The marriage with Great Wall is just an ulterior motive. BMW’s future competitor in China may be Didi Dache!

Recently, Great Wall Motors and BMW Holding (Netherlands) formally signed a joint venture contract on new energy vehicles, with each party holding 50% of the shares. After the signing, Great Wall Motors' stock price rose by 4.93% in a single day.

It is learned that the joint venture factory of the two parties will be located in Zhangjiagang City, Jiangsu Province, with an estimated standard annual production capacity of 160,000 vehicles and a maximum production capacity of 250,000 vehicles. The new factory is part of BMW's global strategy and is also the future global manufacturing base of the MINI brand.

Why are BMW and Great Wall so compatible?

BMW and Great Wall Motors have entered into a partnership, with double points being an important internal driving force.

According to the national "Parallel Management Measures for Passenger Car Enterprises' Average Fuel Consumption and New Energy Vehicle Credits", the corresponding proportion of new energy vehicle credits for each automobile company will reach 10% in 2019 and 12% in 2020.

Now that the dual-points transaction has started, those car companies with negative points can no longer sit still.

Due to the pressure of the double-credit policy, many overseas auto giants have cooperated with Chinese automakers. Volkswagen and JAC, Daimler and BAIC, Ford and Zotye, Renault-Nissan and Dongfeng, all these cooperations have been achieved thanks to the double-credit policy.

Great Wall and BMW are both big negative points holders, and both parties will benefit from cooperating in the production of new energy vehicles. The points generated by the new factory will be distributed in the future according to the shareholding ratio of Great Wall and BMW.

BMW's previous partner in China was Brilliance. Faced with the aggressiveness of Mercedes-Benz and Audi and the weakness of Brilliance Auto, having another partner will obviously help BMW gain a more advantageous position in the Chinese market.

In reality, BMW doesn't have many options.

Looking at domestic automobile companies, almost all of them of a certain scale have merged with foreign-funded companies, and now only Great Wall is left.

Last year, BMW produced a total of 378,000 MINI cars. Currently, 60% of the MINI brand's production comes from the Oxford plant in the UK. Due to the impact of Brexit, the BMW Group is considering closing the MINI plant in the UK.

Obviously, China is an ideal location for BMW's new factory.

China is the world's largest automobile production and sales market, and its new energy vehicle market is also the largest in the world. Whether considering the geographical location or the supply chain system, China is suitable for BMW to settle down.

Great Wall Motors' manufacturing level and supply chain system are very competitive in the Chinese auto market, and its quality control capabilities also make BMW favor it. At the same time, Great Wall is a private enterprise, and its efficient execution and flexible mechanism will make the cooperation smoother.

Britain fell, the Great Wall was full

Great Wall finally ushered in a joint venture.

Wei Jianjun, chairman of Great Wall Motors, said frankly that he had wanted to form a joint venture for a long time, but "it is actually not our turn."

The successful joint venture itself is a recognition of Great Wall by international auto giants and the Chinese government. With the loosening of policies and the growth of strength, Great Wall finally achieved this goal.

As early as 2008, Great Wall had negotiated with Chrysler and the two sides began to develop products, but nothing happened in the end.

In 2011, Great Wall Motors attempted to form a joint venture with Jaguar Land Rover, but the latter ultimately chose Chery. In April 2015, foreign media reported that Volkswagen might cooperate with Great Wall, but Volkswagen chose JAC. This time, the successful joint venture with BMW has fulfilled Great Wall’s long-cherished wish.

The establishment of the new company will first give Great Wall an extra leg to walk. The decline of the SUV craze and the backwardness in the field of new energy vehicles have made Great Wall urgently need new profit growth points. The positive points brought by the new factory will also make Great Wall breathe a sigh of relief.

However, based on previous joint venture experience, it is difficult for Great Wall to obtain BMW's core technology, even for electric vehicles produced in cooperation. What Brilliance cannot obtain, Great Wall will find even harder to obtain. But Great Wall will still benefit greatly from this cooperation. BMW's advanced production concept will enhance Great Wall's standardized production capacity.

Great Wall Motors, which focuses on the domestic market, needs to learn from BMW's overseas marketing management experience. The joint venture will help Great Wall Motors understand and adapt to the international automobile market, which will help Great Wall Motors further expand into the international market.

In terms of brand culture building, Great Wall can also learn from BMW.

In addition, from the moment of its marriage with BMW, Great Wall has obtained BMW's brand endorsement, which is undoubtedly a rare opportunity to increase the premium of its own brands.

Moreover, this time, Great Wall made money while doing nothing.

Wei Jianjun said: "This cooperation embodies a free combination and is also a recognition of each other. It is a joint venture between private enterprises in the true sense and the highest quality."

Compared with traditional joint ventures where foreign capital provides drawings and Chinese side undertakes OEM production, this joint venture adopts BMW's global R&D and production control standards, while leveraging Great Wall Motors' capabilities in localized production, supporting facilities, management and other fields.

The first product of the new joint venture is a compact SUV, with both BMW and Great Wall making technical contributions. Great Wall SUV also has a strong brand effect in China and can provide brand support for the first product.

In addition, the cost of BMW's FAAR front-wheel drive platform is too high and the profit margin is low. In the future, the successor models of the MINI family are likely to adopt the MINI platform jointly developed by Great Wall and BMW.

The cooperation between Great Wall and BMW shows that the status of domestic brands in joint ventures has been further improved and Chinese car companies are no longer secondary foils.

BMW's hidden agenda

The company established by the two parties did not use a name like Great Wall BMW, but a new name - Guangbeam. The official claim was that this was to promote the new company's more independent development.

The first product of the joint venture is a pure electric SUV model with a new brand and a new platform, which is scheduled to be launched in 2021. The second model of the new company will be a product under the BMW MINI brand platform.

The MINI brand focuses on small cars. MINI has been imported into China for many years and has its own unique brand influence, but it eventually became a niche fashion brand mainly sought after by young female customers.

In China, people generally prefer large cars. This means that the market potential of MINI in China is limited. Although domestic production can make MINI's price more competitive, it cannot change the overall situation.

BMW has previously publicly announced that MINI brand products will utilize BMW's existing sales channels in the country and no new channels will be added.

The mobility business is an important part of BMW's global strategy and is related to the future of BMW. BMW's ReachNow has been launched in China. BMW's ReachNow and DriveNow have been deployed in many i3 and MNI vehicles around the world.

The i3 is expensive and too costly for the mobility business. The relatively cheap MINI E is widely used in the mobility business. The price advantage of the MINI E produced on a large scale in China will be even more obvious.

BMW plans to use all-electric vehicles for mobility services in some cities by 2020-2021. Beam's MINI cars will also be put into mass production around 2020.

If the MINI models produced by Guangzhun are mainly used for travel business, the dependence on the traditional 4S store retail model will be greatly reduced.

BMW has publicly stated that it will not build new sales and after-sales channels, and it may be that it really does not need to do so. Direct wholesale to travel service providers, such as car-sharing companies and car rental companies, can meet the needs.

BMW MINI settled in China, and the biggest concern may be the huge travel service market in China in the future, facing Internet travel companies like Didi Dache. And this may be the real intention of BMW's joint venture with Great Wall.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.