Recent conversations with some of the new Chinese arrivals in the market have left me in no doubt about the commercial revolution that is underway in the automotive industry. 

I’m not just talking about being able to deliver technically advanced vehicles at cheaper prices but about sweeping aside established business orthodoxy.

The time-honoured commercial strategy of traditional OEMs based on product, pricing and planning has effectively been taken out of the Chinese model because the sheer pace at which they want to bring products to market does not give them enough time.

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In many cases, their approach is that product planning as we know it is an unnecessary speed-limiter. Instead, they will take a product to market and if it fails, they will just turn a corner. If it fails again, they’ll turn another corner. 

It is essentially a start-up mentality in a mature market. While the established OEMs plan to within an inch of their lives, the Chinese approach is to launch a wide portfolio of products in the market and react according to the response. The successful products remain, the others are cast aside.

In many ways, it is a complete reversal of accepted commercial practice. One senior Chinese leader told me that his OEM had a sales target of 100,000 units of certain models. When I questioned him about the market insight that showed how they could sell that volume of vehicles, his reply was that no such insight was necessary and the plan was built around the target. The number comes first, rather than the other way round. 

Traditional business practice and custom in any sector, not just automotive, would suggest this to be reckless for a company. But the business models for new entrants have been distorted by the massive subsidies that have been pumped into the Chinese OEMs by the Chinese government, skewing the playing field and giving manufacturers the security to set aggressive targets without fear of failure. 

For an executive search specialist like me, the implications of this new way of thinking are huge. If that is how these Chinese newcomers operate, then the overall structure of how the companies are put together and the skills that are required are going to look very different.