China Is Now the World's Top Car Exporter, but Its Automakers Haven't Finished Learning Japan's Overseas Playbook
China exported 4.41 million vehicles in 2023 to take the global top spot, yet from 2012 to 2020 its total exports were stuck at around 1 million units a year for eight straight years. Japanese automakers' first overseas push into the US in the 1950s was a fiasco; they only turned it around thanks to the oil crisis of the 1970s — a crisis is an opportunity, but political risk matters as much as economic risk.
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Eight years stuck at 1 million units is a geopolitical problem, not a product problem
From 2012 to 2020, China's total vehicle exports — including both fuel-burning and new-energy vehicles — hovered around 1 million units. Zhang Junyi breaks out three reasons. First, export destinations were concentrated: Iran was once the largest overseas market for Chinese automakers, and after the US sanctioned Iran, in 2019 China exported almost no cars to Iran at all, causing a major decline. Second, European and American regulations and technical requirements are complex and certification cycles are long. Third, sea and land transport capacity was limited, with tight slots and high prices — at one point Tesla booked entire ro-ro ships, leaving other automakers with orders they could not ship. Earlier still, in 2005 a Chinese model scored zero in a German crash test, which directly caused the first overseas push to fail.
— Zhang JunyiThe pandemic interrupted international supply, and Chinese cars filled the gap
After the pandemic began in 2020, international supply was disrupted and many overseas markets struggled to deliver vehicles. Chinese models, accepted by consumers for their practical and applied value, became a major supplement to local markets. At the same time, transport capacity problems were gradually resolved and export certifications completed, so exports scaled up naturally. In 2021 they suddenly broke 2 million units, overtaking South Korea to become the world's third-largest vehicle exporter after Japan and Germany; in 2022 they broke 3 million to overtake Germany; in 2023 they overtook Japan. Zhang Junyi repeatedly stresses one line: never waste a good crisis.
— Zhang JunyiSecure the home front first: an unstable domestic base means overseas setbacks
Zhang Junyi says the phrasing may not be quite right, but the meaning is this: for a company to live well and survive, it must do so as a whole, and overseas business is always attached to the domestic business. If the domestic base is unstable, overseas development will also suffer setbacks. He gives two counterexamples: Aiways exported a fair number of cars early on, but after its domestic business stumbled, its international business gradually changed too; Great Wall, unable to sell domestically at the time because it could not obtain a license, instead developed in places like Russia and then turned back to the domestic market. But new-energy vehicles are a scale-competition market, and the gap between leaders and laggards keeps widening — going straight overseas without a certain base volume is a huge challenge.
— Zhang JunyiToyota's first US push: ugly, expensive cars nobody bought
In the 1950s Toyota's first attempt to export to the US met with a major setback. Japanese cars were compact, small and durable, completely at odds with the flashy, large, powerful and gas-guzzling design of American cars, and Americans found them ugly and unsuitable. Zhang Junyi breaks out the specific reasons: the US wanted large-displacement, large-body cars, while Japanese cars had insufficient horsepower and were small; Japanese roads were poor at the time, so vehicle designs targeted Japanese road conditions; on price, a Toyota model cost nearly $2,000, equivalent to 67% of the average American wage at the time, so Americans could not afford it either; and more critically, the overseas strategy was simply immature — neither the sales nor the repair and maintenance market was in place, and with no parts supply nobody dared buy.
— Zhang JunyiThe oil crisis gave small-displacement Japanese cars their opening
During the oil crisis of the 1970s, American cars were powerful but burned fuel heavily — they were gas guzzlers — and both sales and profits were hit hard. In the two crises GM's profit fell 50% and revenue fell 30%; Ford's profit contracted threefold, turning from positive to negative growth. Consumers could no longer afford to run big gas burners and wanted fuel-efficient cars, and Japanese cars used this opportunity to enter the US market on the strength of their energy-saving attributes. This was Toyota's second overseas push. Zhang Junyi says: never waste a good crisis — a crisis is also an opportunity.
— Zhang JunyiThe Corolla weighed 950 kg; American cars weighed two tons
Toyota made concrete preparations for its second overseas push: models were developed in directions American consumers could accept, manufacturing quality kept improving, and the Corolla went through many iterations. The most critical factor was fuel consumption — beyond aerodynamic design, vehicle weight had to be considered. At the time a Corolla weighed an average of 950 kg, while American cars of the same period basically weighed two tons, and a Cadillac's engine was basically an 8.2-liter V8. In the 1970s the Corolla was generally about $400 to $1,000 cheaper than American cars. On overseas strategy, Toyota did market research and localized product adjustments, set up a sales company in the US, and had dealer networks on the West Coast and in the eastern Bay Area. Later, to avoid trade friction, it also built factories locally, and after the 1990s it made large-scale overseas investments.
