Weblog with daily updates of the news on a frugal, fair and beautiful China, from the perspective of internet entrepreneur, new media advisor and president of the China Speakers Bureau Fons Tuinstra
China’s EV brands like NIO and BYD are currently beating Tesla, says Shanghai-based business analyst Shaun Rein at CNBC. While China’s automotive industry is pushing out new models and innovations, Tesla looks old-fashioned with a model that has not changed over the past six, seven years, he adds.
US sanctions on China make it harder for Chinese companies to develop large-scale AI systems because they lack access to finance and computing power, says Winston Ma, adjunct professor of law at the New York University School of Law. But they will focus on AI applications and their commercialization rather than developing the big systems, he tells CNBC.
Tesla is losing its China market in the competition with its Chinese competitor. It might lose the rest of the world unless foreign protectionism saves the American car, says Shanghai-based business analyst Shaun Rein at CNBC. Nobody can beat China when it comes to price wars, he adds, and Chinese manufacturers will dominate the market in five to ten years, he adds.
Financial analyst Winston Ma looks at Tesla village Panzhiga as an example of how China’s rural areas moved upward on the road of digitalization for the World Economic Forum. Tesla’s and domestic EV cars are becoming a symbol of success in those areas.
Winston Ma:
The evolution of Tesla village Panzhiga is another giant step forward for the digital transformation of China’s rural economy, from the earlier years of “Taobao villages”.
In recent years, the mobile internet and digital technologies have had a profound impact on China’s rural economy. There are many villages with a majority of farmers working on Alibaba’s shopping site Taobao – earning them the name of “Taobao villages”.
A Taobao village is defined by Alibaba as “a village in which over 10% of households run online stores and village e-commerce revenues exceed RMB 10 million (roughly $1.6 million) per year”. According to Alibaba’s data, there are more than 1,000 Taobao villages in China.
Of course, “Tesla villages” – or “EV villages”, as Chinese electric vehicle brands are quickly catching up and competing with Tesla head-to-head – are still few and far between. The snazzy, high-end electric cars are often associated with environmentally-conscious urban elites, but this will soon change.
In June 2022, China announced a broad campaign in which 26 automakers will create incentives for people in rural China to buy electric vehicles (EVs). Car manufacturers will be encouraged to work on sales incentive programmes, in collaboration with e-commerce platforms, to generate offline car sales in rural areas and lower-tier cities.
To put all these into context, China views the EV development as strategically important to transform its automobile industry. First of all, car ownership in big cities in China already reached a saturation point and thus needs a breakthrough.
Secondly, China vowed to reach “carbon neutrality by 2060”, and consequently, it has declared that by 2035 all new car sales in China must be either full EVs or hybrids (collectively known as new energy vehicles). As such, the rural area is an under-explored market with great potential.
Devastating competition has made many victims in booming China, and now Tesla is the next one as it loses dominance in the world’s largest EV market, says business analyst Arnold Ma in Jing Daily.
Jing Daily:
In China, consumers can choose from a vast amount of foreign and domestic car brands and models. And although Tesla was once a pioneer, competition has now either caught up or evolved. This fierce local competition is coming from Nio and Xiaopeng motors, Arnold Ma, CEO and founder of agency Qumin, said. “As battery swap technology becomes more widespread, Tesla simply cannot compete with the footprint of battery stations of domestic companies.” Nio, the domestic favorite in the luxury arena, is tapping battery swapping — a strategy shunned by Tesla.
China’s electric car makers saw their value rise over the past post-corona months, as they believe they can produce an alternative for US-car maker Tesla, says Rupert Hoogewerf, chairman of the Hurun China rich list to the South China Morning Post.
The South China Morning Post:
The California-based marque leads China’s premium electric vehicle segment, buoyed by locally built Model 3 sedans. Tesla delivered 79,908 made-in-Shanghai Model 3s in the first nine months of this year, beating its Chinese rivals by a large number amid a slump in the overall market due to the Covid-19 pandemic.
In September, Nio delivered 3,226 of its ES6 sport-utility vehicles, a year-on-year increase of 87 per cent. But it was still behind Tesla by quite a distance, as the US company sold 11,329 Model 3s the same month.
