BEIJING — A curious eight-story car tower just opened in southern China.
Customers interested in a Ford, be it a Mustang, Mondeo, Explorer or any of the 130 vehicles on tap, roll up to the unmanned structure. They are scanned by facial recognition software and then check out with the vehicle of their choice for a three-day test drive.
More than 1,200 people have tried it since last month; some have even ended up buying.
"It's a neat, novel, fun way to engage consumers, but it's had a much wider reach," says Dean Stoneley, Ford's Asia Pacific vice president for marketing. "There's a lot of learnings from it."
The car "vending machine" in Guangzhou — a joint project between Ford and the country's e-commerce colossus Alibaba Group, the Amazon of China — is but one brainchild in an explosion of ingenuity radiating from China these days on how to develop, engineer and market cars.
Long derided as a fast follower, China has suddenly blossomed as the innovation nation.
From Detroit to Wolfsburg to Tokyo, global players are looking to China for inspiration and leadership as the country spearheads a global industry upheaval in everything from electrification and autonomous driving to connectivity. Executives at last week's Beijing auto show say the lessons could revolutionize business in the U.S. and other markets.
"I do see China as the front-runner," said Johann Jungwirth, chief digital officer for Volkswagen Group. In January, VW opened an r&d outpost in Beijing called Future Center Asia to soak up the latest trends, navigate China's startup culture and channel new ideas.
Tech triumvirate
Chinese innovation is evident in the year-on-year doubling of electric vehicle sales to 102,000 in the first quarter, making the country by far the world's biggest EV market.
It is seen in the absolute saturation of ride-hailing services such as Didi that make it all but impossible to catch a taxi any other way. You find it in the AliOS onboard operating system from Alibaba that foreign executives say exceeds anything offered by Apple CarPlay or Android Auto.
The try-anything mentality even crops up in creative retailing, such as the Super Test-Drive Center vending machine operated by Alibaba and Ford or mushrooming apps that let people buy cars on their smartphones without ever having to talk to a dealer or visit a showroom.
"China and Silicon Valley are at the cutting edge," said Padmasree Warrior, chief development officer for the Chinese EV startup Nio, which makes an all-electric crossover, replete with swappable batteries and a digital assistant, that can be bought on a mobile phone.
"There is incredible market depth here, but there is also a lot of capital, a lot of talent."
China's burgeoning high-tech industry is leading the change as it rushes into the automotive sector. Alibaba is part of a Chinese big-tech triumvirate that includes Baidu, "China's Google," and Tencent, the country's Facebook.
On the new mobility front, throw in Didi Chuxing as the country's ride-hailing king.
Didi already has squeezed Uber from the market and now is challenging the U.S. rival overseas. Founder and CEO Cheng Wei captured the zeitgeist on the eve of the Beijing show.
"China could play a pivotal role in transforming the existing automotive and transportation structure that has been in place for over a hundred years," Cheng declared.
Indeed, China's cash-rich tech giants are investing heavily at home and abroad in all manner of connected-car technologies and EV startups. Tencent, for example, is an investor in Nio and Tesla.
Baidu, the Chinese counter to Waymo, is pioneering autonomous driving. Last year, Baidu boss Robin Li triggered an uproar by testing his company's self-driving car on Beijing's roads. The country realized it had no rules for that and has swiftly moved to issue proper licenses and promote such tests.
And the Chinese players wield some big advantages over U.S. counterparts.
First, they marshal an incredibly broad swath of big data harvested from 1.3 billion people in China, a country with little concern for privacy rights.
That data is leveraged in developing everything from artificial intelligence and augmented reality to on-the-go marketing.
Moreover, many of these companies were given a head start by the Chinese government, which blocks the likes of Google or Facebook from operating inside the country.
State support plays a huge role in pushing and protecting China's auto sector under Beijing's Made in China 2025 plan. The ambitious strategy aims to acquire technological know-how and establish global leadership in sectors such as EVs, artificial intelligence, robotics, autonomous vehicles, quantum computing and advanced manufacturing.
"It is the important force we see here in the country," Torsten Schonert, head of VW's Future Center Asia, said of government guidance. "That is driving innovation."
For example, China's mandate for new-energy vehicles, or NEVs, is triggering a blizzard of activity in the EV sector. Toyota, Ford, Volkswagen, BMW and Nissan were among the foreign makers outlining new vehicles or fresh electrification strategies in Beijing.
Local expertise
But the big bustle is at the local level. Last week's show featured 174 new-energy vehicles, encompassing EVs and plug-in hybrids. Some 124 were developed domestically.
Homegrown companies, such as battery maker Contemporary Amperex Technology Ltd., are seemingly stepping out of nowhere to become global leaders.
CATL has a $1.3 billion factory in the works that reportedly would go online as soon as 2020. It could catapult the Chinese supplier to being the world's top producer of lithium ion batteries.
"The shift toward new-energy vehicles, as a result of the strengthening NEV policies, has given China the momentum to overtake other countries in development, as well as in the fields of autonomous driving and connected cars," said Kazuhiro Kobayashi, Toyota's CEO for China.
"What impresses me the most is the sense of speed I have experienced in this country."
Ford's tie-up with Alibaba underscores that lightning pace. The companies agreed in December to explore new business models in retailing and mobility. By the end of March, they had opened the vending machine. Alibaba gave Ford exclusive rights to pilot the program for the first month. After that, the Chinese tech company will invite other automakers to join as it builds more test-drive towers around the country.
Ford's Stoneley said it's too early to say how it has affected sales. But one customer bought an Explorer crossover on opening day, March 26, and Ford has sold about 10 vehicles since then.
Ford says the real value comes from learning about facial recognition, big-data lead management, customer profiling and digital service integration at the feet of an e-commerce leader. It also drives traffic to Ford's store at Alibaba's Tmall online emporium.
Ford also will adopt Alibaba's AliOS in the Kuga crossover this year in China.
The platform is more powerful than anything offered in other countries, said Trevor Worthington, Ford's Asia Pacific vice president for product development. It is increasingly a must-have in China, where tens of millions are locked into Alibaba's online services for bill payment, social media, navigation, online booking, video streaming and much more.
"There are some elements of technology here that are ahead of the game compared with anywhere else," Worthington said. "Everybody around the world is watching."
Some 600,000 Internet-enabled cars already are running AliOS in China. And Alibaba says it wants half of the country's connected-car market in five years.
In the meantime, Alibaba says it is also on the prowl for overseas opportunities. Worthington said it's just a matter of time before similar systems pop up in other markets.
In China, the consumer culture of craving the latest, greatest gadgetry can be just as potent as government dictate. The result is a scramble to compete and game-changing technology.
"That's what the customers demand," Worthington said. "If we don't do it here, we're toast."