CHINA REPORT
Beijing Foton Motors and Cummins said they will further strengthen their strategic cooperation in the Southeast Asian region and sign a joint investment agreement with the Foton Cummins Thailand engine factory to provide powertrains for the Foton Zhengda vehicle base and Southeast Asian business.
This signing would mark a further strategic cooperation between Foton Motors and Cummins, targeting a wider range of regional markets and providing more diversified power solutions to global customers.
As a global emerging economy, ASEAN (Association of Southeast Asian Nations) has become one of the regions with the greatest development potential in the world. In recent years, Foton Motors has had significant business expansion in Southeast Asian countries including Thailand, Malaysia, and the Philippines. Their market share has gradually increased in trucks, buses, and other specialized vehicles, and they have built their reputation in the local market.
As a global pioneer in power technology, Cummins established its Asia Pacific business headquarters in Singapore before entering the Chinese market. The scope covers the entire Southeast Asian region, and after decades of deep cultivation, a complete service and distribution network has been established locally.
With the continuous expansion of the export operations of Chinese commercial vehicle and construction machinery companies in recent years, Cummins’ comprehensive service support system in Southeast Asia has become increasingly important. It can help Chinese enterprises quickly establish a sales service system and provide professional support, which is a major assistance for Chinese partners to expand their business in the local area.
Source: Foton Read The Article
PSR Analysis: From a market perspective, the RCEP region (Regional Comprehensive Economic Partnership) is an important global commercial vehicle market. The RCEP is a free trade agreement among 15 Asia-Pacific nations including Australia, Cambodia, China, Indonesia, Japan, South Korea, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.
Member countries account for about 30% of the world’s population (2.2 billion people) and 30% of global GDP ($29.7 trillion), making it the largest trade bloc in history. Signed in November 2020, RCEP is the first free trade agreement among the largest economies in Asia, including China, Indonesia, Japan, and South Korea.
From 2019 to 2021, the region’s share of the global commercial vehicle market remained above 25%. In 2022, China exported 145,900 commercial vehicles to RCEP’s 14 countries, a year-on-year increase of 20.9%. Among them, Vietnam, Indonesia, and Australia are the top three markets. The products with the largest export volume are diesel trucks and road tractors.
Although the commercial vehicle market hovered at a low level in 2022, the overseas market performed well. According to data from the China Automobile Association, a total of 582000 commercial vehicles have been exported, an increase of 44.9% year-on-year.
In 2022, BAIC Foton achieved overseas sales of 86,000 vehicles, a year-on-year increase of 54%, maintaining the top spot in commercial vehicle exports for 12 consecutive years.
Throughout the Southeast Asian market, the traditional commercial vehicle market is also largely occupied by Japanese brands. However, with the gradual implementation of the RCEP trade agreement, competition between Chinese and Japanese brands in the region will become more intense.
With the gradual implementation of policy subsidies for clean energy and electric vehicles in Indonesia and Thailand, competition will also shift from traditional fuel commercial vehicles to the field of electric commercial vehicles. PSR
Jack Hao is Senior Research Manager – China, for Power Systems Research
