market

French businesses upbeat on China market

China France Photo:VCG

China France Photo:VCG

 

French businesses have expressed growing confidence in investment in the China market, as a state visit by Chinese President Xi Jinping to France is set to strengthen bilateral ties and economic and trade cooperation. 

French direct investment in China has been skyrocketing in recent months, highlighting the great attractiveness of the China market among French companies amid China’s steady opening-up measures, experts said. 

The state visit will bolster the confidence of both Chinese and French businesses to pursue win-win cooperation, they noted. 

“President Xi’s visit to France reinforces the potential for the two countries to open up a new future of collaboration on the 60th anniversary of bilateral diplomatic ties,” Paul Hudson, CEO of Sanofi, a French multinational pharmaceutical and healthcare company, told the Global Times. “The two countries have opportunities to strengthen their bilateral relationship while also further collaborating to address global topics.”

Hudson said that the company has seen a great expansion in the China market over the past several decades and will continue to expand in China, amid growing potential and the improving business environment. 

“As one of the first multinational companies to enter China since its reform and opening-up more than 40 years ago, our footprint has grown significantly over the years as a result of openness and collaboration between our two countries,” Hudson said.

“China staying focused on high-level opening-up and actively improving the environment for foreign investment incentivizes pharmaceutical innovation for patients in China and beyond.”

Sanofi is hardly alone in expanding in the China market. In 2023, France was one of the fastest-growing sources of direct investment in China, with direct investment surging 77 percent year-on-year to $1.34 billion, according to China’s Ministry of Commerce (MOFCOM). 

L’Oreal Chairman Jean-Paul Agon also said that the company remains committed to the China market.

“I can assure you that we are more determined than ever to contribute, together, to the mutual development of our two countries. To this end, I believe it is essential to reiterate the imperative need for an ongoing dialogue between us,” Agon said.

That trend has only intensified this year, with French direct investment in China surging 585.8 percent year-on-year in the first two months of this year, data from the MOFCOM showed.

A survey of French companies in China conducted by the French Chamber of Commerce and Industry in China in 2023 showed that members’ willingness to operate in China over the coming three years had increased, with 47 percent saying they planned to further invest in the Chinese market. 

French companies are interested in cooperation with Chinese companies in a wide range of areas including pharmaceuticals and clean energy. During the fifth meeting of the China-France Business Council in April 2023, 36 Chinese and French businesses signed 18 cooperation agreements in the areas of green energy, innovation, aerospace and new energy.

“In China specifically, we are bolstering local innovation and investment by prioritizing early-stage [research and development], involving China in 90 percent of our global simultaneous projects,” Hudson said. 

The growing commitment of French companies to the China market is mainly due to China’s continuous opening-up measures, efforts to improve the business environment for foreign companies, as well as China’s steady economic recovery and its vast market potential, experts noted. 

Cui Hongjian, a professor at the Academy of Regional and Global Governance at Beijing Foreign Studies University, said that the state visit will send a clear signal to French and European businesses that China remains committed to continuous opening-up in an all-round way. 

“This will further strengthen the confidence of French businesses and investors in the China market,” Cui told the Global Times on Monday, noting that remarkable growth in French direct investment in China in recent months has already showed growing confidence in China.  

French brands flock to Chinese consumer product expo in S. China’s Hainan, eyeing huge market potential, despite EU’s ‘decoupling’ claims

The 4th China International Consumer Products Expo, Asia's largest premium consumer products expo, in Haikou, South China's Hainan Province Photo: Qi Xijia/GT

The 4th China International Consumer Products Expo, Asia’s largest premium consumer products expo, in Haikou, South China’s Hainan Province Photo: Qi Xijia/GT

The French pavilion, the exhibition hall for French companies and products, officially opened on Sunday at the 4th China International Consumer Products Expo (CICPE), Asia’s largest premium consumer products expo, in Haikou, South China’s Hainan Province, with French businesses flocking to the event to tap into the potential of the booming Chinese market.

Companies in various sectors such as wine and luxury products that are iconic to the French economy are presenting their latest fashions at the expo, a move that experts described as a reflection of the continuous strong confidence in the Chinese market and economy, despite the claims by some European politicians who are calling for “decoupling” from China.

