In today’s China.Table, the focus is on automotive suppliers. While the German supplier industry is grappling with technological changes, Chinese providers have established themselves as an alternative. An excellent example of this is the technology giant Huawei, which equips the Aito car model entirely with digital technology, making it one of the most connected vehicles in the world, as reported by Joern Petring.
The German supplier industry is still well-positioned and offers all conceivable parts for EVs. However, there is a risk of a two-tier society, as analyzed by Christian Domke Seidel. Those who bring a lot of capital to cope with these changes and are well integrated in China belong to the winners. But there are also strategies on the loser’s side to make the best out of the situation since the internal combustion engine will not completely disappear from the market anytime soon.
Automotive suppliers appear to be in good spirits, at least from a global perspective. According to the Berylls Group consultancy, the industry generated over a trillion euros in revenue last year. This marked a 16 percent increase compared to 2019, a pre-pandemic year.
Rising prices met with an expanding automobile production, primarily driven by China. “The strong connection to China can be viewed as an advantage. The automotive supplier industry from Baden-Wuerttemberg is integrated into Chinese networks and continues to play a leading role,” said Nicole Hoffmeister-Kraut, the Minister for Economic Affairs of Baden-Wuerttemberg, during an interview with Table.Media.
While this is true in essence, automotive suppliers cannot afford to relax. Analysts foresee market shifts in favor of Chinese suppliers due to the technological revolution in the automotive sector. This could potentially come at the expense of well-established suppliers from Germany and Japan.
The Chinese market is demanding EVs. In September, every third vehicle sold was an EV. The sales of New Energy Vehicles (NEVs), including electric cars and plug-in hybrids, surged by 22 percent, already accounting for 34 percent of total sales.
Their share is also rising massively globally. Manufacturers heavily reliant on combustion engines face challenges such as plummeting production numbers. According to Handelsblatt’s calculations, the production of combustion engines for major German automakers fell drastically between 2019 and 2023, while EVs and plug-in hybrids witnessed a dramatic increase:
This transformation also affects suppliers. “The area where German suppliers have patents and expertise is losing relevance. The question is whether suppliers can develop new products and patents. And it’s a race against time,” says Andreas Glunz in an interview with Table.Media. He is the head of international business at the consulting firm KPMG. Large corporations are more likely to succeed in this aspect since they can invest billions to adapt their products and production to new conditions.
Thus, manufacturers no longer source individual components from suppliers. “The suppliers of the future, who are viable, are those that can develop complete systems and integrate them into the production lines of original equipment manufacturers worldwide.” Nevertheless, it is highly debated whether the strong regional ties of these companies, which produce and offer their services in China, truly benefit or potentially harm the German economic landscape.
Suppliers are affected differently by these trends, given the diversity of the sector. According to the Regional Industrial Initiative Service, there are approximately 900 suppliers in Germany employing around 300,000 people.
However, Bosch, ZF, Schaeffler (who are in the process of acquiring Vitesco), and Continental dominate the reporting. These are the major players who can benefit from the rise of the automotive industry in China and the shift toward electromobility. ZF aims to increase the share of its revenue from China to 25-30 percent by 2030. Bosch already stands at 28 percent. Vitesco plans to expand its electromobility business to 30 percent of its revenue, with around 35-40 percent of that coming from China.
The debate regarding how Europe could become less dependent on the People’s Republic or how China could promote local manufacturers remains secondary in this business at the moment, says Glunz. “In principle, it is not a question of independence from each other but a question of technology. The manufacturers work with technology leaders,” says Glunz. They turn to suppliers who can be integrated locally and offer high-quality products at competitive prices. “That’s what the market regulates.”
Smaller suppliers struggle to keep up with these changes. Among the 900 suppliers in Germany, there are many hidden champions with expertise in combustion engines. They operate high-quality, profitable niches that are gradually shrinking. However, these niches are not disappearing anytime soon. In 2022, about 82 million motor vehicles were sold, of which roughly 11 million were pure EVs.
