A Practical Guide for Global OEMs, Suppliers, and Emerging EV Startups

China’s automotive industry is one of the driving forces of China’s economic engine. 

To illustrate this with a statistic, Chinese car sales alone accounted for 33% of the world’s monthly 8.15 million vehicle sales in March 2024.

Beyond boasting the world’s largest car-buying population, China is also a leading hub for electric vehicles (EVs) and advanced battery technology, with government initiatives accelerating the shift to a greener and more technologically integrated automotive future.

Chinese manufacturers currently have an immense production capacity, potentially capable of supplying well over half of the global car market. But rather than pushing foreign entrants away, this overcapacity opens strategic opportunities for international firms to:

Partner with well-established local OEMs (Original Equipment Manufacturers) that have unused capacity.

Tap into China’s EV supply chain and advanced R&D ecosystem.

Export to new geographies or complement global production by leveraging China’s massive manufacturing prowess.

In this guide, we’ll walk you through why China’s automotive market is so attractive and share key considerations for automotive businesses looking to expand to or engage with the Chinese market. You’ll also learn how to address one of the biggest operational hurdles: ensuring your website and digital platforms load and function in China – as many do not.

Disclaimer: This guide is informational and does not constitute legal advice. Chinafy is not a legal or corporate advisory entity, and, given that every business is different, we suggest consulting with your internal legal counsel if you would like advice on any legal or compliance-related concerns, or alternatively we can connect you with one of our partners.

TL;DR

Global automotive powerhouse: China produced 25.8 million new vehicles in 2023, maintaining its status as the largest auto market worldwide.

EV & NEV boom: BYD has surpassed Tesla to become the world’s largest producer of electric vehicles, highlighting China’s world-leading EV and new energy vehicle (NEV) segments. Government incentives and consumer demand fuel rapid adoption.

Competitive landscape & price wars: Domestic players and foreign brands compete fiercely, driving prices down, pushing innovation, and creating opportunities for cost-efficient suppliers.

Supportive government measures: Incentives for manufacturers (like NEV-focused subsidies) and a four-year extension on tax breaks for EV purchases underscore China’s strong policy support.

Digital presence & regulatory complexity: Strict regulations, JV requirements, and a localized online presence (with solutions like Chinafy) are essential for success.

Why consider China for your automotive business

1. Diverse, high-volume market

Largest car market worldwide: China sees 25+ million new vehicle registrations each year. While domestic growth has leveled off for traditional ICE (Internal Combustion Engine) vehicles, NEVs (New Energy Vehicles) continue to surge.

Explosive EV sector: China’s EV ecosystem is forecast to reach 25 million units in production capacity by 2025, with leading brands like BYD and NIO pushing technology frontiers. Growing environmental awareness, government incentives, and cost efficiencies also entice local consumers.

2. Strategic access to overcapacity

Production overhang as an opportunity: China can produce far more cars than it consumes but that extra capacity can benefit foreign automakers who partner with underutilized plants, potentially lowering production costs and time-to-market for both domestic and export sales.

Synergies with global supply chains: China’s well-established infrastructure (roads, ports, logistics providers) supports large-scale manufacturing. This can complement or even partially replace existing production centers in Europe or North America.

3. Cutting-edge technology & innovation

R&D collaborations: Major Chinese tech giants (Baidu, Tencent, Alibaba) and local research institutions often partner with automakers to develop AI-driven features, autonomous driving solutions, and next-gen infotainment.

Generative AI & advanced manufacturing: China’s intense competition in the automotive industry means fast-paced innovation. Generative AI is cutting down development time by up to 40% and automated assembly lines and robotics are widespread, making factories highly efficient.

4. Government support & policy incentives

EV tax breaks & subsidies: EVs remain fully exempt from purchase tax through 2025, then 50% exempt through 2027. Local provinces offer additional incentives (land, infrastructure) to boost NEV production.

High-speed market evolution: Policies that once favored local battery producers, for example, also encourage joint R&D with foreign firms to keep pace with environmental goals and global competition.

5. Abundance of natural resources

China’s stronghold over key battery metals (e.g., lithium, cobalt, graphite) gives EV makers a cost advantage in logistics, labor, and land management. Around 67% of the world’s lithium-ion battery production capacity is in China.

6. Global exports

Export surge: China’s annual car exports jumped from 1 million in 2020 to 6 million in 2024, reflecting growing global acceptance of Chinese-made vehicles. International businesses in China could leverage local supply to export to new or existing markets more competitively.

Market diversification: Producing in China can help you to hedge against regional disruptions elsewhere, access multiple shipping routes, and potentially reduce trade barriers if vehicles are labeled “Made in China.”

Key market entry considerations

1. Understanding the regulatory landscape

Licensing & joint ventures

Foreign automakers can opt for a Wholly Foreign-Owned Entity (WFOE) or a JV (joint venture) with a local OEM or state-owned enterprise, especially if you plan to produce EVs. EV segments often come with fewer foreign ownership restrictions.

Compliance & emission standards

Stay current with evolving emission norms (“China VI”) and local NEV mandates. These policies can shift quickly, particularly at the provincial level.

Trade barriers & tariffs

While China has opened its EV sector more than before, remain aware of potential trade policy changes. Market expansions that rely on global exports from China should consider the possibility of tariffs in third-country markets.

2. Localization and cultural nuances

Consumer preferences

Chinese consumers value advanced infotainment, AI-driven features, and quality after-sales support. Price wars are common, but technology or brand prestige can differentiate you.

