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 car makers take the lead in developing their software-driven industry, and innovation expert Ashley Dudarenok explains how the global industry can learn from their Chinese competitors in her weblog.
Ashley Dudarenok:
In our China Economic Mega Report 2025, one of the clearest shifts in Chinese consumer technology is cars changing from a physical product into a software defined vehicles. The consequence shows in the numbers.
In the first two months of 2026, L2-level combined driver assistance penetration in China’s newly sold passenger vehicles reached 69.15%, up 10 percentage points year-on-year, per Ministry of Industry and Information Technology data.
The vehicle operating system has become the primary competitive variable in the world’s largest auto market. What China figured out first, and why that lead compounds, is what this article maps.
2024 was a bumper year for BYD, but it might face tough challenges to maintain its current lead in the automotive market, says marketing analyst Arnold Ma, founder of Qumin, in Campaign Asia. “Initiatives such as reducing carbon footprints, ensuring fair labour practices, and engaging in community development that resonate positively with stakeholders should continue to stay in focus,” he writes.
Arnold Ma:
Looking ahead, BYD’s brand prospects appear very positive and robust, but certain challenges must be addressed to maintain momentum: Imminent tariffs from the EU and potential ones from the US pose risks to BYD’s international sales. To mitigate their impact, BYD is investing in local production facilities, such as the planned factory in Hungary, to circumvent import duties and strengthen its presence in key markets. In markets where Chinese brands face scepticism, BYD should focus on building trust through quality assurance, customer service excellence, and transparent communication. Tailoring marketing messages to address local consumer concerns and preferences will be crucial to them. Continuous investment in R&D is essential to stay ahead of competitors. BYD will likely continue to prioritise advancements in battery technology, autonomous driving, and connectivity features to meet evolving consumer expectations and regulatory standards. BYD’s commitments to sustainability and ethical practices can enhance its brand reputation globally. Initiatives such as reducing carbon footprints, ensuring fair labour practices, and engaging in community development that resonate positively with stakeholders should continue to stay in focus.
China’s electric car makers are doing pretty well, certainly domestically and – perhaps except the US – also internationally, says leading economist Arthur Kroeber, author of China’s Economy: What Everyone Needs to Know. Excess capacity seems mainly a problem for traditional car makers, as demand for EV vehicles is only picking up. Internationally EV makers might face some restrictions, but they seem able to manage those, Kroeber adds in a debate organised by the Asia Society.
China has issued a wide range of new rules on cybersecurity, data exchange, and consumer protection that will define the development of smart cars, says China-lawyer Mark Schaub in an extensive analysis of the recent regulations, at Lexocology.
Mark Schaub:
China has established its main legal regime in regulating cybersecurity, data security and personal information protection with the promulgation of Cybersecurity Law, the Data Security Law and PIPL. Smart cars will be collecting, processing and transferring data at levels previously undreamt of. However, such activities will prove to be a great challenge to the Chinese regulators. Following the effectiveness of the Data Security Law, the PIPL and the Management Provisions, we expect to see enforcement against some major players to make it clear that China will enforce data security and personal information protection. Companies that will be affected should consider the following: (1) Consider data security issues in the process of designing, producing, selling, operating, maintaining and managing cars, and reduce the amount of data collected and stored in car to the greatest possible extent.(2) While using big data for commercial operations, safeguard the users’ right to know and implement technical safeguards to desensitize and anonymize data, as well as preventing misuse or unauthorized third-party access.(3) Multinational companies or Chinese companies with R&D centers outside China should consider implementing localized storage as soon as possible by establishing data centers within China and enhancing local R&D capabilities in China.(4) Finally, companies would be well advised to conduct a systematic review and assessment of the current state of their data handling. Business operations that clearly do not comply with the requirements of the Management Provisions should be adjusted in a timely manner.
China’s legislators have set another step in regulating data security, this time for the automotive industry, by publishing a draft for comments. China-lawyer Mark Schaub gives an overview of the plans for the China Law Insight. “Companies would be well advised to conduct a systematic review and assessment of the current state of their data handling,” he concludes.