So, there’s still a substantial market for combustion engines. “The question is to what extent the combustion engine is genuinely obsolete and how long the transition to EVs will actually take,” Glunz says when looking to the future. There are too many unanswered questions in this context for this market to disappear quickly. These issues encompass the availability of EVs and necessary charging infrastructure in remote regions, the second-hand car market, battery recycling, and the production of green energy.
It’s the task of both manufacturers and suppliers to locate and serve these regions. However, the question remains whether smaller companies can meet these demands. “Suppliers and manufacturers must be locally present and regionalize their activities in all regions worldwide, including Indonesia or Africa, as these are the markets of the future,” says Glunz. However, this requires massive investments that only large providers can afford.
The Chinese tech conglomerate Huawei is on a roll. First, the company from Shenzhen surprised everyone at the beginning of September with its new smartphone, the Mate 60 Pro. Thanks to chips from the Chinese manufacturer SMIC, Huawei can bypass the existing US sanctions with this new device and is expected to regain market share. But Huawei has also made progress in its foray into the automotive industry.
The latest model from the EV brand Aito with Huawei technology is becoming a bestseller. According to Richard Yu, the head of Huawei’s Smart Car division, 50,000 orders for the new SUV M7 were received in the first 25 days after it went on sale. Yu even referred to this number as a “miracle”.
The Aito brand’s vehicles are manufactured by the relatively unknown Chinese automaker Seres, based in Chongqing. What sets Aito apart is Huawei’s close partnership, filling the M7 with cutting-edge Huawei technology, from the “Harmony” operating system to the highly praised ADS 2.0 driving assistant. The new edition of the M7, introduced on Sept. 12, is sold starting at a price of 249,800 yuan (approximately 30,000 euros), making it about 70,000 yuan cheaper than the previous model.
Aito cars are sold directly in Huawei stores. Huawei decided to seek partnerships in the automotive industry when it became clear that the company’s smartphone sales were plummeting due to strict US sanctions. As a result, Huawei’s branches have partially turned into car dealerships in recent years.
In addition to Seres, Huawei has also partnered with Chinese manufacturers such as Changan, BAIC, and Chery. Similar to its partnership with Seres and Aito, Huawei will launch the S7 with Chery in November, the first vehicle from the new joint brand Zhijie. The S7 is expected to be a response to Tesla’s Model S.
The successful start of the Aito M7 is a bright spot for Huawei. The company’s venture into the automotive market hasn’t gone as smoothly so far, as reported by the Chinese business magazine Caxin in June. According to the report, Huawei faced challenges because the EV market in China is highly competitive.
Newer EV start-ups like Nio, Li Auto or Xpeng reportedly wanted nothing to do with Huawei and preferred to develop their own technology. Other potential partners held back because they didn’t want to be targeted by the US government, as Huawei has been.
The sudden popularity of the Aito M7 is likely due, at least in part, to the success of the Mate 60 Pro. Since the device was a massive hit in China and long lines formed outside Huawei stores, interest in the Aito models also surged.
In addition, Huawei is boosting demand with a special offer and clever marketing. Customers who ordered the M7 and made a down payment of 5,000 yuan were promised faster access to the next delivery of the Mate 60 Pro. The phone was sold out shortly after its introduction in early September.
Australian journalist Cheng Lei is once again a free woman. More than three years after her arrest in China, she landed in Melbourne on Wednesday, accompanied by her country’s ambassador. Cheng was arrested in the summer of 2020 and found guilty in a non-public court hearing last April. She was accused of leaking state secrets abroad during her time as an anchor at the Chinese international TV network CGTN.
Australian Prime Minister Anthony Albanese elevated the reunification of the 48-year-old journalist with her husband and children to the status of a joyful message for all Australians. Just a few months ago, Cheng had penned a “love letter to 25 million” of her fellow countrymen, as she called it, which she sent through her lawyer from her prison cell to her home country. In this letter, she praised the beauty of Australia and reminded people that she hadn’t seen a tree in three years.
