As an industry professional who has watched the Chinese auto market for over two decades, few stories are as compelling as that of Chery Automobile (奇瑞). What began as a small, ambitious dream of a local provincial government has grown into China’s leading passenger car exporter.
But this isn’t just another success story. Chery’s journey is a living textbook, a perfect illustration of the classic development trajectory of Chinese manufacturing: from imitation and learning to independent innovation and global conquest. For anyone in the West trying to understand how Chinese companies compete, the story of Chery is required reading.
Chery’s origins lie not in a flashy startup boardroom, but in the strategic planning of the Wuhu city government in Anhui province. In the early 1990s, they made a bold decision: the automotive industry would be the key to their region’s economic future.
The opportunity came in 1995. On a business trip to Europe, Wuhu officials learned that a Ford engine production line in the UK was for sale. A secret mission, codenamed “Project 951,” was launched. The key player was Yin Tongyue, then an engineer at the FAW-Volkswagen joint venture. Lured back to his hometown, he left a stable career to lead Chery’s founding team.
In 1997, Chery Automobile Co., Ltd. was officially registered. Its first engine, the CAC480, fired up in 1999 and was marketed as “China’s first self-developed engine.” From my perspective as an insider, this was a clever bit of marketing. In reality, it was built on the foundation of the second-hand production line and technology acquired from Ford.
But this shouldn’t be seen negatively. At a time when all Chinese automakers had to import engines, Chery’s ability to establish its own production system—even one based on foreign tech—was a monumental step forward.
In 2003, Chery launched the car that would make it a household name: the Chery QQ. Priced at an astonishingly low 30,000 RMB (around $5,000 today), it became an instant hit, selling over 100,000 units a year.
But its success came with a major controversy. As someone who witnessed this period firsthand, I can state unequivocally: the Chery QQ was a near-perfect copy of the Daewoo Matiz.
In the West, this would have been a brand-killing scandal. But in the China of the early 2000s, the mindset was different. There was little guilt associated with this kind of reverse-engineering; it was seen as an “efficient way to quickly absorb advanced technology.” GM Daewoo did sue Chery for intellectual property theft, a case that was eventually settled out of court.
This “copycat culture” wasn’t unique to Chery. It was the standard operating procedure for most Chinese automakers at the time, a necessary (if ethically questionable) phase for a latecomer industry to catch up—a path, I might add, that Japan and South Korea also trod in their early days of industrialization.
(Image: A side-by-side comparison of the Chery QQ and the Daewoo Matiz.)
Chery’s ambition was never just domestic. In 2001, it exported its first 10 cars to Syria. By 2003, it had established its first overseas assembly plant in Iran. This marked a crucial pivot from simply exporting products to exporting technology and know-how.
During this period, Chery began to evolve. It moved beyond blatant copying and started to iterate and improve upon the technologies it had acquired. The engine technology from Ford was spun into various derivatives, and after the Matiz controversy, the company began investing heavily in its own design capabilities.
Chery’s exports exploded after 2020, making it the first Chinese passenger car company to surpass 5 million cumulative exports. This incredible growth was catalyzed by a perfect storm of global events:
The COVID-19 Pandemic: Exposed the supply chain vulnerabilities of Western automakers.
The Russia-Ukraine Conflict: The withdrawal of European, American, Japanese, and Korean brands created a massive market vacuum in Russia, which Chery eagerly filled.
Surging Demand in Emerging Markets: A boom in demand from South America, the Middle East, and Southeast Asia played directly to Chery’s strengths.
Chery’s Keys to Success:
Multi-Brand Strategy: Operating seven sub-brands (Chery, Jetour, Oumenda, Jaecoo, etc.) to target different market segments.
Proactive Localization: Establishing assembly plants in Brazil, Malaysia, and Russia, and operating over 2,500 overseas showrooms.
Technological Independence: After years of learning, they developed their own core technologies, including the 1.6TGDI engine and the Kunpeng hybrid system.
It’s easy to forget that for much of the last decade, Chery was struggling, hovering around breakeven or even posting losses. In 2018, it recorded a net loss of 250 million RMB.
The explosive growth in its export business single-handedly changed its fate.
2021: Exports grew by 136% year-over-year.
2023: Exports hit 937,000 units, and the company posted a net profit of 10.4 billion RMB.
In just a few years, overseas sales transformed from a supplementary business into Chery’s core profit engine, accounting for over 44% of total revenue by 2024.
Chery’s success story is not complete. It now faces a new set of formidable challenges:
The Electrification Imperative: Its export portfolio is still heavily reliant on internal combustion engines, a major vulnerability as key markets like the EU push for clean energy.
Intensifying Competition: The price war, once a domestic issue, is going global as competitors like BYD accelerate their overseas expansion.
Geopolitical Uncertainty: Rising tariffs in Russia and the growing scrutiny of Chinese EVs in Europe and the US pose significant threats.
Chery is responding by making its new hybrid systems the centerpiece of its global strategy, aiming to pivot from simply selling cars to licensing its advanced technology.
An Insider’s Conclusion: The Blueprint for Success
As a professional who has tracked this industry for over two decades, I see Chery’s journey as a microcosm of China’s entire manufacturing evolution:
Phase 1 (1997-2005): Foundational learning through technology acquisition and imitation.
Phase 2 (2006-2015): Iteration and improvement of copied technologies, building internal capabilities.
Phase 3 (2016-Present): Development of proprietary technology and achieving global competitiveness.
The “copycat” phase was not a mark of shame but a classic, effective strategy for a latecomer to rapidly absorb technology and gain a competitive foothold. The crucial factor is that Chery did not remain a mere imitator. It used that foundation to learn, improve, and ultimately innovate.
Chery’s global expansion is no longer a cavalry charge; it’s a long-term campaign backed by systemic capability. Its next chapter will be a critical test, a bellwether for the future of the entire Chinese auto industry as it navigates the transition to new energy and a complex global stage.
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