Date:The day before yesterday05-15 14:38 Source：autochina.comnews.cn Authour：He Lun
——Auto Market Hotspots Q&A (125)
How many ambitious “strategies” have Chinese automakers launched so far? How many of them have been truly realized and how many have never been heard of again? No one has really studied these statistics before, but overall, it would not be any exaggeration to suggest that these strategies have not enjoyed the best of reputations. As a result, they no longer excite people and are now subject to questioning and even mockery. However, the “20200” Strategy issued by Geely Automobile six months ago (to sell 2 million vehicles, and to become a global top 10 automaker and the most competitive and respected Chinese brand by 2020) is an exception. Recently, the R&D center at Hangzhou Bay in which Geely has invested RMB 6.2 billion Yuan was opened to industry insiders and media, letting people see what this main pillar of support to Geely’s strategy really looks like.
Geely-Volvo China Design and Test Center
Geely-Volvo China Design and Test Center covers an area of just over 140,000m2 (about the size of 28 football fields). The R&D building, with six floors above ground and one garage underground, can accommodate 8,000 workers. Every year the center will develop 5 new models (not including refurbished models), 3 engines and 3 gearboxes and produce 2,400 test vehicles. It is expected to achieve technical service revenue of RMB 2 billion Yuan per year.
Q: You have been to the newly established Geely R&D Center at Hangzhou Bay. What’s your general impression?
A: I visited the center and talked there for more than 4 hours. My overall impression is that when a Chinese private automaker - which in the past was not given enough trust and support - has made it this far, nothing can stop it now other than problems with the macro environment. The Geely we see today has a fully independent development system and is working with Volvo to keep it at high standard and international.
Q: Is it a copy of Volvo’s R&D system?
A: Of course it is not just a simple copy. For example, the powertrain test center has achieved centralized monitoring on test items – it can monitor the status of all bench tests in one room. In the past, the four bench tests needed to be monitored by four different persons. Now one person will be sufficient. What’s more, engineers who are on business trips can perform remote monitoring via cell phone. These measures have greatly improved personnel efficiency and equipment utilization and pushed these indicators to world-leading level. It is worth mentioning that some of the most advanced and efficient testing equipment was jointly developed by Geely and its international suppliers, like the noise and durability bench testing equipment in the vehicle test center. In addition, there is also some chassis assembly equipment which is usually used for Japanese and Korean cars in the vehicle test center; it is much lighter and more flexible than that used for European cars.
As for exactly how much R&D equipment in the center is really “unique or rare in China” or “world-leading”, I did not take notes as I could not carry my cell phone with me during the visit for reasons of confidentiality. But overall, this R&D center is like a blank slate with no traditional burdens - it can be written upon in the optimal way, which can be regarded as a kind of “second-mover” advantage.
Powertrain bench test monitoring center
Q: Does the R&D center have any deficiencies?
A: Currently there is no proving ground, but it is being planned and will also be located in Hangzhou Bay. Compared with those of international car giants, this Geely R&D center at Hangzhou Bay still lacks a wind tunnel laboratory. However, building such a laboratory will require investment of at least RMB 1 billion Yuan, and running it will be extremely power-consuming and costly. According to Hu Zhengnan, Chief of Geely Automobile Research Institute, wind tunnel tests are performed more for mass-produced high-speed and high-performance cars. Judging from Geely’s current and future product structure, rather than building a wind tunnel laboratory that would not see much utilization, Geely prefers to conducting the necessary experiments at the wind tunnel center of Tongji University.
Q: How competent is the R&D team?
A: This is the key to everything, just like in a hospital – bad doctors cannot cure patients even with world-class diagnosis and treatment equipment. Since 2013, Geely Automobile Research Institute has opened its door to experienced engineers only. Last year, it recruited only 200 graduates from the top universities. Currently, there are more than 6,500 employees working at the R&D center, with an average of 9.5 years’ experience in R&D, and this team will be expanded to 10,000 when the nearby Phase II project is completed. Geely has a whole set of measures in place to attract talents. It has poached a lot of people from its rivals and adopted a special incentive mechanism for talent training, and it maintains a relaxed environment. Thanks to this, even newcomers can produce great results and even turn out patents.
On a global scale, Geely now has two major R&D centers which are located in Gothenburg and Hangzhou Bay. It also has four design centers including one in Shanghai and some affiliated bodies in Jiangsu and Zhejiang. The Geely R&D and design team now consists of over 10,000 employees, and that number does not include those working in Volvo’s R&D organizations. In Geely’s domestic R&D team, there are more than 200 expatriates.
Starbucks coffee shop inside the R&D center
Q: Whenever the conversation turns to the best Chinese auto brand, people want to compare Geely and Great Wall. The latter also has more than 10,000 R&D personnel and achieved greater sales last year. What do you think?
A: I once visited Geely’s R&D center in Gothenburg, Sweden – CEVT. What impressed me was that there were more than 500 Chinese among the 2,000 employees at the center (see the article “How High Can Geely’s New Brand Be Positioned?”). Just think about it - 500 Chinese are being trained under the influence of Volvo in Europe. What kind of strength will this bring to Geely’s talent team? Currently no other Chinese brand boasts any such advantage.
In addition Geely’s subsidiary, Volvo, as an international luxury brand, has a complete R&D system of international standard that can provide technological support for the development of Geely cars. What’s more, Volvo can share all its technological resources with Geely, which is another thing that no other Chinese brand can do.
So as I see it, Geely has basically overcome the biggest problem of Chinese brands – access to an independent and high-level technology source. This is one of the core strengths that drive the sustainable development of a car brand. In recent years, Geely Automobile has invested nearly RMB 10 billion in R&D every year, accounting for up to or even more than 15% of its sales revenue, which is far higher than the industry average of 3-5%. Comparatively, Great Wall’s level of investment (RMB 3.18 billion in 2016, accounting for 3.22% of its sales revenue) in R&D is well below Geely’s. Moreover, Geely’s model portfolio covers most of the passenger car market, while Great Wall relies too much on SUVs and has not sought to change this situation. The interesting thing is that both Geely and Great Wall have set a sales target of 2 million vehicles for 2020. Judging by its R&D strength and product mix, Geely has better odds of achieving that target. In the first quarter of this year, Geely already surpassed Great Wall and Chang’an in sales and became No. 1 on the list of Chinese brands.
Industrial Layout of Geely Automobile at Hangzhou Bay