The platform also mirrors China’s ongoing opening-up and welcoming stance to foreign businesses to the Chinese market with their competitive products and services, contrary to the EU’s protectionism against Chinese companies, experts added.

French luxury fashion brand Cerruti 1881 is participating in the CICPE for the first time as part of the French pavilion. The booth showcases selected products from the upcoming new collections of the company.

“The Chinese market is one of the main luxury and fashion markets with consumers looking for quality, elegance and creativity,” Aude Pecheux, chief marketing officer of Cerruti 1881, told the Global Times on Monday.

Following the CICPE, Cerruti plans to open stores in China next year.

Fatima Nouissel, a French wine trader based in South China’s Guangdong Province, is attending the CICPE for a third year and bringing 20 alcohol brands, looking at the consumption potential of the Chinese market. 

In 2023, France remained to be China’s top wine supplier for a third consecutive year, and nearly half of China’s imported wines came from France.

“The Chinese market is recovering, with more visitors attending the CICPE this year,” Nouissel told the Global Times on Monday.

Nouissel said that China’s new visa exemption policies have made it more convenient for travel and doing business in China. 

Speaking on the 60th anniversary of the establishment of diplomatic relations between China and France this year, Nouissel said that “We have had a good business experience between China and France, and we are looking for even better relations in the future.”

Pernod Ricard, an international spirits and wine group, attends the Expo for the fourth consecutive year. The French company is showcasing a number of new products at the CICPE. 

Building upon last year’s successful experience and results, Pernod Ricard aims to further promote environmental conservation and sustainable development in Hainan, the company said in a press release sent to the Global Times on Monday.

“Pernod Ricard has witnessed Hainan’s rapid development and its vibrant vitality.” said Jerome Cottin-Bizonne, chief executive officer of Pernod Ricard China. “As an industry leader, Pernod Ricard is looking forward to introducing more high-quality products and exquisite experiences to the Chinese market, creating moments of ‘Créateurs de Convivialité’ together with Chinese consumers, promoting sustainable development practices, and injecting new vitality into the Chinese market.”

Lancôme, a brand under the L’Oréal Group, displayed its new foundation product at the CICPE to promote Sino-French cultural exchanges through the beauty industry. 

L’Oréal, which is participating in the CICPE for the fourth time, told the Global Times that it sees the CICPE as an “important” and “open” platform to inject confidence and vitality into the consumer market.

Cooperative activities between China and France have intensified in recent years. From 2019 to 2023, French luxury brands’ exports to China jumped by more than 100 percent, the Global Times learned from Business France.

Last year’s CICPE drew the participation of 336 French brands, making France the largest participating country only after China. The European country will continue to highlight its presence at this year’s expo, according to Business France.

The active involvement of French companies at the expo showcases their remaining confidence in the Chinese market, their major destination for investment, Chinese experts said.

French companies are eager to embrace the huge Chinese market of 1.4 billion people. Meanwhile, as the Chinese economy is undergoing a transformation toward high-quality development, highlighted by digital and green development, new opportunities are emerging for foreign companies, Wang Yiwei, a professor at the School of International Relations at Renmin University of China, told the Global Times on Monday.

Wang said that China’s launch of various large expos, including the CICPE, showcases the nation’s opening-up and welcoming stance toward foreign companies, including those from France and other European countries, to the Chinese market, which is contrary to the West’s “decoupling” attempts toward Chinese companies, including those in the new-energy industry.

There are many areas such as high-tech, agriculture and other consumption products where China and France may find high levels of complementarity, Yang Chengyu, an associate research fellow at the Institute of European Studies of the Chinese Academy of Social Sciences, told the Global Times on Monday.

Yang said that France has many advantageous industries including high-end consumer goods. Combined with China’s consumption upgrading, there is huge room for bilateral cooperation, he said.

Close cooperation at the business level is inseparable from high-level political mutual trust, consensuses reached on some global hot issues and frequent exchanges between officials of the two countries, including the recent visit to France by China’s Minister of Commerce Wang Wentao, which injected more confidence in cooperation.

