The Leap from Going Overseas to Globalization

The 2nd Growth Curve for Chinese OEMs

Published: 25 October 2022

Chinese OEMs have made breakthrough achievements in global markets over recent years, expanding their geographic footprint, enriching their product mix, and gradually developing global value chains. In 2021, China exported 2.015 million vehicles1. The giant leap from “product export” to “value chain globalization” in the past 10 years has been driven by the three key factors of policy, market, and capability.

Deloitte recently released The Leap from Going Overseas to Globalization - The 2nd Growth Curve for Chinese OEMs, featuring the globalization direction of Chinese OEMs from three aspects: target markets selection, positioning strategy design, and operating model innovation. Based on previous experience and insights, Deloitte set out the key success factors for OEMs to define their globalization goals and objectives, develop strategies and roadmaps, and achieve sustainable overseas growth.

Figure: Key Drivers of Chinese OEM Globalization


Features and trends in Chinese OEM globalization

Standing on the cusp of a new era, Chinese OEMs have become more ambitious and determined to globalize. To seize new growth opportunities, upgrade their brand image, and continuously enhance advantages through global competition, these OEMs have aggressive target markets selection, positioning strategy design, and operating model innovation.


Target markets

Enter the most valuable global markets, with Europe and North America the “must-wins”

When choosing strategic markets overseas, trade policies and local regulations, which can make or break a market entry, are the top considerations for 75% of OEMs. Furthermore, more than half of Chinese OEMs give more weight to market attractiveness factors including market size, maturity, and growth potential, but are less concerned about investment budget, brand awareness, and other entry barriers. This is driven by their confidence in technology, products, and branding, and their ambitious vision to be global companies in the new era.

With the above considerations, many OEMs have risen to the occasion and targeted global core markets including North America and Europe, which have huge demand and high maturity, rather than focus only on less developed markets as they used to. In 2021, Chinese OEMs doubled their sales in many developed European countries, especially in Belgium, where people bought around 110,000 Chinese cars, representing a more than 400% yearly increase.2 Our survey found that 100% of OEMs plan to enter Germany, France, or another major European market in the coming 3-5 years, and 75% of OEMs are determined to export to North America. By entering the most competitive markets, OEMs are seeking endorsement of their brands and to enhance their capabilities in products, services, and technology.


Positioning strategy

Build highly-recognized high-end brands and concentrate on specific segments including NEVs in competition

“Premiumization” has become an important trend for Chinese automotive brands over recent years. With strong local rivals overseas and increasingly fierce competition, even in the NEV market, more OEMs have chosen to focus on specific segments, create several hot-selling products, and position themselves uniquely. According to the survey, 50% of OEMs plan to concentrate on specific car models or customer segments in overseas market over the next 3-5 years.

Given Chinese OEMs fast-mover advantage, competing in the NEV market is clearly a top priority. With favorable policies encouraging NEV adoption in many countries, Chinese OEMs have accelerated model introductions and launched several competitive NEV products with intelligent functions. In the survey, 87.5% of OEMs said they will focus mainly on NEVs in overseas markets in the next 3-5 years.


Operating model

Flexibly choose sales and service model and create value through localized innovation

Rather than racing to transform to a direct sales or agency sales model in China, OEMs mainly adopt general agency and dealership models overseas to open up the market in a quicker, asset-light way, although they are also exploring a more flexible combination of retail models in different regions. Most OEMs will continue to rely on dealers to varying degrees in the next 3-5 years, given the tight schedule for entering new markets, difficulties in building channels, and the return on investment. Some startups that are more flexible, have already adopted a direct sales model in Europe for long-term experience and branding considerations.

Alongside sales, Chinese OEMs also use innovative customer services as an important differentiator to thrive in new markets. Based on domestic experience, OEMs seek to provide high-quality, end-to-end services throughout the user life cycle to improve customer experience. More than 60% of surveyed OEMs will launch subscription services and financial leasing services abroad to lower the bar for customer purchases and increase market exposure. Some NEV OEMs focus on charging and aftersales services.

For sales and aftersales services, close collaboration with the local industry ecosystem is important to build up capabilities overseas. The survey found 87% of Chinese OEMs will cooperate with local partners, including dealers, agents, and service providers, in sales, and 75% will do so in aftersales services. Overseas OEMs can fully leverage the consumer insights, local resources, and market power of their local partners during cooperation.

Figure: Preferred sales and aftersales business model of Chinese OEMs in overseas market in the next 3-5 years

Despite promising prospects and ambitious goals, Chinese OEMs still face challenges in globalization. Inadequate supply systems, lack of fundamental capabilities, insufficient local market resources, limited brand advantages, and product and technology drawbacks are common pain points for Chinese OEMs, hindering their globalization. To win in global competition, OEMs need to clarify their goals, adopt the right market strategy, give full play to their strengths, and make an effort to fill capability gaps quickly.

Figure: Globalization challenges for Chinese OEMs


Key success factors for Chinese OEM globalization

Based on past project experience and industry insights, Deloitte has summarized four Key Success Factors (KSFs) for OEMs to define their globalization goals and objectives, develop strategies and roadmaps, and achieve sustainable overseas growth.



Customize expansion path based on globalization goal and positioning

Due to differences in market demand and limits to companies’ capacity, it is hard for Chinese OEMs to enter European and North American markets overnight. Other than expanding blindly, OEMs need to customize their own pathways. Guided by long-term goals and brand positioning, OEMs should comprehensively assess each market’s characteristics and their company resources, design an overall market expansion strategy, path, and rhythm, clarify key markets at each stage, and gradually expand their global footprints.

Figure: Suggested criteria for overseas market evaluation




Enhance brand awareness with localized operation and service innovation

Having established clear positioning and their regional market focus, OEMs need then to build up consumer awareness and brand image through localized marketing. Furthermore, they need to adjust sales model and service innovation, making these more suitable and value-oriented to build an established brand reputation in overseas markets.



Accelerate expansion with cooperative ecosystem and global supply chain

To achieve their grand blueprint of "becoming a global enterprise", exporting products and establishing a brand are just the first steps. Chinese OEMs need to build overseas capability throughout the value chain through internal mechanisms and external cooperation. In the short term, OEMs can focus on building and strengthening their local cooperative ecosystems, while in the long run they must build an overseas value chain of their own.



Empower global business with organization and digital capabilities

Along with global expansion, business and management is becoming more complex, with data volume and system requirements growing exponentially. To enhance competitiveness, OEMs need to build new organizational structures, mechanisms, and digital capabilities that are in line with their global business goals.

Deloitte Suggestions

Enterprises should choose an appropriate globalization path and rhythm based on their unique situation, explore localized operation model and services, build a local cooperative ecosystem and value chain, and upgrade their organization and digital abilities. Driven by these efforts, we look forward to seeing Chinese players realize their grand blueprint of covering the most valuable global markets, building recognized high-end brands, leading the world in industry development, and creating value from innovation.


1 Data Source: Ministry of Commerce of the People’s Republic of China, with export volume of around 163,000 units from Tesla included

2 Data Source: China Automobile Dealers Association


Note: all examples of OEMs in this article are from companies’ public information or interviews with industry experts, collected, and analyzed by Deloitte.

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