An Interview with Mr. Levent Simal, Dataforce – Insights into China’s Automotive Sector

ECOVIS Beijing: In recent years, more and more automotive companies have expanded their production to China. What are the major reasons for this shift towards China and are there any signs that OEMs might be relocating the production due to rising labour costs?

Levent Simal: The most popular automotive brand in China is without a doubt Volkswagen – not only within the imported brands but also on the general market. I have to admit, it is quite impressive how Volkswagen has managed to dominate the Chinese market during past years by introducing targeted products and forming successful Joint Ventures. German automotive brands are the second most popular in China, only surpassed by Chinese and followed by Japanese, American and South Korean manufacturers. Although labour costs will surely continue to rise in the upcoming years, this trend is accompanied by an increase in demand for higher quality.

Recent sales figures have again illustrated the ongoing shift towards higher-priced automotive models. Besides the image and status conveyed by such vehicles, this demand is fuelled by greater attention to higher quality for which consumers are increasingly willing to pay. But regardless of production costs, I also see a huge advantage in the logistics infrastructure of China – in order to meet the growing demand, speed of delivery is of paramount importance. Customers expect to receive the cars quickly and this is possible due to China’s rapid development in the logistics infrastructure. Overall, automotive OEMs do not compete merely in terms of product pricing, quality and image but also with regard to delivery speed and reliability.

ECOVIS Beijing: The current reorientation of automotive companies towards China has, in many cases, led to widespread job-cuts in industrialized countries. How does this phenomenon influence the decision-making process of foreign automotive brands in China?

Levent Simal: Due to the amount of the employees of automotive companies, relocating abroad has huge effects. This is, however unfortunate, the general approach that manufacturing companies take. As far as I can tell China is merely the first stage in further successive transfer of production towards the East – these are the effects of profiting from a global environment. Furthermore, Chinese takeovers of traditional German companies do not necessarily have to be viewed as negative. This especially applies when further development and current jobs can be secured at the acquired company.

ECOVIS Beijing: The automotive industry in China has grown dramatically within a short period of time and currently produces more cars than any other country worldwide. How has the Chinese automotive sector developed during the past years?

Levent Simal: Of course, the Chinese automotive sector is expanding incredibly fast. When considering that the number of car registrations in China increased five times from 2005 to today, China gives the impression of an automotive paradise. Car-buyers are not financed by credit but prefer to pay immediately in cash. Besides classic limousines, especially SUVs have proven popular. By no means should Chinese brands shy away from international competition but can rather confidently stand up to their foreign competitors. I noticed at the Beijing Autoshow this year that there are a lot of Chinese cars which are absolutely competitive with regard to comfort, equipment and pricing.

Also in terms of security, Chinese manufacturers have managed to continuously develop higher standards. Although the domestic market still offers high growth potential, some Chinese brands have even already begun to enter foreign markets, for instance Chang’an in Russia. It remains to be seen how international automotive companies react to the development of this new global competitor. If we had attended European industry conferences only a couple of years back, the consensus would have been that the development of Chinese brands would still take its time. In the meantime, however, I have gained my own insights through working in China and believe that we will see Chinese cars far earlier in other markets than initially expected.

ECOVIS Beijing: Due to the large scale of environmental pollution and traffic congestions in China, the countrywide transformation towards e-mobility is inevitable. Which further trends do you consider relevant for foreign automotive companies in future?

Levent Simal: Sales forecasts for the upcoming years paint an overall positive picture which is a good precondition for new trends – currently the most interesting developments are taking place with regard to alternatively powered vehicles. Although the overall volume may not yet be significant, battery electric vehicles (BEVs) are seen as the key to a sustainable automotive future. Other challenges arise from the expansion of infrastructure: European automotive markets face similar problems but no standard solutions are yet in sight. Ideas ranging from charging facilities at gas stations to standardized batteries to be replaced when empty are currently being contemplated – the large number of producers will have to agree to adapt certain norms.

Because of the general development in China, I am confident that China or Asia in general will develop faster with regard to the above mentioned challenges. Of course, there are some other possibilities for promoting green activities through innovative approaches such as car sharing. We will have to wait and see if and how the Chinese market will accept such alternative ideas. Another interesting trend is the development of connected vehicles, the demand for which should be comparatively high given the affinity to the internet and social media based devices in China. I believe that these developments are highly anticipated, especially the next steps of the connected car.

ECOVIS Beijing: You have been working for Dataforce for almost 15 years to date. For what reasons did you personally enter the automotive business and what is it about this sector that continues to fascinate you above all else? 

Levent Simal: As in most cases, I had initially not planned to enter the automotive industry – during my studies I worked as an intern for Dataforce in Frankfurt and have stayed loyal to this company ever since. As time passed, I developed somewhat of a passion for cars in general and enjoy driving myself. Personally, I prefer comfortable limousines with a decent amount of horse-power. I find it relaxing to sit safely inside my car and listen to music while driving through different neighbourhoods or the countryside. This gives a feeling of freedom and independence. A car is a technical miracle: a huge number of very small components is perfectly coordinated to allow for a great driving experience while offering comparatively high levels of security.

ECOVIS Beijing: Dataforce has been operating from Beijing since 2006. Please tell us more about your activities, your customers and the prospects for your business in China. How is Dataforce different from its competitors and why do OEMs decide to go with Dataforce?

Levent Simal: In contrast to our offices in Germany and Italy, our focus in China is to provide Data-Services and BI-Systems to our automotive customers to generate more transparency in their huge amount of data. Dataforce is an essential partner for setting up and developing internal market analyses of our customers. They use our expertise primarily for reviewing, structuring and coding Registration, Sales or other internal data. Additionally, our BI systems allow our customers to use the processed data very quickly and flexibly. This is a huge benefit for our customers because of the reduced time for such analyses, reports or forecasts. Today it is no longer sufficient to work on coded and cleaned data directly on a database.

In order to have analyses and insights available quickly, a simple and flexible application must be ensured. Precisely this combination of data processing and BI-Systems makes Dataforce so valuable to our customers. Through our many years of cooperating with OEMs on the international level, we have accumulated an immense amount of knowledge about automotive markets and the coding and classification of vehicles in their customized segments. OEMs want to secure this advantage that we offer and are sometimes even surprised due to the customer specific knowhow that Dataforce brings to the cooperation instantly from day one.

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