Mark Schaub:
China has continuously strengthened legislation and regulation on cybersecurity, data security and protection of personal information protection.
Automated driving and smart cars will be a major challenge to the Chinese regulators. Smart cars will be collecting, processing and transferring data at previously undreamt of levels. The authorities will need to balance the convenience of automated technology against cybersecurity and privacy concerns. China is accelerating its pace of promulgating laws, regulations, policies and standards to nurture the intelligent vehicle industry but at the same time have in place regulations to ensure such technologies are safe.
The Draft strengthens the protection of personal information and secures data in China’s automotive industry.
However, we believe that some provisions of the Draft require clarification and there is also room for improvement as to how the Draft fits in with other laws. Big data is an important basis for the rapid development of self-driving cars and China’s automotive industry but a balance must be struck between technological innovation and data security. [2]
The Draft will affect almost all players engaged in the automotive industry. Companies that will be affected should keep a close eye on the legislative process of the Draft and start making preparations now to minimize disruption to their operations. In particular:
Consider data security issues in the process of designing, producing, selling, operating, maintaining and managing cars, and reduce the amount of data collected and stored in car to the greatest possible extent.
While using big data for commercial operations, safeguard the users’ right to know and implement technical safeguards to desensitize and anonymise data, as well as preventing misuse or unauthorized third-party access.
Multinational companies or Chinese companies with R&D centres outside China should consider implementing localized storage as soon as possible by establishing data centres within China and enhancing local R&D capabilities in China.
Finally, companies would be well advised to conduct a systematic review and assessment of the current state of their data handling. Business operations that clearly do not comply with the requirements of the Draft should be adjusted in a timely manner. The companies should also consider formulating internal mechanisms and systems that comply with the Draft as soon as possible. Although the Draft has not come into force it is a clear indication of the Chinese authorities’ intent and clear direction as to where the policy is going.
Selling cars in China has been notoriously difficult because of stringent regulations. Mass production of autonomous cars will only be possible when the government paves the legal way for those cars, and just that is happening, writes China lawyer Mark Schaubat the China Law Insight.
Mark Schaub:
China has accelerated its promulgation of laws, regulations, policies and standards related to autonomous cars in 2021. The Draft Admission Guide coupled with the Draft Regulations of Shenzhen Special Economic Zone on the Administration of Intelligent and Connected Vehicles for public comments and the Draft Proposed Amendments of the Road Traffic Safety Law issued by the Ministry of Public Security of China indicate that law makers are seeking real life solutions to the soon to be reality of autonomous cars.
The Draft Admission Guide sets out a commercial case for autonomous cars as it sets admission conditions for autonomous cars and their manufacturers. These requirements understandably centre on the core issues of safety and security. Further, and underscoring safety concerns, at present the authorities are only considering mass production of Level 3 and Level 4 autonomous cars in China. Level 5 autonomous cars are expected to be some way down the track.
China is moving fast on setting up legislation on the development of autonomous driving cars in China, in tandem with the fast technological and commercial developments, writes China-lawyer Mark Schaubin the China Law Insight. These detailed regulations will have a significant and positive impact on the industry, he adds.
The China Law Insight
The Ministry of Public Security Draft Proposal and the Shenzhen Draft for Public Comments mark the first step in China’s legalisation specifically for autonomous cars. These regulations will have a significant and positive impact on the development of autonomous cars in China.
Their provisions on liability will directly impact the development of technologies and business models for autonomous cars in China as well as requiring changes in how contractual arrangements between automated driving system developers and carmakers are made.
Despite the positive elements it should be noted that much is left to be clarified and there are already issues in respect of how to ensure consistency between laws. The classification of autonomous cars in the Shenzhen Draft Regulations seems to differ from that outlined in the MPS Proposed Amendments.
