Reinventing Mobility in the China Context

Gao Feng Advisory Company White Paper, August, 2014

With the auto industry developments and the increasingly prevalence of the wireless internet and mobile devices, we expect that the Internet of Vehicles will create discontinuous opportunities for product and business model innovation. 

We believe the conditions in China – the world's largest auto market and the market with the largest number of both internet and "smart phone" users – will likely make it the incubator for rapid commercialization of such innovations. China's urban transportation challenge, the high rate of adoption of connected mobile devices, combined with the rapid and aggressive introduction of alternative mobility and vehicle ownership concepts from new entrants, will ultimately compress the time needed to commercialize smart, connected car technologies and related services. Such developments will dramatically alter not just the feature content of vehicles, but may also usher in a revolution to the business model of the automotive industry – where a model focused on "users of mobility services" could emerge as a real alternative to the traditional model of "car ownership".

Reinventing Mobility in the China Context from Synergistics Limited

Pechino contro l’auto straniera L’accusa antitrust: listini gonfiati

Corriere della Sera, August 23, 2014

Bill Russo offers his views on China's Anti-Monopoly Campaign.

Mercedes Overhaul (检修奔驰)

CBN Weekly, August 18, 2014

Cover Story from CBN Weekly on the reconstruction of the Mercedes-Benz business in China.  Includes extensive commentary from Bill Russo.  Article is in Chinese.

Click here to read the article at CBNweek.com

China’s Latest Price Fixing Target

Reuters Newswires, August 18, 2014

Click here to see the video at AOL.com

China finds Mercedes-Benz guilty of price fixing

Reuters Newswires, August 18, 2014

Germany's Mercedes-Benz has been found guilty of manipulating prices for after-sales services in China, the official Xinhua news agency reported, adding to pressure on foreign carmakers in the world's largest auto market.

The report by the official Xinhua news agency made no mention of possible penalties, but China's 2008 anti-monopoly law allows the country's anti-trust regulator to impose fines of up to 10 percent of a company's China revenues for the previous year.

The Jiangsu Province Price Bureau, which launched an investigation last month, found evidence of anti-competitive practices after raiding Mercedes-Benz dealerships in the eastern coastal province and an office in neighboring Shanghai, Xinhua said.

The dealership in the same building as the Shanghai office which was raided appeared to be operating as normal on Monday (August 18), with potential customers peering at shiny new cars.

A Daimler spokesman repeated a statement, first made by Mercedes-Benz on August 5, that it was assisting the authorities with their investigation, adding that it was unable to comment further as it was still an on-going matter.

The Xinhua report said the cost of replacing all the spare parts in a Mercedes-Benz C-Class could be 12 times more than buying a new vehicle, citing a report from the China Automotive Maintenance and Repair Trade Association.

Managing director of Gao Feng advisory firm, Bill Russo, said the consumer would benefit.

"So I think what we are seeing is, first of all, a communication to the market that over the years, foreign branded products have been priced very high and informing the Chinese consumer that perhaps they should take another look at the prices and look for a more competitive price from the…and demand a more competitive price from the manufacturer. So in the end, this is actually a good thing for the consumer," he said.

An array of industries, from milk powder makers to electronics firms, have been coming under the spotlight in recent years as China intensifies its efforts to bring companies into compliance with the 2008 legislation.

The auto industry has been under particular scrutiny, with a wave of investigations prompting carmakers such as Mercedes-Benz, owned by Daimler, Volkswagen AG's Audi, and BMW to slash prices on spare parts in recent weeks.

"So by enforcing these laws, they are actually making the foreign branded products more affordable to the market, which in the end is going to make harder for Chinese branded car makers to compete against them. So the unintended consequence is that you're giving the consumers a better price but you are also forcing the local car makers to compete with foreign branded products that are more affordable," Russo added.

Early this month authorities said they would punish Audi and Fiat SpA's Chrysler for monopoly practices.

Chinese media reported last week that Audi, the best selling foreign premium car brand in China, would be fined around 250 million yuan ($40.7 million).

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Bill Russo to Join Panel Discussion at China Automotive Pudong Summit

Shanghai, China, August 13, 2014

TOPIC:

Trade and investment reform in CSPFTZ and its link with the enhancement of competitive edge of China’s auto industry

As we all know, the supply chain of the automotive industry centers on auto manufacturers. In the context of trade facilitation in CSPFTZ, how can we coordinate development of the auto supply chain to improve the competitiveness of the entire supply chain and to achieve win-win development? Along with China’s auto industry rapid growth, a “going global” strategy has been promoted since the beginning of the century. How to further promote the going global initiatives of the industry, so as to improve its international influence and enhance the level of recognition?

• How to develop the auto supply chain in a coordinated way to improve the competitiveness of the entire supply chain and to achieve win-win?
• Challenges and difficulties that China’s automakers are faced with 
• In the context of CSPFTZ trade facilitation, how can domestic suppliers improve technological competitiveness and go global?
•  Discussions on the new going-global models and strategies of Chinese automotive enterprises. How to establish a going-global risk management mechanism?

Panelists

Zhou Biren, Deputy General Manager of Chery Automobile Corporation & General Manager of Chery International Corporation, China

Jay Jiang, Vice President, Corporate Communications, Bosch (China) Investment Ltd., China

Bill Russo, Managing Director, Gao Feng Advisory Company, China

Experts from related research institutions and universities

Moderator

Liu Xiaoyong, Deputy Director, General Affairs Office, CCPIT Automotive Sub-Council  & Editor-in-Chief, Automotive Observer, China 

CCTV Dialogue: Foreign Firms Under Scrutiny

China Central Television, August 7, 2014

Dialogue 08/07/2014 Foreign firms under scrutiny

Host: Yang Rui

Yang Rui

Studio Guests:

Dr. Liu Ke, Vice president of Shenhua Research

Bill Russo, managing director of Gao Feng Advisory Company