Chinese battery companies need to overcome three major challenges when going global

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Since 2023, the exportation of power battery companies has become a hot topic. For Chinese battery companies with strength, venturing into the global market is an inevitable choice to address domestic overcapacity, increase global market share, and overcome trade barriers. In the process of going global, Chinese battery companies need to overcome three major challenges—establishing benchmark factories, successfully validating localized products, and ultimately achieving profitability for localized factories.

From January to September 2023, global sales of new energy vehicles reached 9.4 million units, a year-on-year increase of 39%, accounting for approximately 16% of the total global automotive sales. During the same period, China’s new energy vehicle sales reached 5.92 million units, a year-on-year increase of 36%, with a market share of 29.8%. China’s share of global new energy vehicle sales exceeds 60%.

Regarding the changing trends in the global new energy vehicle market, China remains a major market in the future, but the United States and Europe are emerging as promising incremental markets, developing at a faster pace than China. For Chinese companies, where should they export? Looking west to Europe, heading south to Southeast Asia, eastward towards the Pacific with a keen eye on the U.S. market, and also exploring opportunities in the Middle East.

Encountering differences and collisions during the internationalization process, the first challenge is cultural differences; Chinese companies and individuals tend to be more reserved. The second challenge is environmental differences; European approval processes are more complex and time-consuming, with considerations being more intricate. The third challenge is behavioral differences; China is more flexible, while Europe emphasizes standardization, requiring a step-by-step sequential approach.

Therefore, the first priority for companies going global is to be legal and compliant, followed by respecting each other’s cultural habits, and finally, supply chains should collaborate. Communication is key, and companies need to be prepared for uncertainties and be proactive in facing unknown challenges.

While the proportion of companies able to go global is still relatively small, individual efforts should coalesce into building a Chinese brand for the industry, enhancing the global brand image, and emphasizing long-termism with technology at the core, products as the foundation, quality as the essence, and compliance as the baseline.

The lithium battery industry was very hot in 2021 and 2022, but 2023 has been a challenging year. Despite overall structural oversupply, pressures on battery deliveries for plug-in hybrids and hybrids are significant.

The first quarter of 2024 is expected to remain challenging for the battery industry, and there is a possibility of continued industry decline. However, by the end of this year, negative factors in global politics and the economy are expected to gradually clear, with countries focusing on economic recovery. The industry is anticipated to significantly rebound in the second quarter of 2024.

The large-scale adjustment in the battery industry this year is considered a normal condition after rapid growth. The battery industry is a globally-oriented, medium- to long-term growing green industry. After a few years of rapid growth, a period of adjustment is inevitable. This adjustment is necessary to prepare for the next, more expansive growth cycle. Starting from 2025, the global consumption of new energy will shift from early adopters to ordinary consumers on a large scale. Whether in the domestic or overseas markets, for battery companies belonging to the manufacturing industry, the foundation of competition remains in reliable, high-quality products and advanced manufacturing capabilities.

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