Among Southeast Asians, Malaysians are most supportive of China, according to a survey of 1,994 Southeast Asians by Singapore’s ISEAS–Yusof Ishak Institute. When asked if a situation forces them to choose between USA and China, 75.1% of Malaysians answered China – the highest in the region.

Is there a correlation between results of a political opinion survey and the rapid rise of Chinese car brands launching in Southeast Asia? The short answer is ‘Yes’. Of course, there are other factors that determine acceptance of Chinese cars here – suitable model offerings, free trade agreements for favourable pricing, for example - but the simple answer is still ‘Yes’.

Malaysia also saw the sharpest increase in support for China year-on-year, up 20.3 percentage points from last year. Indonesia came close, up 19.5 percentage points to 73.2%. The situation in Gaza and China’s stance on the conflict against US-backed Israel helped boost the image of China in the Muslim-majority Malaysia and Indonesia.

On the opposite side of things, the people of Philippines (16.7% support China) and Vietnam (21% support China) are most suspicious about China, mainly because both countries are most threatened by China flexing its naval muscles to claim South China Sea.

Malaysia is also a party in the Nine Dash Lines dispute, but Wisma Putra has so far avoided open confrontations. Malaysians are also less concerned about China claiming rights to Malaysia’s commercial fishing areas, somehow.

Philippines (16.7% support) – No love for Chinese cars, even if it wears a German VW badge

Can you guess which Southeast Asian country has the highest number of Chinese brands, but have the poorest results?

The Philippines has 24 Chinese brands, including 3 commercial vehicles-only brands, not counting those who tried, gave up, and left.

Geely and MG are the two best-selling Chinese brands there. Sales dropped 26% and 29% respectively in 2023. In the same 12-month period, Toyota grew 14%, Mitsubishi expanded 47%, Honda is up 10%.

Far from challenging Japanese brands, Chinese brands are going backwards in the Philippines.

Never mind Chinese brands. Did you know that since 2018, VW in the Philippines sells only Chinese market VW models? These are not just China-made VWs, but VWs that were originally meant for sale only in China. Instead of the Golf, Tiguan, or Arteon, VW Philippines sells the Chinese market Santana, Lavida, Lamando, and Tharu.

After the switch, VW Philippines’ saw its sales dropping from 1,363 units in 2017 - when the line-up consisted of imported, German models - to just 269 units last year.

Vietnam (21% support) – Closest to China, but Vietnamese trust the Koreans more

Can you guess which Southeast Asian country is easiest for China to export cars to?

Vietnam has a direct cargo train service into mainland China. Like the Philippines, it’s also a left-hand drive market. Yet, not a single Chinese car brand has made it to the top-10 in Vietnam.

Unlike other Southeast Asian countries, Vietnam is not Toyota’s fortress. Vietnam is one of the few markets in the world where the Ford Ranger, not the Toyota Hilux, is No.1.

In the overall car sales tally, Hyundai was the No.1 brand in 2023. Kia was third, behind Toyota.

To the Vietnamese, high quality affordably priced cars are those made by the Koreans, not Chinese.

MG is the most successful Chinese brand there. The SAIC-owned brand doesn’t publish its sales figures but cumulative sales in the last 3 years are estimated to be around 11,000 units.

BAIC and Hongqi have been in Vietnam for a quite a few years already, but neither has left a mark.

Also, Hyundai and Kia offer regional-focused models like the Hyundai Accent, Kia Soluto, Kia Sonet, Hyundai Venue - all adapted to Vietnam’s unique needs. Chinese brands on the other brand, work on the principle of ‘China is the best. What’s good for China must be good for the rest of the world.’ The Vietnamese don't appreciate this attitude.

Still, Chinese are not slowing down there. Just last year, 5 new Chinese brands were launched in Vietnam – SAIC’s Wuling, Geely’s Lynk & Co, Chery’s Omoda and Jaecoo, and GWM’s Haval. BYD will be launching there in May, though plans for local assembly have been pushed back.

Indonesia (73.2% support) – Lots of support for China, but lack of suitable models limit appeal

Indonesia is ASEAN’s largest domestic car market, selling 1,005,082 units last year. Like Thailand, Indonesia is Toyota Kingdom, ruled by the Toyota Avanza / Veloz and Innova brothers.

SAIC’s Wuling and Dongfeng’s DFSK are the most active Chinese brands in Indonesia.

Wuling is the best performer, finishing 2023 as Indonesia’s 10th best-selling car brand, with 23,540 units, ranking behind ninth place Hino. The next nearest passenger car brand is sixth-placed Hyundai, at 35,500 units.

DFSK is ranked 20th, with 1,360 units sold last year.

Chery and BYD were launched late last year so they have yet to complete their first full-year sales, but neither are worrying their Japanese, or even Korean rivals. Chinese manufacturers have yet to develop cars adapted to local needs.

Indonesia is dominated by MPVs, yet no Chinese brand offers a better alternative to the Toyota Veloz / Toyota Innova, but Hyundai does, which explains their higher ranking versus Wuling.

If Vietnam gets the Hyundai Accent, Indonesia gets the Hyundai Stargazer. The Hyundai B-MPV ended 2023 with 15,886 units sold, behind the Mitsubishi Xpander’s 21,251 units but well ahead of the dated Wuling Confero’s 5,887 units.

