Are you just running away if you can’t win, or is there some foresight and planning behind it?
Text | Chinese Business Tao Lue Yuefeng
In the 2002 World Cup, the Korean football team shocked the football world by reaching the semi-finals.
In the same year, China’s first modern automobile factory was put into operation in Beijing, which shocked the automotive industry.
Chung Mong-koo, chairman of Hyundai Group who loves sports and personally promoted this project, said excitedly: “With the help of the Chinese market, Hyundai Motor will definitely be able to break into the global automobile industry.”Sales volumeThe top four! “
Twenty years later, Zheng Mengjiu’s dream of becoming one of the top four automobiles finally came true. In 2022, South Korea’s Hyundai Motor became the world’s third largest car company with a sales of 6.8482 million units. But this dream was not realized with the help of the Chinese market.
On the contrary, South Korea’s Hyundai, which has a higher position on the world stage, has been losing ground in the Chinese market. In recent years, it has even embarked on the embarrassing road of selling factories at a discount.
[If you can’t sell the car, sell the factory]
On the afternoon of October 11, the Chongqing factory of Beijing Hyundai Motor Co., Ltd. was listed for the third time on the Beijing Equity Exchange, including vehicle equipment with an annual production capacity of 300,000 vehicles and 200,000 engines, five major process workshops, and the land use rights of the factory. and many real estate properties,Sold in packages for 2.25 billion.
Judging from the entire transaction situation, this can be said to be a meat sale.
The first time it was listed, on August 11, the bid was 3.68 billion, but no one paid any attention;
The second time it was listed, on September 27, the price dropped by 1.1 billion and was sold for 2.58 billion. There was still no buyer;
The third time, it was reduced by another 330 million, to the current 2.25 billion, and there has been no rumor of a taker.
Think about it, when Hyundai invested in the Chongqing factory, it spent a huge sum of 7.75 billion. Now it is selling at a 30% discount. It can only be said that things are unpredictable.
However, modern people have become quite proficient in selling factories. Ever since they unlocked the skill of “fire sale”, it has been out of control.
Beijing Hyundai has a total of five factories in China, including Beijing Hyundai Shunyi Factory 1, 2 and 3, as well as Cangzhou Factory 4 and Chongqing Factory 5, with a total planned production capacity of 1.65 million vehicles.
In 2021, Hyundai’s sales in China dropped to 384,000 vehicles, and more than 70% of the factory’s production capacity was idle. The first factory in Shunyi has been shut down for two years. After learning from the painful experience, Beijing Hyundai sold the Shunyi First Factory to Li Auto for a price of 6 billion yuan.
However, just selling a factory is not enough.
Hyundai Motor’s life in China has been like Wang Xiaoer’s Chinese New Year, and every year is getting worse.Sales plummeted from 1.14 million vehicles at the peak in 2016 to 250,000 vehicles in 2022, achieving a gorgeous six consecutive declines, and then halved again.
So Hyundai continues to work hard. In June this year, group CEO Zhang Zaixun publicly stated that two of the remaining four factories will be sold, and the last two remaining factories will be reorganized and used for export business in the future.
Then there is the story of the three fire sales of Chongqing factories.
Although in the first half of this year, Beijing Hyundai announced that its cumulative sales exceeded 123,000 vehicles, a year-on-year increase of 13%, but if this trend continues, the full-year sales will only be tied with last year and will hardly return to the peak.
The former members of the “Million Club” seemed to have drawn a clear line from their glorious past overnight.
[Glory and loneliness, between the thin line]
Those born in the 1980s should have some vague memories of 1990: the whole country was working hard for the Beijing Asian Games.
For the first time the Chinese hosted an international event, they encountered the U.S. economic blockade. Many foreign-funded projects were unfinished, and the Asian Games also had many financial gaps.
For a time, Chinese people at home and abroad donated generously to support the Beijing Asian Games. Hong Kong’s Henry Fok donated 100 million, and Zhang Mingmin, who sang “My Chinese Heart” at the Spring Festival Gala, donated 600,000…
International friends did not sit idly by. For example, South Korea, under the warning eyes of the United States, donated 400 Sonata and 150 Daewoo buses to Beijing, with a total value of over 100 million.
At that time, South Korea’s Hyundai, which was focusing on the Sonata, also knocked on the door of China.
After the Asian Games, some of the 400 Sonatas were used as official cars and some as taxis.
