German media: "A big weakness" slows down the rise of China cars in Europe, and half of the brands will disappear.

# The headline of current events said # "Many European experts think that China cars have a bright future. They perform well in crash tests, are usually beautifully designed, and provide reasonable equipment even in the basic version-and the price is unparalleled. " However, the article titled "What May Stop the Rise of China Electric Vehicles in Germany" in German Economic Weekly on December 10th pointed out that the China brand still has a key weakness-China automobile manufacturers lack a service point network in Germany and Europe. Many China players also have weak financial resources.

Nearly 30 China brands have entered Europe.

At the end of November, BYD, a China automobile manufacturer, announced that it had reached a "historic milestone": the 6 millionth new energy vehicle rolled off the assembly line in Zhengzhou, China. In just three months, BYD’s car production has increased from 5 million to 6 million. BYD is a success story: it took 13 years to produce the millionth electric car. BYD currently has offices in 58 countries around the world, including Germany.

Like BYD, Aichi, MG, Geely and Weilai have mushroomed in Germany. Chery is also expected to start selling in Germany in the second quarter of 2024.

Economic Weekly article

Ergun Lumali, President of the General Union of Mercedes-Benz Group, recently visited China, where he was able to drive and inspect the cars of China automobile manufacturers. He said: "China manufacturers are ahead of us in the fields of digitalization, infotainment and autonomous driving, and the price makes it difficult for us to keep up. We are getting better, but we must hurry and act faster. "

In any case, people in China have ambitious sales plans: "At present, about 20 to 30 China brands are trying to gain a foothold in Europe," said benedikt Mayer of IfA. So far, China’s market share of new cars in Germany is about 1%. By 2025, this proportion is likely to reach 3%. The growth is enormous.

BYD dealers also sell Mercedes-Benz.

But the China brand still has a key weakness: "China manufacturers come to Europe with very strong products, but this is only one of the keys to success," said Peter Fintel, head of Capgemini’s technology and innovation. Sales and service are equally important.

Fabian Brandt, partner of Oliver Wyman Consulting and global consultant in charge of automobiles and industrial products, said that service plays an important role in the life cycle of automobiles. Service "determines whether customers are satisfied." Anyone who has just entered the European market must establish a good service network. If the player doesn’t do this, it will damage the brand. Lack of service may slow down the rise of China brands. "

China’s share of electric vehicles exported to Europe is increasing.

But what if the China car needs to go to a repair shop? Then sometimes there may be problems. Meyer said that in order to fully enter the German market, manufacturers need at least 100 auto repair service points.

Not all China automobile manufacturers have established a comprehensive service point network. For example, Weilai mainly passedmove""WeilaiService center ",to provide users with on-site service. In any case, there are not many users. From January to September, 2023, the newly registered number of Weilai Automobile was only 885. This is not enough to cover the high cost.

A China automobile brand store in Europe.

In contrast, taking MG as an example, it is estimated that there will be 20,000 newly registered cars in 2023. "This goal seems to be achievable at present," said MG. Polestar has set up more than 200 service points in Germany and cooperated with Volvo Car Germany. Polestar 2 has registered more than 15,000 vehicles in Germany. Aichi Auto relies on ATU auto repair service chain. Customers can go to any of about 500 ATU branches in Germany. Up to now, Aichi Automobile has sold about 3,000 U5 SUV models in Germany. BYD dealers also sell Mercedes-Benz in Germany.

The way to establish contact with large retail chain stores is particularly promising. They not only have dozens of car dealerships in the region, but also have affiliated repair shops. This is how sales and service are combined. For example, Great Wall Motor relies on Emile Frey Group, an importer in Germany. So far, the manufacturer has sold more than 4,000 Great Wall Euler 03 cars in Germany alone.

get ready for a journey or a march

There is another risk: according to consultant Brandt, many players from China also have "fragile financial resources". Therefore, he estimated that "half of the brands currently targeting the European market will disappear again". The risk faced by car owners in China is whether they will continue to get spare parts, especially software updates. If the manufacturer withdraws from the market again, in theory, it must abide by the law and continue to provide spare parts to existing customers.

Therefore, if China manufacturers want to gain a foothold in the European market, it is imperative to build a perfect service point network to give European drivers who have bought China cars and want to buy China cars a "reassurance".

# New energy vehicles #

Look at beauty cosmetics from the inside, from ancient times to the present, through time and space.

Beauty products have both efficacy and spiritual consumption attributes, and the triple values of time, research and development and scale support the valuation premium of international beauty leading groups. The history of China’s beauty industry is still short, and it is in the stage of gaining momentum from marketing/channel-driven to R&D-driven, improving comprehensive strength and transforming into a real consumer brand, with a broad market and rich opportunities; The multi-brand and collectivization trend of local high-quality beauty cosmetics leaders has begun to appear, and the growth supports high valuation.

▍ The valuation premium of the beauty industry is due to the value of spirit and efficacy, and the triple value of time, technology and scale breeds the valuation premium.

The historical P/E center range of the international beauty industry leader is 20x-35x, which generally enjoys a valuation premium compared with its index. The P/E multiple generally exceeds 1.4, and the P/S multiple generally exceeds 1.3. We believe that the valuation premium enjoyed by international beauty leaders is due to:

1) The value of time: the precipitation of time creates brand value. International beauty leading companies have a long history of more than 70 years, and their brands are well-known, rich in connotation and enjoy a premium.

2) The value of science and technology: The international beauty leading group has invested heavily in basic research (skin texture/raw materials, etc.), applied research, safety testing and other aspects for a long time to build tangible technical barriers and intangible consumer trust barriers.

3) Value of scale: collectivization exerts brand synergy, globalization captures dividends in various markets, leading the scale and stabilizing the position of the industry.