Pragmatic approach crucial for India to boost its EV industry amid competition

Illustration: Chen Xia/Global Times

Illustration: Chen Xia/Global Times

Confirming earlier media reports about a planned visit to India, Tesla CEO Elon Musk wrote on X, formerly known as Twitter, on Thursday that he is looking forward to meeting Indian Prime Minister Narendra Modi in the country. No details were released, but media reports said that Musk may make an announcement on Tesla’s plan to open a new factory in India during his trip.

Musk has been trying to break into the Indian market for years, while the Indian government has been attempting to attract foreign electric vehicle (EV) brands to establish facilities in the country. 

If Tesla’s long-awaited investment in an EV facility come to fruition, it will undoubtedly be good news for India and help boost EV production. The country has set ambitious targets, aiming to become a global leader in all sectors of the EV market by 2030.

However, it will not be an easy task, even with the support of Tesla. India’s EV industry is still at a nascent stage. 

As for Tesla, which focuses mainly on the mid- and high-end sectors and mature markets, nobody knows if it will find success in India.

While India’s EV market is growing, its size is small. Some statistics showed EVs accounted for just 2.3 percent of total passenger vehicles sold in India in 2023. 

A key barrier India faces for large-scale adoption of EVs is the absence of public charging infrastructure. EV charging stations are still heavily reliant on imports of electronic components and semiconductors. Besides, the country faces a number of challenges, such as streamlining the approval process for public charging infrastructure, and building charging stations in underdeveloped and rural areas.

To make matters worse, consumers face frequent power outages in some regions of India. 

Reuters reported in September 2023 that India had stepped up the use of coal to generate electricity in a bid to stop outages caused by lower hydroelectricity output, as an increase in renewables was struggling to keep pace with record power demand. 

However, India’s expansion of coal mines and plants may complicate its efforts to achieve ambitious climate goals. A power shortage is brewing in India, which will probably pose obstacles for the expansion of the country’s EV market.

The Hindu BusinessLine recently reported that Tesla is in talks with Reliance Industries to set up an EV manufacturing site in India through a joint venture. 

If the report is true, then, after Tesla’s India-built EV becomes available in the country, a key issue will be whether India’s immature market can digest enough Tesla cars and allow the American manufacturer of electric automobiles to make profits in the South Asian country.

India’s supply chain is another major challenge for the EV industry. One of the biggest issues is the limited domestic production of core components like lithium-ion batteries for EV. India is starting relatively late in trying to create an indigenous EV supply chain. 

India and Southeast Asian countries are competing to attract Tesla to set up EV manufacturing sites, according to Japanese media outlet Nikkei. It remains to be seen how significant India’s role will be in Tesla’s Asian strategy. Will India’s importance diminish due to the challenges facing it? 

Given the complex economic landscape, India’s EV ambitions should, more realistically, be implemented step by step with patience and openness. In this process, it is advised that India consider strengthen cooperation with neighboring countries and promote manufacturing development with a more pragmatic attitude.

The author is a reporter with the Global Times. [email protected]

China can ensure financial stability, won’t repeat Japan’s ‘lost decade’ housing bubble

Illustration: Chen Xia/Global Times

Illustration: Chen Xia/Global Times

Downward pressure on China’s real estate market has mounted, but its spillover effects on the real economy and financial system have been greatly exaggerated by Western media outlets, which reflects the West’s lack of understanding of the country and its emotional resistance against China’s rise.

Nikkei Asia published an article on Tuesday, claiming China’s “property crisis” is taking a “particularly heavy toll” on small banks in low-growth provinces, as bad debts to developers erode their finances. 

Previously, Western analysts depicted Evergrande’s financial woes as a “wrecking ball” for China’s economy. Such efforts have fueled a new round of commentary about the “China collapse theory,” which has repeatedly been struck down by reality. 

China’s real estate sector is indeed facing some downward pressure and challenges, but it remains resilient. In February, prices of newly built commercial residential properties in first-tier cities fell 0.3 percent from a month earlier. The real estate market remains generally stable despite price fluctuations.

In some developed economies, when real estate prices fluctuate, the impact may spread to the entire economy and have a huge impact. Examples included Japan’s “lost decade” housing bubble in the 1990s and the US subprime mortgage crisis in 2008. However, the real estate market in China is different from the situations in Japan and the US at those times.