— Zhang JunyiIn China, Toyota chased profit, not market share
Zhang Junyi points out that Japanese automakers consider potential political risks deeply when laying out their industries. What Toyota pursued in China was profit growth, without being overly aggressive about overall market share. Compare the numbers: Volkswagen's share of the Chinese market reached 50% in 2019, BMW nearly 30%, Honda nearly 30%, while Toyota was basically 16%, and now possibly lower. Toyota was thinking about what to do if a potential political risk materialized, so it weighed profit growth against total volume growth more heavily. This is not just Toyota — Japanese and Korean companies mostly make this kind of strategic choice too.
— Zhang JunyiBehind Toyota's recall case was a US-Japan auto war
In 2010 Toyota recalled about 2.3 million vehicles over the accelerator pedal issue, and Zhang Junyi sees this as somewhat like a crisis war, even a conspiracy war. The background: the 2008 financial crisis dealt a heavy blow to the US auto industry, while Toyota was already the world's number one in 2007, and 2008 happened to be GM's centennial — GM had its global number one spot taken by Toyota on its own hundredth birthday. After 2008 GM collapsed and needed government subsidies, and then came the massive recall over Toyota's brake issue; Congress even demanded that Toyota's president appear at a hearing, and the recall issue turned into a formality issue. But Zhang Junyi also says you cannot blame only the US government — this is also a historical warning: an automaker cannot coast on its past, its products must pass muster, and it must meet the most basic moral and safety requirements.
— Zhang JunyiIn their own words · checked verbatim
Never waste a good crisis. When it comes to going overseas, political risk and economic risk are equally important.
不要浪费一次良好的危机 在出海这件事情上 政治风险和经济风险是同等的重要的
Zhang Junyi0:00
Japan's resources are limited, and its market determines that if it does not go outward, it has no way out. This is actually a particularly interesting thing about Japan: its going overseas was in fact determined by geopolitics.
日本的资源有限 它的市场决定了 它不往外走 它没有出路 这个实际上是日本特别有意思的一个地方 它的出海其实是被地缘所决定的
Zhang Junyi31:22
If all technological development were linear, the leader would keep leading as long as it did not make mistakes. But because technology has turning points, everyone has to make trade-offs, and different trade-offs produce different outcomes. The most important thing for a person is choice, not effort.
如果整个技术发展都是线性的话 领先者就持续领先 只要他不做错事就可以了 但是因为技术有转折 大家就有取舍 不同的取舍造成了不同结果 人最重要的是选择 不是努力
Zhang Junyi38:33
An automaker cannot coast on its past. In the end, your product has to pass muster, meet consumer needs, and satisfy the most basic moral and safety requirements. If you fail to do that, you will ultimately be spurned by the market.
一个车企不能吃老本 最终最终你的产品要过关 要满足消费者需求 和满足最基本的道义和安全的要求 如果你这方面不做到的话 那最终还是会被市场都唾弃的
Zhang Junyi1:10:55
Those who can truly gain a foothold in a local market must rely on high-quality, premium products. Why was Japan able to gain a foothold in the US, to the point that it later competed so hard that Detroit was reduced to an empty, ghost town?
真正能够在当地市场站住脚的 一定是靠品质化的优质产品 为什么日本能够在美国站得住脚 甚至于当时卷到后来 把底特律都卷成空城和鬼城了
Zhang Junyi1:11:55
Figures
| China's total vehicle exports (Jan-Nov 2023) | 4.412 million units, up 58.4% year on year | 0:00 |
| China's total vehicle exports (2012-2020) | about 1 million units per year | 5:05 |
| Toyota's market share in China | about 16% | 29:39 |
| Volkswagen's China market share in 2019 | 50% | 29:39 |
| Corolla curb weight | 950 kg on average | 24:26 |
| US car curb weight in the same period | basically two tons | 24:26 |
| Number of vehicles in the Toyota recall case | about 2.3 million units | 1:08:53 |
| Chinese passenger cars' global market share (Jan-Jul 2023) | 32% | 1:17:00 |
Glossary
- CKD/SKD
- Exporting vehicles as knocked-down kits for local assembly, which can reduce tariffs and shipping costs.
- TPS (Toyota Production System)
- Toyota's lean production management system, whose core is just-in-time and automation.
- CVCC (Compound Vortex Controlled Combustion)
- An engine technology developed by Honda that improves fuel efficiency and reduces emissions by re-burning exhaust gas.
- Nianyu effect / catfish effect
- Letting elite employees pull along lagging employees to activate the whole team.
How to listen
Founders and investors watching Chinese auto exports, geopolitical risk and the globalization of manufacturing, plus industry researchers who want to understand how Japanese automakers rose.
After 1:15:59, the discussion of how global sales figures are counted can be skipped.