Gavin Green: we need to talk about China
All Lotus sports cars are made in Hethel, Norfolk and carry a ‘Handbuilt in England’ plate. Will the forthcoming Lotus SUV also have a plate to commemorate its birthplace? I suspect not. It will be made in Wuhan, China. The prospect of a Lotus SUV built in China does not fill the hearts of car enthusiasts with joy. When it’s made in a city whose major contribution to the world’s motor industry is almost to bankrupt it, it’s even more problematic. After decades of delivering juicy profits for many, the promised land delivered a plague. This rather sums up the motor industry’s awkward relationship with the world’s biggest, potentially most profitable and most unpredictable car market.
I recall interviewing General Motors CEO Rick Wagoner and being surprised by his obsession with China. There was a world atlas on Wagoner’s desk, opened on China. It was 2006, and General Motors, the world’s biggest car maker, was going bankrupt. It was looking to China, where it was market leader, for salvation. But China did not save GM. America’s biggest car maker went bankrupt in 2009 and was nationalised.
GM’s Chinese cars are made in a joint venture with state-owned SAIC. All major Western makers have compulsory alliances with (mostly state-owned) Chinese manufacturers, ensuring local car makers benefit financially from the popularity of foreign cars and, crucially, can also access their technology.
In 2017, I sat down with Jaguar Land Rover CEO Ralf Speth at the Shanghai Motor Show. The discussion turned to the Landwind X7, a copy of a Range Rover Evoque. You could even order ‘Range Rover’ and ‘Evoque’ badges and grille online, just to give your Landwind that final touch of Coventry credibility. When JLR sued Landwind’s maker, Jiangling Motors, China’s Intellectual Property Office said the Evoque’s design was on public display before its patent was filed and was thus invalid. Last year, JLR finally won a four-year court battle, the first time a foreign maker had won a legal fight against what Speth calls ‘copy-and-paste cars’.
Not all Chinese car makers are the same. Geely, the biggest privatelyowned manufacturer, is run by entrepreneur Li Shufu and is listed on the Hong Kong stock market. It’s done a fine job overseeing the Volvo brand, including gifting the Swedes the sort of independence Hongkongers can only dream of. Geely also owns Polestar, the London taxi maker LEVC, and Lotus.
As China’s car market has delivered hefty profits and still has huge growth potential, so Western makers continue to invest. Flagrant copying, human rights abuses and East-West trading inequities are all part of the price for doing business.
Huge investment in new technologies and in young engineers means China is now at the forefront of tomorrow’s key car trends. It may be a laggard at building good petrol or diesel cars, but those are yesterday’s technologies. Instead, it’s a world leader in electrification and connectivity. China already dominates electric car battery production. According to Peugeot boss Carlos Tavares, 40 per cent of the added value of most electric cars goes straight to Asia, and mostly to China.
Just a few months ago, VW’s global sales boss Jürgen Stackmann told me: ‘China is where innovation comes faster than anywhere else.’ That’s why Europe’s biggest car maker is likely to move more engineering work there. Already half of Volkswagen’s global production is in China.
So the West’s uneasy relationship with China will continue. Our car makers will continue to prostrate themselves in search of profits, teach China car-making skills, form alliances and tap into China’s electronics expertise. China may well become the world’s global EV hub. It could one day dominate the global automotive market, all with the unwitting support of Western car companies.
Contributor-in-chief Gavin Green, a former CAR editor, is now one of the world’s most respected automotive commentators