Although official cars were later replaced by Audi next door, modern taxis have continued to dominate the Beijing taxi market to this day.
Experienced drivers in Beijing have repeatedly praised it as “sturdy, fuel-efficient and easy to serve”.
In 2002, the second year after China joined the WTO and the 10th year after the establishment of diplomatic relations between China and South Korea, South Korea’s Hyundai began to be deeply tied to the Chinese market: BAIC, which was in poor business, regarded Hyundai as a life-saving straw, and Hyundai head Zheng Mengjiu, who was eager to open the Chinese market, I also want to use BAIC as a springboard. The two hit it off and quickly established Beijing Hyundai Motor Co., Ltd.
As soon as Zheng Mengjiu made his move, he made the right bet.
From negotiation to signing, it only took 6 months; from project establishment to the first car rolling off the assembly line, it only took 8 months. This “modern speed” of “signing the contract in the same year, building the factory in the same year, putting into production in the same year, and rolling out the car in the same year” has made the world Shock.
After that, Beijing Hyundai was like a high-spirited god of war, conquering cities and territories and advancing triumphantly.
In 2003, the locally produced Sonata firmly occupied 10% of the B-class car market with its high cost performance and good service. Beijing Hyundai’s contribution to Beijing’s GDP once reached 8%.
Another once popular Elantra, by May 2007, its cumulative sales exceeded 500,000 units.
In February 2013, the cumulative sales of Beijing Hyundai’s Yuedong exceeded 1 million units, and it took 4 years and 10 months; while the Focus, the flagship product of a friend, which is also a hot seller, took 7 years to hand over 1 million units.
same year,Hyundai Motor’s annual sales reached 1.03 million, joining the “Million Club”. At that time, only Honda, Nissan and Ford had this status. In 2016, Beijing Hyundai’s sales reached 1.14 million, exceeding one million for four consecutive years.
However, the good luck came to an abrupt end in 2017.
This year, Beijing Hyundai’s sales plummeted by 31.3%, with annual sales falling to 785,000 vehicles. Moreover, since that year, Beijing Hyundai has almost plummeted without looking back.
By 2022, its annual sales dropped to 250,000 vehicles, and there are no signs of recovery so far.
【pride and Prejudice”】
On the surface, the modern debacle has three causes:The first is the obsession with cost-effectiveness, the second is the inability to keep up with market changes, and the third is arrogance towards the Chinese market.
When Hyundai Motor first entered the Chinese market, mid-to-high-end sedans priced above RMB 250,000 were dominated by German, Japanese, and American cars, such as Accord, Regal, and Passat; domestically produced cars priced under RMB 100,000, such as Jetta and Fukang, dominated the market. , Xiali, etc., except for Santana 2000, the middle segment of the entire market is almost blank.
In this huge “crack” between foreign brands and domestically produced cars, Beijing Hyundai has found its own position with its “cost-effectiveness” that it is good at, and has quickly established its own niche: using relatively unbeatable quality with mediocre… The price very accurately captured the mentality of Chinese people at that time who wanted foreign brands but did not want to spend too much money. It was a smooth journey.
Moreover, Beijing Hyundai also engages in price wars and improves KPIs from time to time. Yuedong offers discounts of RMB 20,000 at every turn, and the price of the Sonata dropped by more than RMB 30,000 within a few months of its launch.
but“Value for money” is a double-edged sword.While winning sales, Beijing Hyundai also left the impression of a low-end joint venture brand.
At that time, there was such a “chain of contempt” in the hearts of Chinese people, which was German > Japanese > American & asymp; French > Korean > independent brands. There were often car owners hurting each other: “There are three treasures for losers, just ask for a K5 Malibu.” .
So although Hyundai’s sales are good, its brand value continues to be overdrawn. As soon as domestic independent brands emerged, their fragile price defense line collapsed unstoppably.
First, “big guys” such as FAW Pentium, Changan Automobile, SAIC Roewe, and Dongfeng Fengshen entered the market.Passenger carfield, and then with the strong support of national policies,New energy vehiclesIt has also emerged suddenly, and the production and sales of independent brands have grown rapidly.
From 2012 to 2017, the market share of China’s own-brand passenger cars increased from 30.6% to 43.9%.
