After nearly two decades of relative isolation, China's domestic auto brands have recently shown a surge in collective effort during the first half of this year. Geely Automobile announced a commitment of over 3 billion yuan to build two new production facilities; FAW launched its "2009 Million Brand" initiative; and SAIC set a target of investing 1 billion yuan into its own brand as part of the "Eleventh Five-Year Plan." Industry leaders of independent brands remarked, “Chinese cars can't survive without boldness.†So what exactly are these companies doing?
The National Medium- and Long-Term Scientific and Technological Development Plan (2006–2020), released by the State Council in February, emphasized that R&D investment as a percentage of GDP would steadily increase, reaching 2% by 2010 and 2.5% by 2020. To achieve this, the plan called for government guidance in investment, using tools like direct funding and tax incentives to boost science and technology resources.
True innovation requires more than just capital—it needs strategic vision. As Li Dongsheng of TCL said, building independent capabilities demands long-term planning and sustained investment, not quick returns. This is evident in global examples like Toyota and Hyundai, which took nearly 30 years to master their own R&D processes. According to *The Far Eastern Economic Review*, Chinese automakers may need 10 to 15 years to fully develop their skills and compete globally—shortening that cycle to three or even one year is unrealistic.
While national projects can inspire success, they also risk creating an environment where failure is unacceptable, encouraging shortcuts. American scholars have noted that China’s economic culture often favors quick wins, a mindset reflected in both business and consumer behavior, and also in how policy is shaped.
**Part I: The National Team Steps Up**
As the auto industry embraced a wave of independent innovation, FAW and Dongfeng were not left behind. Despite initial hesitation, the big players finally moved forward under pressure from the central government. Within FAW, opinions varied: some believed the company had the capability to build its own brand, while others felt it lacked depth. One official admitted that FAW was pushed by SASAC and the National Development and Reform Commission to act, with funds tied to the revitalization of the Northeast region.
FAW’s C301 model borrowed core technologies from the Mazda 6 platform, and its Hongqi models still showed traces of Crown and Golf designs. However, unlike private enterprises, FAW must be cautious about public perception to protect its image.
Ge Shuwen of FAW Car Sales defended the company’s approach, stating that integrated innovation—rather than starting from scratch—is valid. FAW now seeks financial support, especially to prevent talent loss, and is working on securing more funds for the C301 project.
Dongfeng, on the other hand, faces criticism for focusing too much on joint ventures, particularly with Nissan and Honda. While it has made progress in commercial vehicles, experts argue that its passenger car development lags. Dongfeng claims it is expanding independently in Xiangfan, with a Hummer-like SUV as a flagship project.
**Part II: Second-Line Players Rise**
Second-tier brands like Chery and Geely are showing signs of rapid growth. Chery recently launched the V5 model and boosted sales to the top three, while also cutting prices on older models. Its ambitious target of 300,000 units this year has put immense pressure on dealers, with some expressing concerns about the feasibility of launching six new models in a single year.
Geely, meanwhile, is expanding aggressively, signing deals to build new production bases in Jinan, Cixi, Lanzhou, and Xiangtan. These moves have raised questions about the company’s true intentions, but Geely insists all land will be used for auto production. Local governments are eager to support such projects, offering infrastructure and financial assistance.
Chery, Geely, and Brilliance are also seeking new financing through listings, convertible bonds, and new investors. With government support for independent brands, these companies are finding fresh momentum to drive their growth.
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