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Chinese a long way behind: Conomos
Slow progress: Australia's automotive envoy John Conomos says that indigenous Chinese car-makers are well off the pace compared with international rivals.
Former Toyota boss says Chinese car-makers are not ready to go global, yet
21 July 2015
FORMER Toyota Australia executive chairman John Conomos believes Chinese-made
cars will not have a significant impact on the Australian market for some time,
but this could change down the track under joint-venture agreements with large
Addressing a meeting of dealers at the Victorian Automobile Chamber of Commerce
(VACC) in his role as an Australian automotive industry envoy last week, Mr
Conomos was examining the forces that would have an impact on dealerships over
the next few years.
The majority of Chinese manufacturers did not fit into that timetable, he said.
“They are thirsty, they are hungry and they have huge money to spend on
research and development but, frankly, they don’t know how to do it in the
world of car manufacturing,” Mr Conomos said.
In his role as Australia’s automotive envoy, Mr Conomos said he had travelled
to a number of emerging markets in Asia, including China, India, Indonesia and
He said that with the rapidly developing Chinese domestic market, sales growth
in that country had been exponential for some years.
“But when you go and visit any of the 110 or so local indigenous auto
manufacturers you see one thing: they have no technology.”
Left: Australia's automotive envoy John Conomos.
This is starting to change, however, with companies such as Great Wall-owned
SUV-maker Haval signing up European design talent in a similar manner to the
South Korean manufacturers in years past.
While some Chinese manufacturers are importing Western talent, others have
bought struggling European brands, as is the case with Geely and Volvo, which
will share platforms for future models.
Mr Conomos said it is the long-established joint ventures between Chinese
manufacturers and Western companies that are doing much better than the
indigenous Chinese manufacturers because they have access to technology,
although he added that the Western companies were still keen to protect their
“The car companies that have gone into JVs are succeeding because they take
with them the black box. They don’t transfer the knowledge to the Chinese
Mr Conomos said this helped him in his quest to “sell” Australian know-how from
the CSIRO and Australian universities.
The Australian delegations are considered neutral, according to Mr Conomos, and
the Australian industry is in decline ahead of the three remaining vehicle
manufacturers closing their operations by late 2017.
“They do not have know-how. They want it,” he said of the indigenous Chinese
manufacturers. “They are sick of being given a drawing and asked please make
this item for $10 cheaper. They want the Western companies to teach them how to
Mr Conomos was appointed envoy in 2009, shortly after the federal Labor
government appointed former Victorian premier Steve Bracks to head an inquiry
into the ongoing viability of the local car industry in 2008, which was when
China’s industry was just starting to accelerate.
Mr Conomos said he visited many manufacturers in China at the time, including
Geely, Great Wall and BYD when they were setting up greenfield sites.
“Two years later and there were high-rise buildings with 6000 engineers in each
of those car companies. In BYD’s case, there were 13,000 engineers trying to
build a car,” he said. “(Yet) they cannot do it.”
He said the Chinese automotive industry was doing a better job of producing
light-commercial vehicles as they do not need the same degree of technology,
and production volumes were generally lower.
“Chinese products are failing as indigenous products, worldwide,” he said.
“The only ones that will succeed are the BMWs or Hondas or Suzukis that have
got into that market and produced cars under their structures and which satisfy
their domestic Chinese needs.
“Five or six years on, after proving the technology is okay, will they begin to
export. Hence there is a long way to go because the Chinese are really not
Mr Conomos compared the industry policies across other Asian countries, noting
that in India the emphasis was on joint ventures, with Indian companies looking
for partners that could offer a unique “widget” that would give an advantage
over the competition.
In Thailand, he said the emphasis is on foreign-owned operations satisfying the
developing domestic market and building exports into ASEAN, in particular, at
the same time.
As part of its automotive and climate change policies, the central government
in China dictated that the indigenous manufacturers would build 500,000
pure-electric vehicles. It even fitted public recharging infrastructure in 21
‘megacities’ with a population of more than three million.
“The encouragement was quite interesting. In order to drive the consumer demand
– Chinese buyers like many others were wary of battery cars – the government
offered incentives,” Mr Conomos said.
“The central government will give you €4000 ($A5876) and the provincial
government will match it.
“So the buyer would receive €8000 ($A11,750) offset to buy a battery car
because they are so intent on trying to change the market dynamic around
“But it’s not working. No-one is buying battery production cars. In droves.
“In fact, I think EVs are still less than one per cent of world production.”
Mr Conomos’ conclusion was that any new influence or impact on Australian
dealers from the emerging automotive industries in Asia was still “a little way
“You’ll buy Chinese cars, I do believe, or hire cars, based on big brands,” he
“They will produce them more cheaply in Asia, economically, and send them to
countries like Australia, which has a great appetite for higher-tech cars at