American businesses make money in China: a new warning

American businesses make money in China: a new warning


Once favored by Chinese officials, Tesla is slowly being scrutinized by the Chinese media and this is a warning that the US technology company cannot ignore.

My businessmen make money in China: New rice soup
The woman made a riot at the Shanghai Auto Show. Photo: Global Times.

Tesla has suffered major shocks for two years in a row, although the situation is no longer as stressful as when Donald Trump strongly pushed the trade war.

In the past, Tesla has been continuously involved in controversy in China. Since October 2020, Tesla has twice recalled vehicles in China, affecting nearly 85,000 units, due to technical errors.

On April 19, a woman rioted at the Shanghai Auto Show while wearing a T-shirt with the words “Brakes not working” and climbed onto the roof of a Tesla car. On Chinese social networking sites, many people criticize Tesla cars as poor quality.

After the incident at the Shanghai Auto Show, Tesla apologized to Chinese consumers. However, the campaign of criticism continues in the press of this country.

The entry of the Chinese media is indeed a warning.

Xinhua News Agency and Nhan Dan Daily newspaper simultaneously published editorials criticizing the electric car company of billionaire Elon Musk “ignoring” the interests of Chinese consumers. Some Chinese commentators have even called on Beijing authorities to expel Tesla from the same 1.4 billion population market as Google.

My businessmen make money in China: New rice soup
Tesla in China is both collaborative and head-to-head?

According to analyst Anne Stevenson-Yang of the investment firm J Capital Research in China, when the Chinese state media speak out, American businesses clearly need to be careful.

“This is not an ordinary editorial but an organized anti-Tesla campaign,” said the analyst.

Expert Tu Le – founder of Sino Auto Insights – has a similar opinion: “Complaints on social networks are one thing, the state media’s voice is completely different. This is clearly a warning to Tesla. “

According to him, Tesla in China is a relationship of cooperation and confrontation. Beijing needs Tesla to bring attention to its electric vehicle market. In the long run, however, Beijing wants domestic brands to dominate the market.

Currently, Tesla, SAIC-GM-Wuling Automobile and BYD dominate the Chinese electric vehicle market with 55% market share. However, that is only equivalent to 5% of the total Chinese car market share.

“For the time being, Beijing still needs Tesla to boost the electric vehicle market. But Tesla needs to be very cautious. When a domestic brand becomes strong, the situation will change quickly for US companies ”, forecasted by expert Le.

Expert Lee Miller, founder of China Beige Book also said: “In the past, when Chinese media launched offensive campaigns, businesses only had to apologize. Now when Beijing attacks, it is very difficult for businesses to survive. The only way to survive is to make sure the brand wins the trust of Chinese consumers, like Nike or Adidas. “

In fact, this is gradually making analysts pay more attention to the risks to Tesla in general and to American businesses in particular.

Beijing is not “determined to destroy” Tesla yet, Miller said, but what happened is “just part of what Elon Musk will see in the future.” “Then Beijing will crush Tesla,” he warned.

Meanwhile, Wedbush Securities analyst Daniel Ives said the entry of the Chinese state media provides a reminder: Elon Musk will have to ‘act nice’ in China to make sure. That Tesla’s growth isn’t slowing down in this market. China will account for 40% of all electric vehicles delivered worldwide by 2022.

Jinhua

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