The term “autonomous cars equipped with drivers” in the Shenzhen Draft Regulations and the term “autonomous cars equipped with automated driving functions and manual operation modes” in the MPS Proposed Amendments seem to both primarily refer to conditionally automated vehicles (i.e., level 3). However, the two terms are expressed differently and the responsible party for traffic violations and liability also differ. While the MPS Draft Amendments identifies the responsible party to be the driver or the automated driving system developer, the Shenzhen Draft Regulations defines the responsible party to be the driver, manufacturer or distributor. The question of how to maintain consistency on liability for traffic violations or accidents of autonomous cars in the legislations may be an important consideration in the subsequent revision of these pieces of draft legislation.
Although the relevant provisions of the MPS Proposed Amendments and the Shenzhen Draft Regulations are still in draft form (and therefore the final official versions are likely to undergo significant amendment), the two drafts will undoubtedly directly drive China’s legislation in the field of autonomous cars and therefore have a profound impact on the commercialization of autonomous cars in China.
China’s automotive industry has traditionally taken a backseat compared to global competitors, but is planning a major overtake when it comes to pushing startups on self-driving, says China lawyer Mark Schaub in the Asia Nikkei. “In China, if you always wait till the law comes into effect, you are six months to a year behind what the regulators are saying,” Schaub said.
The Asia Nikkei:
Analysts see authorities’ willingness to allow aggressive experiments for new technology as a major advantage in China’s fierce competition with the U.S. for the most advanced autonomous driving technology, which many believe will change the automobile industry.
“China missed out on manufacturing top quality cars. The industry is being transformed … Chinese policymakers are very keen to be the first and best doing autonomous driving,” said Mark Schaub, a tech industry lawyer and partner with law firm King & Wood Mallesons.
China has grown to be the world’s largest car market and produces tens of millions every year. But few domestic automakers have mastered the core technologies for combustion-engine cars, an area led by the U.S., Japan and Germany. China’s most popular cars have often been produced through joint ventures with leading foreign automakers such as Volkswagen, General Motors and Toyota.
China wants to turn the tables with autonomous driving technology, which would also transform taxis, buses, trucks and delivery vehicles. China’s target is for vehicles with at least partial self-driving functions to account for 50% of new auto sales in five years, according to a blueprint published by a government research body in November…
Beijing, Guangzhou and Changsha appear to be among the more aggressive promoters of autonomous driving. They allow self-driving vehicles to be tested with remote support rather than a human driver. But none of these cities has allowed fully autonomous driving, where both remote controls and backup drivers are removed.
“In China, if you always wait till the law comes into effect, you are six months to a year behind what the regulators are saying,” Schaub said. Unlike most Western countries where authorities enforce the strict letter of the law, he said, there is a lot of discretion in China.
The regulatory approach is expected to put foreign players at a disadvantage in competing with local players in the age of autonomous driving, because “Chinese companies know better how to navigate the legislation and the laws,” he said.
Every crisis offers an opportunity and China is pushing ahead with its plans to develop autonomous vehicles, as the car market is in the doldrums. China lawyer Mark Schaub summarizes the effect of the country's plans for the future at the China Law Insight.
Mark Schaub:
The world’s auto market is in the doldrums and China, as the world’s largest auto market, has suffered almost two-years of starkly declining sales and now the novel coronavirus (COVID-19) epidemic has crashed the already anemic sales.
The automotive sector has been heading for disruption for some time now. The virus outbreak may have pushed matters further. China signaled its intention to play a key role in the development of autonomous vehicles when on 24 February 2020 eleven central level Chinese governmental departments jointly issued the Strategy for Innovation and Development of Intelligent Vehicles (the “Strategy”).
The Strategy sets forth a blueprint as to how the Chinese government will boost the development of autonomous vehicles over the next thirty years...
The Strategy has been warmly welcomed by the market in China.
The Strategy lays out a comprehensive and detailed plan for the development of autonomous vehicles in China. China clearly recognizes the advantages it has in data, market, technology innovation, infrastructure and environment to build an autonomous car manufacturing titan. The Strategy also recognizes and seeks to address some of China’s disadvantages – restrictions on mapping and slow changes to relevant laws.
Black swan events are unforeseen and unexpected. An unexpected result of the virus outbreak is that the inevitable disruption and move to autonomous new energy cars will be sped up. An already weakened traditional auto sector may find it has no choice but move to new technologies.
