Hawtai drives into overseas markets for sales growth

Hawtai's vehicles boast a number of self-developed technologies like the automatic gearbox and powertrain, which makes it different from other domestic brands. XIAO HUAIYUAN/CHINA DAILY

Domestic competition prompts companies to chart new plans

Facing increasingly fierce competition at home, Hawtai Motor, like many other domestic automakers, is pinning its hopes for growth on overseas markets.

The Chinese automaker signed a $1.1-billion agreement with Russia-based Derways in May in Shanghai.

According to the agreement, the Russian company will assemble vehicles for Hawtai's sales branches in Russia, and both sides will jointly build a production facility there.

In August, Hawtai showcased its high-end SUVs and compact cars during the Automechanika show - an international trade fair for the automotive and auto parts industry - in Moscow, and officially started its sales operations in Russia.

"Since its inception, Hawtai has set its sights on foreign markets, especially those in developing countries," said an official in charge of Hawtai's overseas business.

Three years of work since 2011 have helped the company make inroads into markets in the Middle East, South America, Africa and Europe and Asia, according to the official.

In addition to exports of complete vehicles, Hawtai's overseas strategy covers brand building, technology exports and facility construction.

"We have different business forms in different markets, and at the same time, Hawtai has built facilities abroad through direct investment or technology transfer," said the official.

"Hawtai can bring advanced powertrain technology and vehicle assembly techniques to countries with weak auto infrastructure, help upgrade local auto industries and build our own brand," the official added.

The company plans to sell 50,000 vehicles abroad this year and hopes to export 500,000 vehicles by 2020, according to the official.

If Hawtai can achieve this, the company can raise the utilization rate of its production capacity, which will translate into greater profitability, according to the official.

Adding to the existing annual capacity of about 500,000 vehicles at facilities in Shandong's Rongcheng and Inner Mongolia's Erdos, a new facility in Tianjin became operational on May 28. The Tianjin plant has a designed capacity of 450,000 vehicles per year.

"The launch of the Tianjin facility is aimed to satisfy the growing demand of Hawtai's overseas markets," said the official in charge of Hawtai's overseas business.

Although there are many opportunities in developing countries, analysts said trade protectionism, political fluctuation and immature market conditions would hinder the expansion of Chinese manufacturers like Hawtai.

Analysts also noted that the continuous appreciation of the renminbi has increased export costs, bringing down competitiveness in complete vehicle and auto parts exports.

"The Chinese automakers should work to upgrade quality. While keeping a foothold in the domestic market, they should build strong brands overseas," said Zhang Zhiyong, an auto industry analyst.

Hawtai's Boliger SUVs and B21 sedans have made great strides in terms of product quality and performance, thanks to heavy investments in R&D, but the company still has to find ways to survive the fierce competition in the domestic market, said Zhang.

"The biggest bottleneck for the growth of China's indigenous brands is the lack of core technology, which puts them at the mercy of foreign brands," said Zhang Hongliang, board director of Hawtai.

"Now, we can control the key links in the industrial chain, because we have mastered technologies in clean diesel engine, automatic gearbox and powertrain," said Zhang.

Zhang said he believed that Hawtai should insist on technological development and grasp current market opportunities.