The Chinese Foreign Ministry emphasized on Wednesday that the case had been handled in accordance with local laws and that the personal rights of the convicted had always been protected. However, until the last moment, it was unclear how long Cheng Lei would remain behind bars. It was only on Wednesday that Chinese authorities disclosed a prison term of two years and eleven months. This sentence had now been served, and Cheng was released in accordance with the law.
Albanese, who plans to visit China later this year, stressed that his government had worked for a long time on Cheng’s release. However, if she has indeed completed her sentence, as claimed by the Chinese, then these efforts appear to have been unsuccessful. Another interpretation is that diplomatic negotiations for her release took place behind the scenes. Nevertheless, China does not want to be seen using detained foreigners as political pawns, which is why the sentence was announced only after Cheng’s return.
The relationship between both nations had deteriorated over the years due to trade disputes and Australian allegations of espionage against China. Cheng’s arrest occurred during a time when Australia was vigorously demanding information from China about the origin of the coronavirus. However, possible links were never substantiated. Instead, Cheng was accused of leaking state secrets.
Cheng had lived in China for more than 20 years. After a brief period as an anchor on state television, she became a correspondent for the US channel CNBC. In 2012, she returned to CCTV and became an anchor on international news broadcasts. Throughout the years, she made no secret of her appreciation for the liberal values of democratic systems.
At one point, she praised Australia’s education system. “It doesn’t teach you to just follow instructions, but it allows you the freedom to think for yourself,” she said at the time. As an Australian citizen who emigrated from China to Australia with her parents at the age of nine, she did not hesitate to criticize the state president or the early COVID-19 policies of the Chinese government. Marcel Grzanna
US basketball star Shaquille O’Neal recently embarked on a small promotional tour in China, winning over the hearts of the Chinese people, as shown by numerous photos shared on social media. In the span of a week, “Shaq” visited the cities of Shanghai, Hangzhou and Macao, immersing himself in the local culture. Fans spotted him enjoying mooncakes, dancing with locals in a park and riding e-scooters in Hangzhou. He also made time for a meeting with his former NBA colleague Yao Ming, the Chinese basketball legend who towers over the 216 cm tall O’Neal by more than ten centimeters.
In today’s China.Table, the focus is on automotive suppliers. While the German supplier industry is grappling with technological changes, Chinese providers have established themselves as an alternative. An excellent example of this is the technology giant Huawei, which equips the Aito car model entirely with digital technology, making it one of the most connected vehicles in the world, as reported by Joern Petring.
The German supplier industry is still well-positioned and offers all conceivable parts for EVs. However, there is a risk of a two-tier society, as analyzed by Christian Domke Seidel. Those who bring a lot of capital to cope with these changes and are well integrated in China belong to the winners. But there are also strategies on the loser’s side to make the best out of the situation since the internal combustion engine will not completely disappear from the market anytime soon.
Automotive suppliers appear to be in good spirits, at least from a global perspective. According to the Berylls Group consultancy, the industry generated over a trillion euros in revenue last year. This marked a 16 percent increase compared to 2019, a pre-pandemic year.
Rising prices met with an expanding automobile production, primarily driven by China. “The strong connection to China can be viewed as an advantage. The automotive supplier industry from Baden-Wuerttemberg is integrated into Chinese networks and continues to play a leading role,” said Nicole Hoffmeister-Kraut, the Minister for Economic Affairs of Baden-Wuerttemberg, during an interview with Table.Media.
While this is true in essence, automotive suppliers cannot afford to relax. Analysts foresee market shifts in favor of Chinese suppliers due to the technological revolution in the automotive sector. This could potentially come at the expense of well-established suppliers from Germany and Japan.
The Chinese market is demanding EVs. In September, every third vehicle sold was an EV. The sales of New Energy Vehicles (NEVs), including electric cars and plug-in hybrids, surged by 22 percent, already accounting for 34 percent of total sales.
Their share is also rising massively globally. Manufacturers heavily reliant on combustion engines face challenges such as plummeting production numbers. According to Handelsblatt’s calculations, the production of combustion engines for major German automakers fell drastically between 2019 and 2023, while EVs and plug-in hybrids witnessed a dramatic increase:
This transformation also affects suppliers. “The area where German suppliers have patents and expertise is losing relevance. The question is whether suppliers can develop new products and patents. And it’s a race against time,” says Andreas Glunz in an interview with Table.Media. He is the head of international business at the consulting firm KPMG. Large corporations are more likely to succeed in this aspect since they can invest billions to adapt their products and production to new conditions.
