Laborers work at the Qingdao branch of SAIC-GM-Wuling Automobile.
Agence France-Presse/Getty Images
China’s No.1 car maker by sales said it would establish a venture-capital company in Silicon Valley to tap advanced technology in a bid aimed at bolstering its own brands at home, where it faces increasing competition from foreign brands.
SAIC Motor Co. Chairman Chen Hong gave only a broad overview of the plan during a shareholders meeting Thursday. He said the company is in talks with Silicon Valley-based venture capitalists and private-equity investors over potential cooperation, but he didn’t give any specific names.
Chinese car companies, including SAIC, could do with all the help they can get, as the majority of Chinese consumers prefer foreign-branded cars. Chinese domestic brands’ market share in the country’s passenger-vehicle market fell to 36.5% in May from 39.4% in the year-earlier period, the ninth-consecutive month of decline, according to data from a government-backed industry group.
As foreign companies produce more affordable cars, they’re entering into what used to be the Chinese players’ realm, said Mr. Chen.
“Building a brand is an arduous job,” he said. “Chinese car makers must go upscale, otherwise the situation will be worse.
“In terms of sales, SAIC is a big car company. But when it comes to core technologies, we are far from strong enough,” said Mr. Chen, who became chairman in May. “Silicon Valley houses a number of emerging-technology companies. Having a footprint there will help improve our innovation ability.”
In addition to keeping an eye on opportunities in the U.S., SAIC is building a research center in Shanghai that will focus on emerging auto technologies. It’s set to be completed in June 2015, he said.
New technologies are desperately needed to alleviate problems plaguing China, such as traffic congestion and air pollution. “We must have a sense of urgency,” he said.
Citing recent remarks from Chinese President Xi Jinping, who visited an SAIC facility last month, Mr. Chen also said developing new-energy vehicles is a priority for SAIC. “We already have a lineup of electric car models. The next step is to reduce costs to make them affordable,” he said.