On August 7, 2024, a store in a shopping mall in Beijing.
Pedro Pardo | AFP | Getty Images
Fierce China’s price war From cars to food delivery to solar panels, it squeezes profits and exacerbates the industry in the country’s deflation slide. While consumers may be attracted to super cheap exchanges, for them, the tradeoffs are more complicated than they seem.
Since the pandemic and ongoing housing recession Chinese consumers are becoming more and more sensitivefocus on value and cut non-essential spending. To stay competitive, automakers have introduced huge discounts and price cuts (with the help of government subsidies) to deepen a price war that has broken out over the years.
In the so-called instant business field, Alibaba,,,,, JD.com and Meituan Competing to expand delivery networks and guarantee billions of dollars in subsidies to lure customers trade Like bubble tea, only for cents.
It is not difficult to see the appeal of trends to some consumers.
Li Kun is a resident of Beijing, watching the model of Chinese electric car manufacturers xpengHe was immediately fascinated after a salesperson called him a new subsidy.
“The harder the competition for manufacturers, the better it is for buyers,” Li said. “Compet as you like!”
Beijing resident Yu Peng said that if the price drops, it will feel like a gamble when buying it. “As a consumer, all you can do is accept it quietly.” Still, he shrugged in one sentence: “Buy early and enjoy as soon as possible.”
Hide costs
Cutthroat competition comes with hidden costs.
Some Chinese buyers acknowledge that safety and quality can be lost when automakers cut corners. Beijing is now worried that the price war has hurt not only companies and suppliers, but also wages, tax revenues and the economy as a whole.
In recent weeks, state media in China have stepped up criticism of the price war. This month, the Chinese Communist Party publication Qiushi warned that the competition could force companies to cut basic production costs and compromise quality, “creating ‘bad money to drive good things’ and ultimately harming consumers.” Comments also slammed some local governments for providing unfair incentives.
On Wednesday, China’s cabinet vowed to regulate so-called “irrational” competition by conducting stricter inspections of costs and prices and by shifting the competition from who is cheaper to who has better technology and caliber.
At present, maintaining market share remains a priority for many automakers, analysts said.
Velipe Munoz, a car analyst at Jato, said that because the market is full of many brands and similar models, automakers who don’t want to lose market share believe that the only way to survive in the short term is to lower prices.
Jim Ma, sales manager at Swedish automaker Lynk & Co, China, said the company is not focused on short-term profits, but builds loyalty over time. Its new plug-in hybrid car features a mini fridge, rotating seats and LED message bars. He added that the competition makes buyers more sensitive, but many value safety, customer support or specific designs, such as in-car entertainment for children.
“Our pricing policy is designed to make customers like and choose our brand,” Motor said. “In the long run, we hope they will still choose us when they need after-sales service or decide to replace or buy a new car.”
Ripple effect
The chain reaction of China’s pricing war has also been felt in various ways abroad.
Some consumers outside China welcome restructuring, forcing global automakers to provide better products.
Julia Poliscanova, senior director of vehicles advocating for the group’s transportation and environment, said Chinese electric vehicles helped fill the gap left behind with slow-moving European brands. While they are not as cheap as China in Europe, they are usually still slightly lower in prices, or offer range or software at the same price.
But politics is also working as Europe negotiates tariffs and minimum pricing for electric vehicles with China. A key question, she said, is how Chinese auto and battery manufacturers are encouraged to localize their supply chains in Europe to build a home industry, just like Japanese and Korean brands did decades ago. Some Chinese companies are already working hard, especially for small markets in Europe.
While consumers in Europe are often more concerned about quality than the origins of automakers, they are also concerned about wider economic impacts, Poliscanova said.
“They just want to make sure that it doesn’t cause their neighbors or someone in the nearby village to lose their jobs,” she said.
Ford and Volvo Cars In recent months, it has been one of the automakers in Europe for layoffs, partly due to growing competition with Chinese competitors.