Thus, manufacturers no longer source individual components from suppliers. “The suppliers of the future, who are viable, are those that can develop complete systems and integrate them into the production lines of original equipment manufacturers worldwide.” Nevertheless, it is highly debated whether the strong regional ties of these companies, which produce and offer their services in China, truly benefit or potentially harm the German economic landscape.
Suppliers are affected differently by these trends, given the diversity of the sector. According to the Regional Industrial Initiative Service, there are approximately 900 suppliers in Germany employing around 300,000 people.
However, Bosch, ZF, Schaeffler (who are in the process of acquiring Vitesco), and Continental dominate the reporting. These are the major players who can benefit from the rise of the automotive industry in China and the shift toward electromobility. ZF aims to increase the share of its revenue from China to 25-30 percent by 2030. Bosch already stands at 28 percent. Vitesco plans to expand its electromobility business to 30 percent of its revenue, with around 35-40 percent of that coming from China.
The debate regarding how Europe could become less dependent on the People’s Republic or how China could promote local manufacturers remains secondary in this business at the moment, says Glunz. “In principle, it is not a question of independence from each other but a question of technology. The manufacturers work with technology leaders,” says Glunz. They turn to suppliers who can be integrated locally and offer high-quality products at competitive prices. “That’s what the market regulates.”
Smaller suppliers struggle to keep up with these changes. Among the 900 suppliers in Germany, there are many hidden champions with expertise in combustion engines. They operate high-quality, profitable niches that are gradually shrinking. However, these niches are not disappearing anytime soon. In 2022, about 82 million motor vehicles were sold, of which roughly 11 million were pure EVs.
So, there’s still a substantial market for combustion engines. “The question is to what extent the combustion engine is genuinely obsolete and how long the transition to EVs will actually take,” Glunz says when looking to the future. There are too many unanswered questions in this context for this market to disappear quickly. These issues encompass the availability of EVs and necessary charging infrastructure in remote regions, the second-hand car market, battery recycling, and the production of green energy.
It’s the task of both manufacturers and suppliers to locate and serve these regions. However, the question remains whether smaller companies can meet these demands. “Suppliers and manufacturers must be locally present and regionalize their activities in all regions worldwide, including Indonesia or Africa, as these are the markets of the future,” says Glunz. However, this requires massive investments that only large providers can afford.
The Chinese tech conglomerate Huawei is on a roll. First, the company from Shenzhen surprised everyone at the beginning of September with its new smartphone, the Mate 60 Pro. Thanks to chips from the Chinese manufacturer SMIC, Huawei can bypass the existing US sanctions with this new device and is expected to regain market share. But Huawei has also made progress in its foray into the automotive industry.
The latest model from the EV brand Aito with Huawei technology is becoming a bestseller. According to Richard Yu, the head of Huawei’s Smart Car division, 50,000 orders for the new SUV M7 were received in the first 25 days after it went on sale. Yu even referred to this number as a “miracle”.
The Aito brand’s vehicles are manufactured by the relatively unknown Chinese automaker Seres, based in Chongqing. What sets Aito apart is Huawei’s close partnership, filling the M7 with cutting-edge Huawei technology, from the “Harmony” operating system to the highly praised ADS 2.0 driving assistant. The new edition of the M7, introduced on Sept. 12, is sold starting at a price of 249,800 yuan (approximately 30,000 euros), making it about 70,000 yuan cheaper than the previous model.
Aito cars are sold directly in Huawei stores. Huawei decided to seek partnerships in the automotive industry when it became clear that the company’s smartphone sales were plummeting due to strict US sanctions. As a result, Huawei’s branches have partially turned into car dealerships in recent years.
