Mr. Schmitt: honored to be a participant of FAW-Audi

Editor: On November 19, I had a brief interview with former Audi director Mr. Schmitt in the office of FAW-Volkswagen Changchun. The 72-year-old Mr. Schmitt has been engaged in FAW-Audi’s project from 1993 to 2007. Later, Mr. Schmitt became the chairman of SEAT. After retirement, Mr. Schmitt still has feelings about FAW-Audi and Changchun. On the occasion of celebrating the 30th anniversary of FAW-Audi’s cooperation, Schmitt once again came to Changchun to meet his old and new friends. Schmidt is a very honest person. He told me: Who predicted the current development of the Chinese auto market 30 years ago, he must be lying. If someone has experienced the rapid development of China in the past 30 years and has not realized the hard work of the Chinese people and the achievements of China's economic development, he must be pedantic and stubborn. I am gratified by the rise of China. As a participant in the Chinese automotive industry, I am proud to be able to make a contribution.

After returning to China many years later, he can still clearly remember the scene when he first came.

In January 1993, he first came to China. The temperature in Changchun was minus 25 degrees, and the actual body temperature was lower than this. Factory Director Geng Zhaojie went to the airport to pick up Mr. Schmitt in an old Hongqi. At that time, Schmidt was a member of the board of the Audi Group and the first director in charge of China affairs. At that point, The Audi 100 was produced in China for four years in the form of CKD, with an annual sales of about 600 vehicles. Time flies, in November 2018, FAW Audi's 30th anniversary celebration was held in the factory of FAW-VW Changchun. As the pacesetter of FAW Audi project, Mr. Schmidt was invited to China again. The weather in Changchun was fine at this time. And now FAW-Volkswagen Audi sells more than 30 products in China, with an annual sales of about 600,000 units.

1.     In his view, the key to success is simple: trust, understanding, and support.

From “run in the cooperation” to “find a balance of cooperation” China in the early 1990s was not so attractive to German auto companies, and being stationed in China was obviously not a good thing at the time.

Why did Audi choose Schmidt to take charge of the Chinese market? Before joining Audi, Schmidt was responsible for purchasing business, doing trade, and dealing with suppliers. At the time, in the eye of the Germans, the Chinese were very good at negotiating and communicating for thousands of years. Therefore, Audi at the time also needed people who were good at negotiating.

In the late 1980s and early 1990s, the Chinese automobile industry has just begun to develop slowly, and Germany has become the world's leading automobile country. The technological gap and cultural differences have become the biggest interference in the cooperation between the two sides. Schmidt said: "The important thing I learned in my previous work experience is that it doesn't make sense to beat the supplier. If he thinks this business is doing badly, then he will treat you the same way the next time. So always strive to achieve a win-win situation. Business must bring benefits to all parties. I think it is very important for us to find a balance between challenges and interests.". Therefore, Schmidt tried to learn Chinese people's way of thinking and understand Chinese culture. Chinese employees also began to recognize the rigorous attitude of German peers to quality standards. Schmidt believes that the factors for the rapid development and success of Audi in China are simple: mutual trust, mutual understanding and mutual support.

2.     The second "significant progress" of FAW Audi cooperation

If the launch of the first Audi 100 sedan was the prelude to Audi’s production of luxury cars in the Chinese auto market, the first extended version of the A6 (C5) entering China would be the beginning of Audi leading luxury car market in China.

But the story of the domestic Audi A6 is very tortuous. In the 1980s and 1990s, China's auto industry was just getting started. There were only a handful of local suppliers that could meet Audi's standards. For FAW and even the whole Chinese auto industry at the time, it seemed to be impossible to put into production the highest-end products of Audi. First, there were only a handful of local suppliers that could meet Audi standards. Second, the performance, quality, and domestic parts of the Audi 100 could not meet the original design requirements of Audi A6. The further cooperation between the two parties reached a deadlock.

After long-term negotiations, Audi considered that since FAW could achieve the success of the Audi 100 with a strong will and full of enthusiasm, and made significant progress in both hardware strength and production experience. The second chance may also surprise them. In addition, the demand and vacancy in China's luxury car market were also factors they had to consider. Schmidt said: "I have been negotiating for the first Audi A6 project for almost a year before I finally got approval and finally finished it. The next projects progressed relatively fast."

But in any case, A6 pioneered the secondary development of high-end cars in China, and also became a model for the follow-up enterprise localization.From the beginning of technology transfer to the world-class manufacturing level, through the full value chain localization model, Audi has achieved very good achievements in China. It has completely changed the manufacturing structure of China's auto industry and laid the foundation for China's luxury car market, making a significant contribution to the development of China's auto industry.

3. In the future

After the Audi sedan was produced by FAW-Volkswagen and the first A6 extended version succeeded in the market, Audi sales began to increase in China. This is the beginning of China's becoming the most important market for Audi. The cooperation of FAW-Audi has explored a new way for the development of high-end cars for the China's auto industry.

With the rapid development of China's auto industry, in response to the ever-changing market situation and technology trends, both sides of the Chinese joint venture auto companies have put forward new requirements for the joint venture model with more than 30 years of history.

At the same time, with the further development of reform and opening up, it is a general trend to relax the access restrictions of the automobile manufacturing industry in China. In 2017, China FAW Group Corporation and Audi AG officially signed the “10-Year Business Plan for FAW and Audi”. Based on its strong full-value chain system, FAW-Volkswagen Audi is actively exploring new ways of joint venture cooperation and transitioning to a full value chain sharing model.