development. The fate of the Chinese people also changed and now it is said that 1% of the population is below the poverty line. China boasts technology giants such as Huawei, Xiaomi and BYD.
The initial step of implementing the Chinese strategy in Iran's automobile industry is to acknowledge that Iran lags behind when it comes to competitive development.
Stakeholders, policy and decision makers and those with a strong voice in the economy, industry and trade must accept the ground reality that a country cannot and will not become a car manufacturer (or for the matter any other major producer) with a closed mind and behind closed doors.
Mutually-beneficial collaboration and respect, trust, foreign investment and knowhow, modern technology and the belief in a free market economy is paramount to Iran’s car industry’s survival.
The prerequisite for such policy is a healthy and efficient bureaucracy, updating policies and strategies, reforming structures, well-defined economic agenda, compatibility with acceptable global norms in preparing financial statements and banking transactions, and last but not least, economic reforms premised on industrial and trade diplomacy.
It is noteworthy to recall that the automotive industry in China has been the largest in the world measured by automobile unit production since 2008. The traditional ‘Big Four’ domestic car manufacturers are SAIC Motor, Dongfeng, FAW and Chang’an.
Other Chinese car manufacturers are Geely, Beijing Automotive Group, Brilliance Automotive, BYD, Chery, Guangzhou Automobile Group, Great Wall and Jianghuai (JAC). In addition, several multinational manufacturers have partnerships with domestic manufacturers.