Afterwards, the domestic auto market entered a downward cycle. First-tier joint venture automakers such as German and Japanese automakers began cutting prices, while Chinese independent brands continued to increase their prices. Naturally, the gap left for Beijing Hyundai became smaller and smaller.
Unfortunately, the car market has undergone tremendous changes.Beijing Hyundai is still resting on its laurels in its comfort zone.Not to mention outdated design and old-fashioned marketing, mainstream electrification and intelligent transformation have not kept pace with the times.
Of course, it’s not that Beijing Hyundai didn’t work hard.
At the 2017 Guangzhou Auto Show, it proposed a “three vertical and three horizontal” matrix product layout, vertically building “basic car series, performance car series, new energy car series” and horizontally developing “electric technology, intelligent technology, Internet technology”.
To put it bluntly, we just want to go high-end and intelligent.
However, the thunder was loud and the raindrops were light.
The ix35 launched by Beijing Hyundai in 2017 focused on intelligence, but the old model made consumers instantly lose interest. It was even ridiculed by the crowd for “putting outdated overseas models to sell in China.”
It was also that year that Weilai’s first car, the ES8, was launched, and Tesla’s Shanghai factory was also speeding up preparations. However, Beijing Hyundai was delayed until 2021 before it started testing new energy sources and launched the Tucson L hybrid and Mingtu pure electric versions. , priced in the waist range of around 170,000 to 200,000 yuan.
However, this range has long been “rolled” into flowers in China. Consumers can choose Tesla,BYDHan or China’s new car-making forces, there are BYD Qin, Song, Yuan and other models to choose from. Compared with them,Hyundai’s product power and price have no advantages at all, and the situation is even more embarrassing. It can’t go up or down.
But if you say that modern South Korea has no technology, that is really unfair.
As early as 2016, its new energy model IONIQ series has been launched overseas. It supports 800V fast charging and can accelerate from 100 kilometers to 3.5 seconds. It was not lagging behind at the time and was very popular in the United States. Unfortunately, IONIQ 5 and IONIQ 6 are not. It has not been introduced into the Chinese market for a long time.
So in the final analysis, it has arrogance towards the Chinese market.
Back then, when Chinese students visited local factories in South Korea, they were shocked by the degree of automation there: in a workshop of several thousand square meters, almost all processes were completed by robots, and only a dozen workers were needed to perform auxiliary operations.
The students sincerely asked: Why don’t the Beijing factories have these advanced robots?
The person in charge of the Korean factory answered seriously:Labor in China is very cheap, and the cost of building a car with humans is lower than that of robots. Koreans are much more “expensive” than Chinese, so they need to be replaced by robots.
To be honest, there is nothing wrong with it, but it always seems to be a bit of a show of superiority.
Even Hyundai is blatantly using double standards. In the same standard crash test, the Elantra received an excellent rating from the North American IIHS, but a poor rating from the domestic C-IASI.
In terms of product strategy, most foreign car companies will adapt to local conditions, such as building special long-wheelbase models in China. However, Hyundai basically imports global models simply and crudely, and rarely does localized R&D actions for the Chinese market.
In 2014, the 80-year-old Zheng Mengjiu came to China to celebrate the completion of the new factory. He said that he would listen to the needs of Chinese consumers and build new cars that are 100% customized for Chinese consumers. Now that I think about it, he was somewhat polite.
In addition to not working hard enough, the historical process also does not pay enough attention to modern times.
In 2017, South Korea supported the deployment of the THAAD anti-missile system by the United States, which brought China-South Korea relations to a freezing point. At this time, domestically produced automobiles have emerged strongly, and the national self-confidence and self-esteem of the Chinese people are unprecedentedly high.
With the general trend of “de-Korean Wave”, coupled with the fact that Korean cars are old and not smart enough, Chinese people no longer have any attachment to modern cars.
It was also from that year that South Korea’s Hyundai began to take off in the Chinese market, and it went downhill without looking back.
【Have no choice but to give up or think long-term? 】
In stark contrast to its steady losses in the Chinese market, South Korea’s Hyundai is still quite “crazy” in the global automotive industry.
There is no way, who let someone accidentally take the third place in the world.
In 2022, South Korea’s Hyundai Group became the third largest car company in the world with a sales of 6.8482 million units. Its operating profit surged 47%, ranking only behind Toyota and Volkswagen.