Just like Vietnam, ‘What’s good for China must be good for the rest of the world,’ doesn’t work in Indonesia, even if the locals support China's foreign policies.

Indonesia has also announced a set of very comprehensive incentives to promote battery EVs. The Wuling Air is Indonesia’s first locally assembled BEV but it didn’t meet local users’ needs, and sales were propped up only by government fleet order contracts.

The Wuling Binguo however, has hit the sweet spot. It’s currently the best-selling BEV model in Indonesia, totaling 3,121 units in Q1 2024. That’s 20 times more than a Honda City Hatchback or Toyota Yaris! But that’s also because the Binguo is exempted from Luxury Tax, with VAT reduced from 8% to 1%. These incentives will expire by 2027.

Apart from Wuling and DFSK, Chery and Neta have just started building cars in Indonesia. BYD, GAC’s Aion, and GWM will also be starting their own local assemblies in the next few years.

Thailand (52.2% support) – Divided on China, but good quality BEVs are welcomed

Thailand is Toyota’s and Honda’s Southeast Asian homebase. It’s also the hot spot for Chinese brands hungry for exports.

Our northern neighbour is quite divided on China, with only 52.2% voting in favour of China. The Thai government is actively courting Chinese tourists and industries, but the locals are not so keen.

Still, Thais will never say no to lower priced, better-quality cars. Thailand is BYD’s No.1 export market for passenger cars, selling around 30,000 units there last year.

At March’s Bangkok International Motor Show, five of the 10 brands with the highest number of bookings collected were Chinese, led by BYD, followed by MG, Changan, GAC’s Aion, and GWM’s Haval.

For Chinese manufacturers, Thailand is their launchpad to go international. Biden’s USA is a no-go, Ursula’s European Union is adding hoops and hurdles for Chinese cars. Latin America and Africa are not ready for Chinese BEVs. Only Southeast Asia welcomes China in a big way and has the necessary infrastructure to support Chinese electric cars. Moving ahead of its neighbours, Thailand is positioning itself as China’s gateway to the ASEAN trade bloc.

BYD is building a plant there, as has GWM and its battery manufacturing spin-off SVolt. MG and Neta are also building cars there.

However, a separate survey by Singapore’s Differential Asia revealed that only 30% of Chinese car buyers in Thailand will buy another Chinese car. In contrast, 48% of owners of Japanese cars will buy another Japanese brand.

Malaysia (75.1% support) – Half of the market is blocked off, but buyers are most keen to try Chinese brands

Malaysia is a difficult market. Our car market is worth around 650,000 vehicles annually (2023’s 799k units spike is an outlier), which is reasonably big enough to support a vibrant car market but 60% of it is blocked off by our quasi-national Proton and Perodua.

On paper, there are no more special privileges granted to domestic brands but provisions for excise tax rebates are rigged to grant advantages to Proton and Perodua.

A pessimist won’t see past this but shrewd manufacturers, Tesla and BYD for example, find Malaysia to be a fantastic place to do business, because policy papers are typically short on details, which also means that almost everything is open for negotiations.

Tesla being granted special exemptions from Approved Permits for its China-made cars is one example. The cost to Tesla to enjoy that advantage is simply to rent an office space in Cyberjaya, and then roll out Superchargers on the West Coast of Peninsular Malaysia – which in the grand of scheme of things, is an inconsequential cost to Tesla.

BYD too rode on our tax exemptions and raced to the top of the BEV sales charts without having to invest much in Malaysia. Its local partner Sime Darby is the one investing.

Malayia’s BEV promotion papers also don’t say anything about what happens after 2025 (or 2027 for locally assembled BEVs), when import and excise tax exemptions ends, but you can be certain that everything is up for negotiations.

The local populace is also very supportive of Chinese brands. The sheer volume of Proton-badged Geely models have indirectly paved the way for wider acceptance of Chinese cars like Chery.

Many Malaysians are Mandarin speakers who use Douyin (Chinese version of TikTok) and Xiaohongshu (Chinese equivalent to Instagram) as their preferred social media platform, thus exposing them a lot of marketing materials from China.

When Chinese car brands come to Malaysia, they benefit from a customer base that already has a fairly good level of awareness of their brand. It makes brand building so much easier, and faster. This is a huge advantage that Chines brands don’t enjoy in Thailand or Indonesia.

In just two years, we have seen 10 Chinese brands launching Malaysia! We have Maxus, BYD, MG, Chery, Jaecoo, Ora, Neta, Smart, JMC, GAC, excluding commercial vehicle brands like Foton (Auman), CAM, King Long, Dongfeng, Sinotruk, Chana, and many more.

Later this year, XPeng, Aion, BAIC, Jetour, Leapmotor, and Tank are expected to launch in Malaysia. After that, Haval, Poer, Avatr, will follow. Geely is also expected to have a direct presence here within the next few years, for Lynk & Co and Zeekr. That’s 21 Chinese brands in total!

Most of them are competing for a slice of the very narrow RM 100k – RM 200k segment. The volume in this segment is too small – just 25% of total new car sales - to support 21 brands (30 if you include commercial vehicles). How will the competition play out, that's another topic for another day.