Language & branding

A well-chosen Chinese brand name, plus Mandarin-speaking support teams, can help build brand loyalty.

Social media marketing on WeChat, Weibo, and Douyin will help with brand discovery and reputation management.

Price sensitivity & brand perception

Ongoing price wars and heavy discounting mean new entrants must strategize carefully around cost, quality, and perceived value.

3. Leveraging technology and innovation

Generative AI for software

AI-assisted development slashes coding time and enhances product iteration for EV operating systems or infotainment.

Battery R&D & infrastructure

Forging alliances with domestic suppliers can secure cost savings and component pipelines. However, charging infrastructure hasn’t fully caught up to EV sales. Foreign companies offering next-gen charging solutions can seize a crucial market gap.

Eco-innovation

Emissions-reducing technology, like lightweight materials and alternative propulsion systems, helps align with government targets and environmental directives.

4. Forming strategic partnerships

Local OEM & supplier collaboration

Partnerships with established Chinese OEMs (e.g., SAIC, FAW) or EV pioneers (e.g., BYD) offer instant familiarity with regulations, distribution channels, and consumer expectations.

Allied & third-party industries

Machinery, tool, and CNC suppliers enjoy particularly strong demand as local manufacturers upgrade assembly lines. China’s CNC market still relies on imported high-end technologies, offering a clear entry point for international automation providers.

Research institutes & tech giants

Collaborate with Baidu, Alibaba, or Tencent for in-car AI, cloud computing, or data analytics. Partnerships with local universities can also spur EV or NEV R&D.

5. Building a strong online presence in China

Even with strong offline manufacturing and distribution networks, a localized online strategy is essential, especially for marketing to Chinese consumers who heavily research vehicle options online. Many websites, particularly those targeting a global audience, run slowly or do not function in China, hindering business growth.

Why websites load slowly in China

Blocked or slow third-party resources: Services like Google APIs, YouTube videos, and hundreds of lesser-known third-party resources are restricted, causing severe loading delays.

Infrastructure limitations: Hosting your site outside of China, even with a global CDN, can introduce high latency, as data has to travel further to get to the end user in China.

Testing and optimizing your site

Before making any changes, run speed tests from within China to see how your site performs. If you discover performance issues, consider the following:

Use a China-compatible CDN: Some content delivery networks have PoPs in mainland China (e.g., Tencent Cloud, EdgeNext, Alibaba Cloud) but typically require a local business entity and ICP filing. It’s also important to note that CDNs alone cannot solve all performance issues, as they won’t accelerate third-party resources that are blocked in China.

Minimize slow or blocked resources: If you’re tailoring your site to a China-only audience, it makes sense to remove or replace resources from slow or blocked domains. This can improve loading speeds and ensure your site remains functional. However, if you’re using your existing global site, doing this would be detrimental to global visitors, and equally, the way third-party resources work in China differ and evolve over time so there is no one-off list or means to edit these resources. Changes will likely have to be made on an ongoing basis.

Consider onshore hosting: Hosting in China can be beneficial but comes with regulatory obligations like setting up a local entity and obtaining an ICP license. Also, like with using a China CDN, hosting your site in China doesn't automatically make it work there. It’s still necessary to optimize your website for third-party dependencies, content compliance and user experience.

Chinafy: Make your website run fast and fully in China

Chinafy offers an agile approach for both companies with either an onshore or offshore presence. Chinafy optimizes your existing site for Chinese users without necessarily requiring local hosting.

How Chinafy helps websites load fast and fully in China:

Removes, replaces or optimizes third party resources: Chinafy combines both in-person and platform-level features to detect and replace blocked or slow resources that cause loading delays.

Leverages a China-friendly CDN: Speeds up content delivery with an onshore CDN or near-China CDN depending on whether your business meets certain prerequisites.

Requires minimal IT involvement: Typically takes only a couple of weeks to implement and maintains both global and China-specific performance in parallel.

China is a key player in international automotive expansion, thanks to its market size, technological leadership, generous government backing, and export potential. Although domestic capacity currently exceeds local demand, this environment can benefit foreign automakers by offering:

Opportunities to partner with factories that have unused capacity.

Access to a strong EV/NEV supply chain.

A launchpad for global exports, leveraging China’s heavy investments in manufacturing and logistics.

Key takeaways

Regulatory preparedness

Familiarize yourself with JV structures, local NEV policies, and swiftly evolving emission standards. Consult professional legal advice where necessary.

Localized strategy

Adapt to Chinese consumer preferences, name your brand well, and leverage social platforms to build trust.

Technology focus

Integrate AI-driven software development and invest in battery tech partnerships to keep pace.

Strategic partnerships

Collaborate with local OEMs, logistics providers, or tech giants to expedite market penetration and build robust distribution networks.

Website optimization

Ensure your websites load quickly and reliably in China by using Chinafy, the only solution that can achieve near-native performance even if you choose to remain offshore.

International automotive players have an opportunity to tap into the potential of China’s automotive market if done right. Whether your focus lies in EV battery solutions, CNC machinery, or premium consumer vehicles, the right approach can drive sustainable growth in a market that’s continually reinventing the global automotive space.

The insights shared in this article are based on our research, observations, and experiences at the time of writing. They are intended to inspire ideas and foster conversation, not to replace professional consulting advice tailored to your unique situation. Always consider your specific needs before making business decisions.