China’s Great Wall automaker opens Yokohama R&D division in bid to obtain Japanese technology

Kyodo, Bloomberg

A Great Wall Motor Co. research and development base in Yokohama has started operations as the Chinese automaker aims to strengthen cooperation with Japanese auto parts makers.

The launch Tuesday reflects Great Wall’s efforts to deliver high-quality products by gaining technological knowledge from Japanese companies in a variety of fields, such as environmentally friendly and self-driving cars, according to Hu Shujie, head of the Japanese development unit.

This is its first facility in Japan. China’s largest SUV maker plans to open at least three more overseas research and development centers, as it seeks to build supplier relations and gain access to technology.

The carmaker renowned for imposing military-style discipline on its workforce aims to open R&D centers in North America, Europe and India in the next few years, according to Suguya Fukusato, a company vice president. In Yokohama, Kanagawa Prefecture, where the automaker has a five-member team, the plans call for as many as 200 employees to work on areas including fuel cell vehicles and autonomous driving.

Based in Hebei province, Great Wall Motor is the leading seller of sport utility vehicles in China. It sold around 853,000 autos in 2015, according to the company.

Other Chinese automakers that have set up research and development bases in Japan include Changan Automobile Co., which has partnered with Mazda Motor Corp. and Suzuki Motor Corp.

“Great Wall is becoming a global brand with sales networks in the Asia-Pacific, Africa and South America,” Hu said in an interview on Tuesday. “We understand that without global research and development, we won’t be able to provide global customers with high-quality products and services.”

Chinese carmakers are venturing overseas even as they struggle to break into developed markets, such as the U.S., Japan and Europe, where tighter emission and fuel economy rules require advanced technology. They also risk falling behind in the race for fully self-driving cars, seen as the next phase of automotive technology, against global carmakers and the likes of Apple Inc. and Google Inc. without attracting global talent.

“They are sowing the seeds of future competitiveness,” said John Zeng, a Shanghai-based analyst at LMC Automotive. “You can never underestimate these overseas R&D centers. It may be a long way off but eventually they may become the heart and brains of the company.”

Great Wall’s move follows that of Chongqing Changan Automobile Co., which has established research centers in the U.S., Japan, Britain, and Italy.

Zhejiang Geely Holding Group Co. runs a joint research center in Gothenburg, Sweden, with its Volvo Car unit. SAIC Motor Corp., China’s biggest carmaker, has said it will set up a venture capital company in Silicon Valley to invest in the latest technologies in the industry.

Great Wall chose Yokohama as the site for its first overseas R&D center because of the network of auto suppliers anchored by Nissan Motor Co., Japan’s second-largest carmaker. The city, about a 40-minute train ride from Tokyo, was also very aggressive in inviting foreign companies to invest, said Great Wall’s Hu.

Great Wall deliveries rose 17 percent to 853,000 vehicles in China last year on demand for SUVs, outpacing the 7.3 percent gain in industrywide passenger vehicle sales. SUVs are forecast to rise 36 percent to 8.42 million units in 2016, according to estimates by the China Association of Automobile Manufacturers. The company’s stock fell 39 percent in Hong Kong trading last year on concern an industry slowdown would crimp profit margins.