▍ China’s beauty industry enjoys a valuation premium, with a broad market and abundant opportunities.

The valuation premium of China’s beauty industry has existed for a long time, with the P/E multiple center of 2.3 and the P/S multiple center of 3.1. Main reasons:

1) Early stage of development: low permeability and leading growth rate. In terms of penetration rate, the per capita consumption of beauty care in China is only about 403 yuan, far lower than that in Europe, America, Japan and South Korea. In terms of growth rate, CAGR+10.1%% in China’s beauty care market from 2008 to 2021 is higher than CAGR+2.6%% in the world.

2) Continuous iteration, full of vitality, driven by channel to technology/R&D.. China’s beauty industry has a fast iteration: consumers are becoming more rational, supervision is becoming stricter, channels are more dispersed, traffic costs are constantly high, and marketing focuses on value recognition.

▍ China’s beauty industry has a short history and is full of vitality.

The development of local beauty listed companies started relatively late, and most of their brands were launched after 2000. The market concentration of beauty personal care in China is still low. In 2021, the proportion of CR3/5 is 26.8%/33.5% and there are no local companies in CR5, which is lower than that in Europe, America, Japan and South Korea. There is still room for improvement in the market share of high-quality local leading companies. At present, the industry is poised for stage adjustment, from channel and marketing-driven to technology-driven, and companies with strong comprehensive capabilities are expected to further increase their market share.

▍ The pattern is scattered, high-quality leading players enjoy industry growth and share increase, and leading players in sub-sectors rise.

▍ Risk factors:

Overseas historical development is not fully applicable to China beauty listed companies; The weak consumption of optional consumption, especially in the field of beauty, affects the company’s performance: the industry updates quickly, and the company, brand or product may have a certain life cycle; Industry competition or intensification, affecting the company’s performance; The sales volume of new products may not meet expectations, and the construction of brand matrix still has a long way to go.

▍ Investment strategy:

After the valuation adjustment since the second half of 2021, the PE of the leading A-share beauty companies in 2023 is concentrated in 45x~55x, which has fully reflected the factors such as the slowdown of industry growth, the ready research and development, and the shift of driving force. In short, in 2023, with the gradual recovery of consumption, the efficiency improvement of various companies’ operations/the promotion of large single product strategy/the listing of new products, there is still room for improvement in the valuation of leading companies; From 2023 to 2025, with the improvement of R&D and comprehensive strength of local brands, as well as the improvement of consumers’ recognition of local brands, the beauty industry is expected to change from marketing-driven and channel-driven to R&D-driven, and high-quality bibcock is expected to become a real consumer brand with both product power/marketing power/channel power, thus maintaining a high valuation.

This article comes from a selection of brokerage research reports.

Football match

From: Nanjing Morning Post

Wonderful moment

In a football training class, we played a match between grade four and grade three.

Before the game, the coach said to us, "We should not score three goals in 15 minutes in the fourth grade, and if we finish, we will run ten laps in the third grade." "yeah!" Our fourth-grade players cheered up, not only to win the game, but also because the match was much more interesting than constantly training with the ball and passing the ball.

The confrontation began. First of all, Wang Yike, a fourth-grade student, served the ball to Xu Zimo. Xu Zimo just dribbled the ball forward, and Wang Wenxuan snatched it away in an instant and passed it to striker Zhou Yuxiao, who ran to the penalty area with the ball. When I was about to hit the door, I seized the opportunity and shoveled a ball at Zhou Yuxiao with lightning speed and successfully took it out. Then I quickly got up and passed the ball to Li Jiaming.

It’s a pity that I forgot to stare at people. Xia Shaozhong grabbed Li Jiaming’s ball while I was not looking. However, Li Jiaming is not a vegetarian. He stepped forward with a big foot and drove the ball to the door. Next, in the third grade, Zhou Yuxiao took the ball and ran. Sun Yuanhao riveted his strength and didn’t keep it. The ball scored. Unfortunately, there are only five minutes left, so it seems difficult to score two more goals in the third grade.

As soon as several teammates in our fourth grade came together, they decided to fight a protracted war with them next. It was our turn to serve. Forward Wang Yike passed the ball to Li Jiaming. Li Jiaming provoked the ball and drove it forward hard. The third-grade goalkeeper Chen Ganyu blocked the ball with an accurate side jump and threw it out.

Chen Ganyu threw it to Xia Shaozhong, and Xia Shaozhong passed it to Zhou Yuxiao. Wang Yike took the opportunity to successfully grab the ball, but unfortunately he didn’t keep it. The ball fell to Wang Wenxuan’s feet again, and Wang Wenxuan passed it to Zhou Yuxiao to hit the door and was caught by our fourth-grade goalkeeper Sun Yuanhao.

Next, we have to fight back. I took the ball across the center line to find Li Jiaming and passed it to him. Li Jiaming was ready to hit the door, but unfortunately he didn’t score. At this time, the whistle blew and we achieved our goal.

This wonderful match tested our skills and made the cooperation between teammates more tacit.

Football is really a passionate sport!

Yixin Garden Primary School Class 4 (3) Liu Honglang

Instructor Liu Feng

There was another tragedy of trampling on the stadium, and at least 12 people were killed.

Local time this Saturday, in San Salvador, the capital of Central American country El Salvador, a serious stampede occurred in the middle of a domestic football league match, killing at least 12 people. It is said that the disaster occurred after the stadium gate was closed, when a large number of fans still tried to force their way into the venue. Some officials said that they thought some fans had bought fake tickets and were investigating. According to the Ministry of Health of El Salvador, about 500 people have received treatment, and many of them have been transferred to hospitals.