In 1979, China made the decision to adopt a number of economic reforms aimed at increasing foreign trade and investment, while at the same time providing more autonomy to enterprises in order to reduce centralized control. These policies were an unqualified success and since then, the country has not looked back, moving from stagnation and inefficiency to becoming a major global economic and trade power. Today, it is the world’s second largest economy behind the U.S., the largest manufacturer of goods and the second largest destination of foreign direct investment. It is also the world’s largest car market having overtaken the U.S. in 2009. Sales of commercial vehicles in China stood at close to 4 million units in 2011 according to statistics developed by the Organisation Internationale Des Constructeurs d'Automobiles (OICA). Back in 2009, it was estimated that China alone accounted for over 50% of the global truck market with sales of heavy truck growing by 141% year-on-year and sales of medium trucks by 15%.
Clearly then, this is excellent news for those companies keen to tap an insatiable appetite for the latest in-car electronics, navigation, and accessories. But what about those in the commercial telematics space? As fleets struggle to add a sufficient number of new vehicles to keep up with the surging economy, telematics becomes an important tool for optimizing the use of the limited available vehicle resources, which is a big change from the previous situation with resources being over-dimensioned. At the same time, regulation mandates the use of telematics in private and public transportation in metropolitan areas for security reasons. On the other hand, the market has been lagging due to restrictive government regulations that force foreign companies to partner with local players.
This report looks into whether western firms will win the lion’s share of business in this lucrative market as opposed to indigenous brands with more tailored solutions. Also provided is insight into various mandates, licenses, and road infrastructure constraints in order to provide the reader with some perspective around drivers and inhibitors of growth in the Chinese market for commercial telematics.