Passing bumps in the road: what we can learn from FAW's 70-year journey

BEIJING, July 15 (Xinhua) -- In the northeastern city of Changchun, the humble automobile is a shining light against which all other sights of the city seem dim. You would be hard-pressed to find another city in China that is so deeply connected to, and heavily affected by automobiles.

Known as the cradle of China's automotive industry, Changchun, capital of Jilin Province, is home to FAW Group Co., Ltd., the nation's first auto manufacturer that celebrated its 70th anniversary on Saturday.

FAW's history is the very embodiment of China's auto industry -- from conception to birth, and from weakness to strength.

SELF-RELIANCE: THE LONG HARD SLOG

FAW started from scratch as an important part of China's first five-year plan.

At that time, rebuilding was an urgent task facing the newly founded People's Republic of China (PRC). Hundreds of millions wondered when they would be able to ride in a locally made car.

During the plant's three-year construction, hundreds of cadres were sent to help, and a large number of skilled workers from Beijing, Shanghai and Tianjin set off for Changchun. Graduates from top universities and returned students also joined in.

When the first batch of Jiefang trucks rolled off the production line in 1956, engineers and technicians immediately went forward to lift the hood, listening to the roaring of the engine. The crowd burst into triumphant laughter when it gradually stopped, the People's Daily reported.

In May 1958, China's first prototype Dongfeng model was produced by FAW. The first Hongqi luxury sedan was produced mere months later. The Hongqi open-top limousine made its debut in Beijing at the 10th anniversary of the founding of the PRC.

With China's reform and opening up, imported cars flooded into the Chinese market from the mid- to late 1980s. FAW established a joint venture with Volkswagen in 1991, starting to produce the Jetta cars, which became one of the most popular compact models in China along with the VW Santana and Citroen ZX.

China's auto industry has never forgotten the importance of independent innovation. Its path can be characterized by the development model of a latecomer country -- independent innovation based on introduction.

This mode develops technologies and products with independent intellectual property rights through introduction, digestion, absorption and innovation, and establishes a relatively complete automobile industry system with independent development and manufacturing capabilities, national brands and a domestic auto parts supply system.

As the backbone of China's auto industry, FAW absorbed technologies from its foreign partners and developed its own Hongqi brand, which was a long, hard slog.

EMBRACING CHANGE: THE WINNING FORMULA

FAW's "market for technology" strategy was anything but smooth, even counterproductive at times. There was a period when its self-owned brands lagged significantly behind those of the joint ventures, both in terms of product quality and market recognition.

As is often said, the rising tide covers many things, but when it goes out, you learn who's been swimming naked.

Geng Zhaojie, a veteran automobile executive who served as head of FAW for 14 years from 1985, remained calm and sober-minded when foreign businesses entered China's auto market.

"Without our own brand, no matter how many cars we make, the pride is not ours," warned Geng, believing that independent development of self-owned brands was the only way to avoid China's automakers becoming OEMs (original equipment manufacturers) of foreign brands.

China's entry into the WTO accelerated the globalization of the auto industry. Facing a sudden influx of foreign brands, China's local enterprises faced accelerated market competition, which made FAW realize that only reform and innovation could help it keep up with the pace.

According to Li Zhihong, director of the general manager's office of FAW-Volkswagen, automobile joint ventures have played an important role in talent training and laid a solid foundation for China to become a global power in auto manufacturing.

Change is the only constant, and embracing it is the magic formula to stay ahead of the game.

In September 2017, FAW launched a major reform of its institutional setup, personnel management and salary system. The drastic reform has stimulated the vitality of innovation, and rejuvenated Hongqi, a homegrown brand that is deeply cherished in the hearts of Chinese people.

The global automotive industry is now accelerating its electrified and intelligent transition. With a world-leading market of new energy vehicles (NEVs) and strong industrial chains, China finds itself among the company of the global automobile powers.

This transition has also brought historical opportunities for national brands like Hongqi, which has recently announced it will direct all of its investment in technological innovation into NEVs, as well as all of its new production capacity, aiming at selling 500,000 Hongqi NEVs by 2025.

China's vehicle exports soared to around 1.07 million units in the first quarter of 2023, making China the world's largest auto exporter in the period, outpacing Japan.

Meanwhile, FAW has been accelerating the expansion of Hongqi in the overseas high-end auto market, and is planning to boost overseas sales of Hongqi to a level where it will account for over 10 percent of Hongqi's total sales by 2025, and 25 percent by 2030.

Qiu Xiandong, FAW's general manager, expressed the company's determination and confidence in transitioning to NEVs. Hongqi products are going to be younger, more fashionable and more tech-empowered, he said.

STAY STRONG, BETTER TOGETHER

It has been said that almost every family in Changchun can name a relative, not to mention a friend, who is engaged in automobile-related work.

Ever since the birth of the first car, FAW's development has been closely linked to that of the city and even the whole province of Jilin. Yet Changchun was once bringing up the rear of China's automobile surge.

In recent years, the local government has not only stepped up efforts in infrastructure renovation for FAW, but also actively supported its reform and development.

As China's only state-level development zone named after the automobile industry, where FAW headquarters is located, Changchun's automobile economic and technological development zone has been improving the business environment, attracting further investment from multinationals.

Building an international automotive city covering the automobile, auto parts and automobile service industries is what Changchun is driving toward, a transformation together with FAW that aims to boost China's automobile industry.

Changchun and FAW are embracing brand new opportunities for growth on the way to realizing this vision. Their fates are intertwined even more closely than ever.