Today, Hyundai has quite good market recognition in the North American, European and African markets. In 2022, its U.S. market share has reached 10.6%, which is the first time it has exceeded 10% in the 36 years since it entered the U.S. market.
What is the concept?
Historically, apart from the Big Three (GM, Ford and Stellantis), only Toyota and Honda have exceeded this figure.that’s almost allCar manufacturerbusinessman’s dream,Modern times have been achieved in this way, and it is definitely worth writing about.
It is getting stronger overseas. This may be the reason why Hyundai doesn’t care much about the Chinese market, and then fights if it can win, and runs away if it cannot win.Moreover, they do not hide this gesture.
According to a public speech by Hyundai Motor Group CEO Zhang Jae-hoon at an investor relations event on June 20, Hyundai’s product models in the Chinese market will be reduced from 13 to 8 models. In the future, it will focus on high-end and SUV models and put more energy into it. Put it overseas.
A series of overseas investment plans also confirm this.
In April this year, Hyundai announced its latest plan: by 2030, a total of approximately 24 trillion won (approximately US$18.2 billion) will be invested to expandelectric carProduction.
When the United States visited South Korea in May last year, Hyundai emphasized that it would invest at least US$10 billion in the United States in the fields of electric vehicles and driverless driving.
In addition, Hyundai previously said it would invest 7.6 trillion won (approximately US$5.8 billion) in Europe.Hydrogen energyfield, 500,000 hydrogen-powered vehicles will be produced by 2030.
This means that South Korea’s Hyundai will invest more than 15 billion US dollars in Europe and the United States in the next few years.
In contrast, in the first half of last year, Hyundai Group and BAIC increased their investment in Beijing Hyundai United by US$942 million (approximately 6 billion yuan at the time). On the surface, it was a subsidy to the Chinese market, but the link was that “the remaining two factories must be exported.” “Business”, if you carefully appreciate the mystery, the drunkard’s intention is not in the wine.
Interestingly, when looking at the world, South Korea’s Hyundai instantly formed a pattern in the layout of new energy vehicles: “In 2023, we will strive to become one of the world’s three largest electric vehicle manufacturers.”
Well-known automobile analyst Zhong Shi believes that “Korean car companies are currently more suitable for the layout of the electric vehicle industry in the United States. First, the U.S. electric vehicle market is still in its infancy and competition is not fierce. Second, various regionsChargeThe infrastructure is gradually expanding and the supporting system is gradually taking shape. When completed in two years, Korean car companies will usher in a suitable market warm-up period. “
But when it comes to the head-on confrontation with new energy vehicles in the Chinese market, even Hyundai CEO Zhang Jae-hoon has no confidence. He once said: Hyundai and Kia have lost their competitiveness in the face of new car-making forces with stronger execution and innovation capabilities.
Basically it can be understood as,Hyundai’s retreat in the Chinese market was due to both forced helplessness and proactive strategic avoidance.
A speech by Yang Honghai, COO of Kia China, revealed a sense of retreat in order to advance, and even foresight and forethought:
“I made 2.1 billion US dollars globally in the first quarter of this year, which is affordable for the Chinese market. Do your local companies have the financial strength to compete? You burn it to death first, and I can wait to come in and seize the market later… Let It’s better for the enemy to test the wounds first. I have money and technology in my pocket, and I haven’t given up on this market. It’s also a strategy to come in at the right time and deal with you.”
Avoid its sharpness and attack its laziness.
This makes the Korean people’s calculation seem to be: to be aware of current affairs and set a small annual sales target of 300,000 yuan for the Chinese market to keep this small spark of “revolution”.Wait for the Chinese market to finish the knockout round, and then come back at the right time.
But having said that, when Chinese car companies decide the winner, they will definitely rush abroad.
By then, Chinese car companies will surely start a new round of car wars abroad. South Korea’s Hyundai does not know whether it has to fight head-on in the United States or return to China to make a comeback in order to maintain its top three position in the world.
”What happened to the Korean cars that were once a smash hit now?” 》Shuaizhen Finance
”20 years of joint venture, the ups and downs of Beijing Hyundai Motor” car totem
”South Korean car companies’ breakthrough is effective: Exports surged nearly 50% in the first half of the year, and Kia and Hyundai’s performance hit new highs” Times Weekly
 Data sources: China Association of Automobile Manufacturers, Passenger Car Association, corporate public data, Beijing Equity Exchange
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Original title: Modern Korea, defeated China