In addition to Seres, Huawei has also partnered with Chinese manufacturers such as Changan, BAIC, and Chery. Similar to its partnership with Seres and Aito, Huawei will launch the S7 with Chery in November, the first vehicle from the new joint brand Zhijie. The S7 is expected to be a response to Tesla’s Model S.
The successful start of the Aito M7 is a bright spot for Huawei. The company’s venture into the automotive market hasn’t gone as smoothly so far, as reported by the Chinese business magazine Caxin in June. According to the report, Huawei faced challenges because the EV market in China is highly competitive.
Newer EV start-ups like Nio, Li Auto or Xpeng reportedly wanted nothing to do with Huawei and preferred to develop their own technology. Other potential partners held back because they didn’t want to be targeted by the US government, as Huawei has been.
The sudden popularity of the Aito M7 is likely due, at least in part, to the success of the Mate 60 Pro. Since the device was a massive hit in China and long lines formed outside Huawei stores, interest in the Aito models also surged.
In addition, Huawei is boosting demand with a special offer and clever marketing. Customers who ordered the M7 and made a down payment of 5,000 yuan were promised faster access to the next delivery of the Mate 60 Pro. The phone was sold out shortly after its introduction in early September.
Australian journalist Cheng Lei is once again a free woman. More than three years after her arrest in China, she landed in Melbourne on Wednesday, accompanied by her country’s ambassador. Cheng was arrested in the summer of 2020 and found guilty in a non-public court hearing last April. She was accused of leaking state secrets abroad during her time as an anchor at the Chinese international TV network CGTN.
Australian Prime Minister Anthony Albanese elevated the reunification of the 48-year-old journalist with her husband and children to the status of a joyful message for all Australians. Just a few months ago, Cheng had penned a “love letter to 25 million” of her fellow countrymen, as she called it, which she sent through her lawyer from her prison cell to her home country. In this letter, she praised the beauty of Australia and reminded people that she hadn’t seen a tree in three years.
The Chinese Foreign Ministry emphasized on Wednesday that the case had been handled in accordance with local laws and that the personal rights of the convicted had always been protected. However, until the last moment, it was unclear how long Cheng Lei would remain behind bars. It was only on Wednesday that Chinese authorities disclosed a prison term of two years and eleven months. This sentence had now been served, and Cheng was released in accordance with the law.
Albanese, who plans to visit China later this year, stressed that his government had worked for a long time on Cheng’s release. However, if she has indeed completed her sentence, as claimed by the Chinese, then these efforts appear to have been unsuccessful. Another interpretation is that diplomatic negotiations for her release took place behind the scenes. Nevertheless, China does not want to be seen using detained foreigners as political pawns, which is why the sentence was announced only after Cheng’s return.
The relationship between both nations had deteriorated over the years due to trade disputes and Australian allegations of espionage against China. Cheng’s arrest occurred during a time when Australia was vigorously demanding information from China about the origin of the coronavirus. However, possible links were never substantiated. Instead, Cheng was accused of leaking state secrets.
Cheng had lived in China for more than 20 years. After a brief period as an anchor on state television, she became a correspondent for the US channel CNBC. In 2012, she returned to CCTV and became an anchor on international news broadcasts. Throughout the years, she made no secret of her appreciation for the liberal values of democratic systems.
At one point, she praised Australia’s education system. “It doesn’t teach you to just follow instructions, but it allows you the freedom to think for yourself,” she said at the time. As an Australian citizen who emigrated from China to Australia with her parents at the age of nine, she did not hesitate to criticize the state president or the early COVID-19 policies of the Chinese government. Marcel Grzanna
US basketball star Shaquille O’Neal recently embarked on a small promotional tour in China, winning over the hearts of the Chinese people, as shown by numerous photos shared on social media. In the span of a week, “Shaq” visited the cities of Shanghai, Hangzhou and Macao, immersing himself in the local culture. Fans spotted him enjoying mooncakes, dancing with locals in a park and riding e-scooters in Hangzhou. He also made time for a meeting with his former NBA colleague Yao Ming, the Chinese basketball legend who towers over the 216 cm tall O’Neal by more than ten centimeters.