Tianfeng Securities analyst Song Xuetao wrote an op-ed article on Monday, headlined “China’s real estate sector won’t follow the old path of Japan.” We suggest Western analysts should read the article, in which Song analyzed the demand structure and the financialization of China’s real estate industry, as well as the loan-to-value ratio for Chinese residential mortgages. 

Song said the slide in China’s housing prices will be much milder than the decline in Japan, and, from the perspective of transmission risk, it will also be much milder than that in the US subprime mortgage crisis.

In the US in 2008, the collapse of real estate prices resulted in unprecedented losses of hedge funds, mortgage lenders and banks. However, China doesn’t have a complex property derivatives market similar to the US. Although the memory of the US crisis is still fresh for many Western analysts, the same scenario won’t play out in China, because the situation faced by the two countries is different.

First, although China’s real estate market is facing downward pressure, the decline in housing prices is limited. More importantly, because of the slow development of financial derivatives, it will have a very limited spillover effect on the financial system.

Second, China is actively taking measures to stabilize the real estate market. For instance, under the “white list” mechanism launched in January, local authorities are recommending real estate projects eligible for financial support to financial institutions. This mechanism helps ensure the completion of quality real estate projects developed by companies that are distressed by debt issues.

Third, China’s financial system is operating steadily and has strong resistance to risks. Multiple efforts have been made to improve the financial system, optimize financial services, and effectively forestall and defuse financial risks. Besides, Chinese households have high saving rates and low leverage levels, leaving sufficient space to cope with risks and challenges. 

Fourth, the central government has enough tools to stabilize the real estate market and secure financial stability. In recent decades, China has maintained a stable financial system during a period of rapid economic expansion and significant structural reform. This has proved China’s financial governance capability.

Pan Gongsheng, governor of the People’s Bank of China, the central bank, said in March that China’s property market is showing positive signs, with a solid foundation for long-term stable development and a limited impact on the financial system.

Despite the difficulties and challenges ahead, China is capable of ensuring financial stability and preventing systemic risk.

The author is a reporter with the Global Times. [email protected]

China’s IPOs drop in Q1 by 56% y-o-y, as nation steps up regulation to enhance quality of listed firms

stock market Photo:VCG

stock market Photo:VCG

The number of A-share IPOs has fallen significantly so far this year, with none available for subscription this week, and issue prices have become more reasonable, indicating a steady rise in market confidence as regulators move to enhance the quality of listed companies. 

Even though the IPO process may take longer, observers said that strengthened regulation will set a higher benchmark for the Chinese stock market, leading to sustainable development.

In the first quarter, 30 IPOs raised 23.6 billion yuan ($3.26 billion), with the number down 56 percent on a yearly basis and the funds raised reduced by 64 percent, according to a report released by Deloitte China on Monday, nbc.com reported. 

The report estimated that about 115 to 155 IPOs will be held in the A-share market this year, raising anywhere from 139 billion yuan to 166 billion yuan.

The decreased number of IPOs means that new issues are becoming rarer, prompting funds to become more active, Yang Delong, chief economist at the Shenzhen-based First Seafront Fund Management Co, told the Global Times on Tuesday. 

Since the beginning of this year, 31 new companies have been officially listed, with an average closing price of 104.94 percent on the first trading day. Just one new company closed at a discount on its first day, according to media reports.

The reduction in IPOs aims to balance the primary and secondary markets and help the market rebound, Yang said. 

The relatively limited number of IPOs is a temporary situation, as regulators are focusing primarily on stabilizing the market. The situation is beneficial for investors in the secondary market, as having too many IPOs would depress the broader market if demand doesn’t catch up, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Tuesday.

The China Securities Regulatory Commission (CSRC) is allocating more money to conduct more inspections and audits of companies seeking IPOs, with a targeted penetration ratio of at least 25 percent, the Shanghai Securities News reported on Monday.

In March, the CSRC issued four policy documents to enhance supervision and management of the capital market and prevent risks, vowing to promote the high-quality development of the stock market. Among the four documents, three were guidelines aimed at boosting supervision of IPOs, listed companies, brokers and public offering funds. The fourth was meant to enhance self-construction of the CSRC system.