Rupert Hoogewerf, the chairman and chief researcher at Hurun Report, which compiles the Hurun China Rich List, said the rallies in Chinese electric carmakers had resulted from a belief that they would evolve into China’s answer to Tesla in the future.
“The sector is interesting to watch because they are potential game changers in the automotive industry,” he said. “We don’t know the answer yet to whether they can become powerful players in the fast-changing automotive industry.”
Most of China is moving away from the coronavirus crisis, but the fears are still running deep. Companies, notably the hard-hit car industry, try to use that fear for marketing their products, says business analyst Shaun Rein to the BBC.
BBC:
Shaun Rein, managing director at the China Market Research Group, ...: "Companies are trying to take advantage of fears of Covid-19 to sell products and services to consumers and to be able to charge a premium."
In 2015, Tesla sold cars with anti-pollution filtration systems that were very popular in China. Its "Bioweapon Defense Mode" was aimed at people worried about air pollution in cities.
"Auto makers are now trying to position their cars as safe against viruses too. I'm no doctor or scientist, but I'd warn consumers to be cautious of any company saying their products reduce virus transmissions, especially Covid-19 ones," Mr Rein said.
The Luxury Consumer Price Index, released by Hurun each year, aims to measure the price changes for a predetermined basket of goods and services purchased by China's high-net-worth individuals (HNWI). The index covers the consumption activities of wealthy Chinese in the following 11 categories: real estate, health, education, luxury tourism, weddings, watches & jewelry, accessories & beauty products, cruises & private jets, lifestyle, liquor & cigarettes, and automobiles.
The 2017 index, which gauges prices from June 2016 to June 2017, was calculated based on a basket of 116 high-end goods and services, 20% of them imported. The issue marks the 11th edition of the index.
The depreciation of the Chinese yuan against major global currencies over the past year has been the main reason for the decreasing purchasing power of China's rich population with respect to buying luxury property worldwide and high-end imported goods.
Based on Hurun's estimates, there were nearly 1.34 million HNWIs in mainland #China by May 2016, while the number of individuals with over a billion yuan of wealth was close to 89,000. Over the past year, this population has borne the brunt of the price spike in the areas of luxury property, liquor, lifestyle and travel.
'What impresses me most, this year, is how much the price of real estate, baijiu (a traditional Chinese liquor) and Tesla has increased,'said Rupert Hoogewerf, chairman and chief researcher of the institute, 'completely lifting up the luxury CPI.'
For affluent Chinese buyers, the price of luxury property has gone up 16.6% since last year. Domestically, a villa in China's southwestern city Chengdu spiked 56.5%, followed by properties in Hainan (a rising tourism city) and Shanghai. Housing prices in overseas cities such as Vancouver, San Francisco, Los Angeles and New York also jumped.
Spending on luxury in China went up over 80 percent over the past ten years, reveals the Luxury Consumer Price Index (LCPI). HuRun chief researcher Rupert Hoogewerf points in ECNS at three major winners: property, baijiu and Tesla.
ECNS:
The gauge represents a basket of 116 high-end goods and services, 20 percent of which are imported. It is the 11th of this kind issued by HuRun research institute, which tracks changes among China's high-net-worth individuals.
The index compares the price level from June 2016 to June 2017, while noting that the LCPI rose by 3.6 percent so far this year, outpacing a 1.5 percent increase in CPI.
"What impresses me most this year is the increase in property prices, baijiu (a Chinese alcohol), and Tesla cars, which drive the general luxury consumer price up," said Rupert Hoogewerf, chairman and chief researcher of the institute.
Of the 11 categories measured by HuRun, luxury housing price led the upward trend, up 16.6 percent from the previous year. And baijiu recorded huge price surge, with Wuliangye, one of China's most famous high-end Baijiu brands, rising as high as 30.5 percent.
The LCPI report attributed more expensive luxury houses and imports to the depreciation of yuan, as many foreign currencies became stronger, with exchange rate of US dollar against renminbi up 3.6 percent year-on-year as of June 9.
Gold and diamond maintained momentum, up 9.6 percent and 3.3 percent respectively. And Tesla electric cars increased by 4.5 percent, thank to favorable policies in China to support electric car development, the report noted.
However, wedding and healthcare markets witnessed a decline for the first time, dropping 3.6 percent and 3.5 percent respectively.
