Foreign companies are losing ground in China: Industrial age strategies cannot win the battle of the digital Age
Over the past five years, foreign automakers have rapidly lost ground in China as the country's transition to smart electric vehicles has shifted the competitive landscape from an industrial-age model to a digital-age ecosystem. Joint venture brands, which once dominated, now account for only about 30% of the market, while foreign brands cover less than 20% of China's rapidly growing electric vehicle segment—the only exception being Tesla.
Supported by dense supply chain clusters, fast iteration cycles, artificial intelligence-based software development, and horizontal agile organizations, Chinese automakers currently control almost 70% of the market. Their ability to update products on a monthly basis, jointly develop core technologies with suppliers, and scale quickly has created an "ecosystem velocity" that foreign firms cannot match.
In contrast, global original equipment manufacturers continue to rely on slow hierarchical structures, multi—year validation cycles, global platforms, rigid pricing models, and risk-free innovation processes, making them fundamentally incompatible with the digital-focused Chinese market. The result is a systemic gap: competition is no longer "car versus car", but "system versus system". To remain viable, foreign automakers must undergo a deep reconstruction, viewing China as a center of innovation, localizing supply chains, moving to software-based vehicle development, applying experience-based pricing, and forging co-creation partnerships with Chinese technology and supply chain leaders. By not adapting to the speed of China's digital age, foreign companies risk forever being sidelined by the world's largest automotive market.