At the China Speakers Bureau we have started to explore WeChat Work as a social platform, next to Twitter, Facebook and LinkedIn. Are you interesting in following us on this journey? Check out our instructions here.
Major industries like travel, retail, automotive, telecom and others see their traditional business models changing very fast. At Shanghai-based SOSV managing director William Bao Bean helps startups to make money in new ways, based on data, and capture fast emerging markets, he tells at the Phocuswright Europe conference in Amsterdam last week. Companies should not cling to melting margins, but identify where money can be made, he argues. William Bao Bean is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.
Are you looking for more experts on innovation at the China Speakers Bureau? Do check out this list.
China is going to phase out restrictions on foreign ownership of the automotive industry over the next five year, president Xi Jinping announced earlier this year. Shanghai-based lawyer Mark Schaub summarizes the effects on the industry for the China Law Insight.
Mark Schaub:
The automotive sector is facing the twin disruptions of new energy and autonomous cars.
It is eye-catching that one of the major initiatives to further open up China’s economy announced by President Xi Jinping at the Boao Forum on 10 April 2018 was large scale relaxation of foreign investment restrictions in the auto sector.
Shortly after President Xi’s announcement the National Development and Reform Commission (NDRC) revealed that foreign ownership limits on automakers would be phased out over a 5-year transition period which would start on 17 April 2018.
According to NDRC, foreign ownership restrictions on special-purpose vehicles and new energy vehicles (NEVs) will be removed in 2018. The liberalization will be followed by commercial vehicles in 2020 and passenger cars in 2022. The rule that currently prohibits foreign automakers from setting up more than two joint ventures in China will also be lifted in 2022. After the 5-year transition period, all restrictions on foreign investment in auto sector will be removed.
These policies were swiftly followed by regulatory action and on 28 June 2018, NDRC and the Ministry of Commerce (MOFCOM) jointly issued the Special Administrative Measures for Admittance of Foreign Investment (Negative List) (2018) (“2018 Negative List”)[1] which is due to take effect from 28 July 2018.[2]
The 2018 Negative List confirmed the pledge to fully remove foreign investment ownership limits on auto industry over a 5-year transition period.
In addition to making it easier for international companies to sell more cars to China the government has also significantly lowered import tariffs for vehicles. Starting 1 July 2018 import tariffs on autos were reduced to 15% from 25% and auto parts will be subjected to 6% tariffs.
The relaxation on foreign ownership restrictions should open up China’s auto industry and for this reason it may have a major impact on domestic and international OEMs alike.
China has not only been leading the way to develop self-driving cars, it has also been are the forefront of legal changes needed to allow those cars into society. The Shanghai-based lawyer Mark Schaub gives an overview of the new regulations the government has been introducing at the China Law Insight.
Mark Schaub:
China is embarking on bold moves to re-shaping its auto industry policy. This follows recent announcements in relaxation of key restrictions on foreign investment in the auto sector.
The National Development and Reform Commission (NDRC) is the body tasked in China with laying the direction for industrial policy. On May 17, 2018 the NDRC circulated the draft Administrative Rules on Auto Industry Investment (“Draft Rules”) to local governments and industry stakeholders for comment. The Draft Rules when passed will replace the current car industry development policy that has been in place since 2004.
In short the Draft Rules reform the China approval system for auto investment projects by delegating more authority to local governments, expressly prohibit any new production capacity for fossil-fuelled vehicles and raise the threshold for establishing electric vehicle manufacturing companies.
The Draft Rules set 25 May 2018 as the deadline for feedback from local governments and industry participants. Accordingly a tight timeline and sorry if you missed it! This does, however, hint that feedback will be limited and that NDRC has clear ideas as to the direction it intends to take. Generally, longer feedback periods are granted...
The Draft Rules continue and extend existing policies in place.
On the one hand China has announced relaxation of restrictions on foreign investment in auto sector with a 5-year transition plan and also reducing import tariffs on autos to 15% from 25% and on auto parts to 6%.