Experts highlighted the issuance and landing of the documents as a vital step to enhance the quality of listed companies and further stabilize the capital market, as previously implemented measures have already shown an effect. 

The enhanced supervision of IPOs will elevate the quality of listed companies at the root, and promote the sustainable development of the stock market in the long run, Yang said.

US should play a responsible role in ensuring stable, smooth new-energy supply chain: FM spokesperson

The manufacturing line of a NEV factory in Southwest China's Chongqing Municipality Photo: VCG

The manufacturing line of a NEV factory in Southwest China’s Chongqing Municipality Photo: VCG

Ensuring a stable and smooth global supply chain serves the interests of all, and is a responsibility that should be shared by all parties, including the US, a Chinese Foreign Ministry spokesperson said on Thursday, in response to comments made by US Treasury Secretary Janet Yellen on Chinese new-energy products.

A Chinese expert in China-US trade said that China’s edge in new-energy industries are the result of Chinese entrepreneurship, massive investment in tech innovation and the country’s comprehensive manufacturing strength, as well as the choice of the market, which US officials should respect.

On Wednesday, Yellen said she intended to warn Chinese officials in “a constructive talk” about the negative effects of subsidies for China’s clean energy products, including solar panels and electric vehicles (EVs), during a planned visit to China, according to a report by Reuters. 

Yellen reportedly said China’s “overproduction” of solar panels, EVs and lithium-ion batteries have “distorted” global markets and hurt jobs in other industrial and developing economies.

In response, Foreign Ministry spokesperson Lin Jian said at a routine press conference on Thursday that China firmly opposes trade protectionism and unilateral bullying.

The global industrial and supply chains are shaped and developed by the laws of market and business choices combined, Lin pointed out, noting that the vigorous development of China’s new-energy sector relies on technological innovation and excellent quality formed amid global market competition, rather than relying on so-called subsidies for support and protection.

“Speaking of subsidies, I would like to point out the US is leveraging the US Inflation Reduction Act (IRA)’s tax credit policies to distort fair market competition and disrupt the global industrial chain, violating relevant rules of the WTO and the principle of market economy,” Lin said. 

“China firmly opposes such acts by the US and urges the US to correct its discriminatory industrial policies,” said Lin.

Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Thursday that any mismatch in supply and demand can only be addressed through global industry dialogue and cooperation. 

Zhou urged the US side to observe the laws of market, refrain from unilateral control measures under the pretext of protecting national security, and lower tariffs on Chinese goods.

In mid-March, Donald Trump, now presumably the Republican Party US presidential candidate, threatened that he would hit cars made in Mexico by Chinese companies with a 100-percent tariff, according to Bloomberg.

In what analysts say is a “reasonable, legitimate and well-founded” move, China lodged a dispute complaint at the WTO against the US over discriminatory subsidies on new-energy vehicles (NEVs) under the US IRA on Tuesday.

The move not only aims to safeguard the interests of Chinese new-energy vehicle companies and a fair competitive environment for the global NEV industry, but also to firmly defend the rules-based multilateral trading system and resolutely maintain the stability of the global NEV industrial chain and supply chain, a spokesperson of the Ministry of Commerce said on Thursday. 

In 2023, China accounted for around 60 percent of global electric car sales, according to the International Energy Agency (IEA). China doubled solar panel capacity in 2023, and wind power capacity rose by 66 per cent from a year earlier, the IEA estimated.

China is a current leader in new-energy industry. In 2023, its export value of solar panels, electric vehicles and lithium-ion batteries totaled 1.06 trillion yuan, increasing 29.9 percent from 2022, customs data showed.

China’s new-energy industry deserves to be rewarded as their successes stem from risky endeavors that aim to transform the world into a green, better living place, Zhou said.

China, US business communities want cooperation instead of ‘decoupling’: China’s trade promotion agency

File photo: China US

File photo: China US

It is obvious to all that the business communities of China and the US are voting with “their feet” on China’s economy, and want cooperation instead of “decoupling.” This is also what the people of the two countries want and what they hope for in China-US relations, China’s trade promotion agency said on Friday.

At the invitation of US commerce chambers, the China Council for the Promotion of International Trade (CCPIT) plans to organize a delegation of Chinese entrepreneurs to visit the US in June to increase exchanges. 

