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Electric Vehicles Research
Posted on September 3, 2010 by  &  with 1 Comment

The exit from China

Chinese sovereign funds and companies are acquiring foreign companies very rapidly, Volvo being a recent example. In some contrast to this, foreign companies wishing to invest in China have usually been constrained to minority shareholdings and what they see as little or no influence on the running of these Chinese companies. Some foreigners setting up from scratch have felt that they have been given inadequate freedom to operate.
2010 is turning out to be the year of the great exodus from China. Steve Balmer, CEO of Microsoft, said early this year, "China is a less interesting market for us than India or Indonesia." He complained about the rampant software piracy in China. Jeff Immelt, CEO of General Electric, the largest manufacturing company in the USA, said that, although China is still important for GE, he was already thinking about what to do next. He added, "It is getting harder for foreign companies to do business there. I am not sure they want any of us to win or be successful."
Ian Bremmer, President of Eurasia Group, one of the world's leading political risk consultancies, reports that growing corporate bitterness towards China reflects the realisation that China's brand of state capitalism might never deliver the long term profits that big foreign operations once dreamed it might.
He estimates that about half of his corporate clients are rethinking their strategies in China. Google's dramatic pullout from China this year is just the tip of the iceberg, he argues. Indeed, his statement was followed by Vodafone, one of the world's biggest mobile phone operators, putting its massive shareholding in China Mobile up for sale, despite the fact that the Chinese phone operator now has hundreds of millions of customers.
Bremmer says, "China no longer needs the West's money, which is why they have gone after Goldman Sachs as they have - and increasingly they don't need our know-how, thanks to the development of solid local firms in key industries such as autos and technology." He sees companies already downsizing or exiting in China and moving to India and Brazil, for example.
All this raises big issues for those in the electric vehicle value chain. Certainly, India has a very different tradition from China, encouraging mutuality of benefit and long term relationships. KPIT Cummins, headquartered in India, has an innovative hybrid conversion, for example, and Electric Vehicles Research has recently run a series of articles on electric vehicles in India, describing many happy partnerships with Western and East Asian organisations. No one talks of moving out of India.
IDTechEx will give forecasts for the next decade of the booming Indian electric vehicle business at the forthcoming Future of Electric Vehicles event in San Jose.
Electric Vehicles Research does not know any large foreign company involved in electric vehicles or their components that sees a long term future in China.
Please get in touch if you have such a story to tell. If the country is indeed making it increasingly unattractive for the foreign electric vehicle industry to participate in the Chinese market in any major way, it may suffer.
China is not exactly in the lead in what will be used in future EVs -fuel cells, third generation batteries (eg Oxis Energy in the UK and PolyPlus Battery Company in the USA), embedded energy harvesting (eg Levant Power Corporation in the USA, ETH Zurich in Switzerland), smart skin, self powered wireless sensors and actuators (eg VirginiaTech CEHMS in the USA), printed electronics and electrics (notably T-Ink, Inc in the USA, that will present at Future of Electric Vehicles in San Jose in December)) or even design of the vehicles themselves.
Relying on exports
History may be harsh in reporting how a land of traffic jams and inefficient coal powered power stations can be encouraging manufacture of electric vehicles and whether it can export such electric vehicles and batteries while increasingly inhibiting foreign companies from participating in Chinese industry.
Small companies too?
For now, this unlevel playing field seems to be a big company phenomenon however. For instance, the battery magazine BEST has recently achieved an enthusiastic launch in China.
Small companies continue to sell intellectual property into China though Eco Trans Alliance Inc.& Cruise Car, Inc. has ceased to import low speed electric vehicles from China, following difficulties, and now sells a better quality solar powered vehicle they make in the USA, to great acclaim.
We welcome your comments.

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Posted on: September 3, 2010

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