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China’s industry is evolving – Evidence in Xi Jinping’s visit to Europe

China industrial evolution toward more advanced manufacturing and more internationalized players is visible for some years already. Nowadays, many clear evidences are reported in the news on regular basis.

I found some good examples during the visit to Europe by President Xi Jinping, from March 22 to April 1. They both relate to the automotive industry and both show how China has changed since 20 years ago. 

China: 20 years ago and now

When I arrived to China 20 years ago, very few people were interested in the country. And those would cared were focusing on what the West could bring to China: technologies, management practices, investments or government loans. My first mission in China was to transfer a specific telecom equipment technology from Europe to China.

Shanghai Mid 1990: China industrial evolution

Shanghai Pudong in the mid ’90s

Now, 20 years later, things have changed a lot. China is one of the key news topics across the world. The country has now reached a level where what it does has worldwide impact. And it is also worth noting that the flow of investment and technology transfer is no longer exclusively inbound.

Shanghai in 2012: China industrial evolution

Shanghai Pudong in 2012

President Xi Jinping Europe Visit

Xi Jinping Visit Europe

Arrival of Xi Jinping in Europe

In this context, it was interesting to follow the ample media coverage for President Xi Jinping visits in Europe over the last weeks.

Among all the news and activities in the Benelux, France and Germany, I picked two:

  • The signature of the PSA-Dongfeng agreement in France
  • The visit of President Xi Jinping at the Volvo factory in Belgium

I though that these two activities were good illustration of the China industry evolution.

Both happen to be related to the automotive industry, but it would be easy to find similar illustration in many other sectors.

 

Signature of PSA – Dongfeng agreement in France

PSA Donfeng Agreement

Signature PSA Donfeng

PSA and Dongfeng logosOn March 26, an agreement was signed by the French Automobile manufacturer PSA and the Chinese manufacturer Dongfeng in the presence of Presidents Xi Jingping and Hollande.

PSA and Dongfeng are long time partners in China and have joint ventures for the domestic market. But what is significant in this agreement is that Dongfeng takes up a 14% participation in the capital of PSA mother company.

Dongfeng now becomes a worldwide partner for PSA. It is also interesting to note that this happens shortly after General Motors stepped out of its previous partnership with PSA.

Visit of Volvo factory in Belgium

On April 1st (no april’s fool), President Xi Jinping and King Philippe visited the Volvo car factory in Ghent, Belgium.  

Visit Volvo Ghent

Xi Jinping and King Philippe visit Volvo Ghent

What is interesting in this story is that several years ago, that factory was rumored to be listed for closure by Volvo (then owned by Ford).

But in 2010, Geely, another Chinese car manufacturer, acquired Volvo from Ford. After a difficult start, it seems that Geely is now better understand how to manage a European company. What is clear for the workers in Ghent is that they still have a job. 

Geely Volvo logo

China industrial evolution, still a long path, but . . .

These two examples and many others are illustrations of the evolution China as made. Obviously, many of these large scale ventures will fail or will face major challenges.

But the point I want to make here is that no one can just look at the Chinese industry and all the manufacturers it counts like we used to do 10 or 20 years ago. And those who can pick the right partners or suppliers among these who fully embraced China industrial evolution will get a strong competitive advantage against those who do not.