The remarks came in response to a recent meeting between China’s top leader and a number of US representatives, indicating that China is now paying more attention to exchanges with the American people at all levels and the business community, analysts said.

Chinese President Xi Jinping met with representatives of the US business, strategic and academic communities at the Great Hall of the People in Beijing on Wednesday, according to the Xinhua News Agency.

“The two countries’ respective success is an opportunity for each other. As long as both sides see each other as partners and show mutual respect, coexist in peace and cooperate for win-win results, China-US relations will get better,” the Chinese top leader said.

Just as the Chinese president has stressed, the foundation of China-US relations lies among the people, the hope is in the people, the future lies in the youth, and the vitality lies in sub-national areas, Yang Fan, a spokesperson for the CCPIT, told the Global Times on Friday during a regular press conference.

“As the country’s largest trade and investment promotion agency and the spokesperson of Chinese industrial and commercial enterprises, the CCPIT has always taken it as an important mission to deepen exchanges and cooperation between the business communities of China and the US,” Yang said.

In fact, US companies are still heavily involved in the Chinese market and are confident in China’s economic development and vast market potential.

According to a recent survey by the American Chamber of Commerce in China, the majority of US companies saw improved profitability in China in 2023, and half of the survey participants put China as their first choice or within their top three investment destinations globally. 

One of the latest examples was the just-concluded China Development Forum (CDF) 2024, held from Sunday to Monday in Beijing, during which more than 30 percent of the over 80 business executives attending the forum came from the US.

This figure is strong evidence indicating the US business sector’s unabated commitment to the China market, in stark contrast to the “decoupling” narrative promoted by some US politicians.

“The Chinese economy is always going to be a very significant economy and a very significant driver of global growth, and I don’t think that’s different this year as opposed to any other,” Timothy Creber, general manager at the China Operation of American Express, told the Global Times at the sidelines of the CDF 2024.

“The opportunities are huge and the opportunity to continue to partner with different institutions in this market is very good. So we’re very confident about the Chinese economy over the coming years,” said Creber.

On March 5, the first session of the US-China Commercial Match-Making Program (CMP) in 2024 was held in Southwest China’s Chongqing, after bringing together more than 130 entrepreneurs from China and the US.

CMP was jointly launched by the CCPIT and the US Department of Commerce in 2005. Over the past 19 years, the two sides have held more than 100 themed matching events in advanced manufacturing, rail transit, energy conservation, environmental protection, financial services, automobile technology, tourism and culture, and investment cooperation, benefiting more than 2,000 Chinese and US companies.

“During the CMP session in March this year, we saw warm on-site exchanges and interactions, which shows the strong desire of the Chinese and American business communities to strengthen exchanges and cooperation,” Yang said.

Unlike the US and some Western countries that closed their previously open doors to the outside world for political reasons, China has always welcomed global companies to operate and develop in the Chinese market and share the dividends of its market potential, Li Yong, a senior research fellow at the China Association of International Trade, told the Global Times.

China has taken a slew of measures to expand market access for foreign businesses, including those from the US, so as to achieve greater integration of industrial interests, “make the cake of economic interests bigger” and achieve win-win results, analysts pointed out.

“From the perspective of the US business community, their interests are closely linked to those of the Chinese business community. Therefore, the US business community has an intrinsic motivation to promote the development of China-US relations,” said Li.

However, analysts warned that the US government is constantly trying to suppress China’s development. China expects both sides to meet each other halfway, but at the same time China should also be prepared for the worst.

In particular, the US’ technological war against China is bound to continue, because technological hegemony is one of its strategic fundamental interests, Zhang Xiaorong, director of the Beijing-based Cutting-Edge Technology Research Institute, told the Global Times on Friday.

The US knows it can’t “decouple” from China, but it is increasingly nervous seeing China’s rapid technological rise, Zhang noted.

The CCPIT also said on Friday during the press conference that US acts, such as the so-called “Uyghur Forced Labor Prevention Act” and US export control measures, are still causes of concern for Chinese enterprises.