On the other hand China is clearly putting in place policies to allow it to have a strong domestic auto market in which it will compete head to head with international competitors. This future competition will be in respect of NEVs and autonomous cars.
The Draft Rules are expected to be officially issued within 2018 but their impact on the China’s auto industry will reach into the next decade.
Lynk & CO and NIO both launched their first production models at the Shanghai auto show in April, but the question is whether new technology is enough to sell their cars. Branding expert Tom Doctoroff says to Wardsauto that the newcomers on this market need a bit more to succeed.
Wardsauto:
It won’t be easy for the startups to use customer experience to brand themselves, says Tom Doctoroff, senior partner at global brand and marketing firm Prophet. Most Chinese companies still are much more focused on sales than service, he says.
“When you want to talk about customer experience, you have to look at corporate structure and whether it can provide an integrated holistic experience,” says Doctoroff, who lived in China for decades and is the former Asia Pacific CEO of communications firm J. Walter Thompson. “The ecosystem that is required is a very refined ecosystem.”
The Beijing Auto Show was an exceptional bright spot during an economic slowdown that is worrying many, writes financial analyst Sara Hsu in the Diplomat."We can expect China’s auto industry to keep moving."
Sara Hsu:
SUVs have increased sales in recent months, particularly as Great Wall Motor and Chongqing Changan Automobile Co reduced prices on entry-level SUVs. SUV sales increased by 45 percent between 2014 and 2015, reaching 6 million vehicles in 2015, or one third of new passenger vehicle sales. New energy vehicles have increased sales from a low base, with eager new Chinese firms planning to enter the electric car market.
Government policy has boosted car sales, with a 50 percent cut in smaller engine sales tax in October of last year making vehicle purchases more attractive. The government is also providing state subsidies of up to 120,000 RMB for the purchase of electric cars until 2017 in order to reach a target of having five million electric cars on the roads by 2020. A government directive also requires banking institutions to lower the down payments for new energy vehicles, while another requests that public institutions add more NEVs to their car pools. The government is invested in ensuring that consumers obtain the best prices possible in general. Anti-monopoly law has been drafted to increase competition in the auto sector and improve conditions for the consumer.
China’s well-functioning auto sector is a bright spot in a dwindling economy. Automobile consumption boosts consumer spending, which China’s leadership is attempting to expand. Encouraging innovation and ensuring competition by reducing monopolistic practices continue to benefit the sector. Meanwhile, the participation of Chinese firms in vehicle production helps to ensure China’s viability in this global sector. While infrastructure, a necessary complement to vehicle use, may lag in some regions, China’s commitment to development and urbanization will ensure that roads and electric vehicle charging areas continue to expand. We can expect China’s auto industry to keep moving.
China´s billionaires not only spend a huge part of their money on luxury cars, they also make it from the car-industry, says Rupert Hoogewerf, founder of the Hurun Rich listin the China Daily.25 Percent of the super-rich in the automotive industry come from China.
The China Daily:
A quarter of top car-industry billionaires call China home, a list from Shanghai-based Hurun magazine that documents the life of the wealthy, showed.
This year's Richest People from the Car Industry list named 45 billionaires from 13 countries. Their average fortune was $3.75 billion. Among them, 11 are from China.
Wei Jianjun, 50, chairman of the Hebei-based Great Wall Motors Co Ltd, is the richest self-made car entrepreneur in China. He ranked fifth with $7.7 billion. His company is China's largest private car brand and the biggest domestic manufacturer of SUVs and pickups.
Great Wall's market capitalization is more than $16.7 billion and annual production capacity is 800,000 vehicles. Total sales revenue was 56.8 billion yuan ($9.19 billion) in 2013 and net profit 8.3 billion yuan.
"It is no longer a secret that Chinese billionaires are huge buyers of luxury cars," Rupert Hoogewerf, chairman and chief researcher of Hurun Report, said. "But still it is quite a surprise for us to find out that Chinese are not only major buyers but also major profit-makers."
Most of China's leading automobile companies are State-owned, making it difficult to calculate personal wealth, he said.
