China's truck industry is facing rapid development

At the recent first China Truck Model Awards Ceremony, industry professionals expressed admiration for the remarkable progress made by China's truck sector. However, there is growing concern about how long the current competitive edge can be sustained. **I. Key Technologies Need Improvement** Li Qingwen, president of China Automotive News, emphasized that while domestic truck brands currently dominate the market in China, this does not necessarily mean they have secured a lasting competitive advantage. Tan Xiuqing, vice president of Shandong Automotive Industry Group, agrees. He notes that although Chinese truck manufacturers have significantly narrowed the gap with foreign counterparts, certain areas are showing signs of widening disparities as products become more advanced. In terms of product development, critical components such as axles and automatic transmissions still lack high-tech, independently developed alternatives. The reliance on foreign technology remains high, particularly in automotive electronics, which is still dominated by international players. Additionally, due to the low penetration rate of electronic systems in domestic trucks, many companies have not prioritized R&D in this area. Last year, the Liberation J6 model, a source of national pride, rolled off the production line. Meanwhile, Sinotruk and Dongfeng Commercial Vehicles are also working on new models. Despite this progress, Tan Xiuqing revealed that many of these new models are actually developed under commission from foreign companies, indicating a lack of independent innovation. **II. Rising Corporate Costs** Earlier this year, news of rising iron ore prices once again put pressure on truck manufacturers. In fact, over the past two years, the continuous increase in raw material costs has placed significant financial strain on the industry. Peng Huacheng, a researcher at JAC Heavy Duty Vehicle Market Department, points out that while rising raw material costs are a major factor, increasing labor and management expenses cannot be ignored. Since January 1, China has implemented a new labor law aimed at better protecting workers, which has added to the cost pressures faced by companies already struggling with inefficient employment practices. Peng believes that domestic truck companies are starting to learn from foreign best practices, but this learning often remains superficial—focused on concepts rather than practical implementation. As a result, these advanced ideas fail to deliver real benefits and instead cause internal conflicts. **III. Unbalanced Cost Structure** According to Tan Xiuqing, the cost structure of Chinese trucks shows a high proportion of material and processing costs, with research and development spending being relatively low or even absent. This stems from the early adoption of foreign models and technologies. Although the government has encouraged independent R&D, many companies remain reluctant to invest in it, often engaging in cutthroat price wars instead. "This issue is deeply rooted in the unreasonable pricing of products and the distorted relationship between vehicle manufacturers and their suppliers," Tan explains. "Some manufacturers prefer to focus on short-term sales strategies rather than investing in future innovation." Recently, steel prices have surged sharply, yet heavy-duty steel producers have remained relatively stable. A company executive, who wished to remain anonymous, told reporters that their strategy is to wait and see if competitors raise prices before making any decisions. “We’re testing our ability to absorb cost increases,” he said. An industry expert noted that much of the success of Chinese truck companies has been supported by the cost-cutting efforts of parts suppliers. In contrast, in foreign markets, parts companies play a key role in helping vehicle manufacturers upgrade their technology. The long-term consequences of this "cost-sharing" model may soon become apparent.

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