Chinese tech giant Xiaomi launches first EV model, joining competitive domestic market

Xiaomi SU7 is seen at a Xiaomi store in Guangzhou, Guangdong Province on March 27, 2024. Photo: VCG

Xiaomi SU7 is seen at a Xiaomi store in Guangzhou, Guangdong Province on March 27, 2024. Photo: VCG

Chinese tech giant Xiaomi held a launch event for its first electric vehicle (EV) model, the Speed Ultra 7 (SU7), in Beijing on Thursday. It marks the smartphone giant’s entry into the competitive and challenging Chinese new energy vehicle (NEV) market, analysts said.

Xiaomi has conducted tests using 576 vehicles in 300 cities, with a total road test mileage of 5.4 million kilometers, said Lei Jun, founder and CEO of Xiaomi at the launch event.

The SU7 series will be launched in nine different colors, at a price starting from 215,900 yuan ($29,866), Lei said, adding that mass production is expected to start in the first half of 2024.

Xiaomi Auto said in a post on Weibo on Thursday night that pre-orders hit 50,000 units during the launch event.

Xiaomi has invested over 19.1 billion yuan in 2023 in the initial research and development phase, and the total R&D investment is expected to reach 24 billion yuan in 2024, the CEO said.

The new car has drawn wide attention, including from rival firms. William Li, founder, chairman and CEO of Nio, He Xiaopeng, chairman and CEO of Xpeng, and Li Xiang, founder, chairman and CEO of Li Auto, were all seen at the launch event.

Customers and analysts had previously estimated that the SU7 would be priced at 200,000 to 300,000 yuan. Earlier in the afternoon, at a Xiaomi store at Heshenghui shopping mall in Chaoyang district, Beijing, the Global Times learned that many buyers have already paid around 5,000 yuan ($693) as a deposit, and they are eager to start test driving the car.

Starting from Monday, the SU7 series has been on display in 59 stores across 29 cities in China, a staff member at the store told the Global Times, adding that people have been crowding into the showroom to see the car.

The staff member told the Global Times that the SU7 uses the company’s self-developed Hyper OS as the operating system. It connects EV users to other devices, including smartphones.

“China’s auto market has welcomed another newcomer,” Wu Shuocheng, a veteran automobile analyst, told the Global Times on Thursday. This will increase the already intense competition among major NEV manufacturers, he said.

China’s NEV market has become the world’s biggest, and carmakers are ramping up efforts to improve technological capabilities amid an ongoing price war.

Xinhua News Agency reported on Monday that BYD, China’s top NEV manufacturer, has become the world’s first NEV firm to produce 7 million cars. The company reported annual NEV sales of more than 3.02 million units in 2023, maintaining its lead in the global NEV market.

Beijing-based Li Auto posted net income of 11.81 billion yuan in 2023, up 173.5 percent year-on-year, making it the first of China’s three EV startups to record an annual profit, media reports said.

Meanwhile, Chinese NEV manufacturers are expanding overseas. About 19.5 percent of EVs sold in Europe last year were made in China and this is on track to reach a quarter in 2024, according to new analysis by Transport & Environment.

All these signs indicate that with the accelerated development of global green travel, Chinese brands are leading the transformation of the automotive industry, Wu said. This is inseparable from China’s industrial advantages in the scale and systematization of NEVs, he added.

It’s still unknown whether Xiaomi’s ambition to fulfil its auto business dream will succeed. However, analysts believe it will drive innovation and progress in NEV technology, and help promote the expansion and market penetration of NEVs by attracting more consumers, and increasing awareness and acceptance of NEVs.

China is the world’s largest market for electric vehicles (EVs). In the first two months of 2024, production reached 1.252 million, up 28.2 percent year-on-year, and sales reached 1.207 million, up 29.4 percent year-on-year, according to the China Association of Automobile Manufacturers.

The combined share of EVs and hybrids in China’s auto sales is likely to reach 42 percent to 45 percent this year, up from 36 percent in 2023, according to a report by AP citing data from Fitch Ratings on Thursday.

There is also strong support for the development of NEVs at the national level. China will consolidate and enhance its leading position in industries such as intelligent connected new-energy vehicles, according to the 2024 Government Work Report.

Analysts believe that further refinement and implementation of relevant policies will help to continuously consolidate and expand the stable and positive development trend of the automotive industry and stimulate enterprise innovation.