An Obscure Chinese County Takes Over Australian Recreational Vehicle Market

(AsianFin)—With a population of roughly 700,000, Rongcheng, a nondescript county in Shandong province, boasts 10 large-scale recreational vehicle (RV) manufacturers and over 50 components and parts producers, churning out various types of RV. The city's RV output accounts for about 30% of China’s total, with its exports contributing to 70% of the country's total.

In recent years, outdoor camping has gained popularity globally, leading to an increase in demand for off-road camper trailers and motorhome RV among many middle-class families.

The travel trailer market has been dominated by European and American consumers, with North Americans accounting for about 62.1% of the total, Europeans 28.8%, and Australians and New Zealanders combined about 4.6%. Not surprisingly, Chinese consumers account for less than 1% of the global market.

Meanwhile, the global travel trailer giants have been primarily European or American enterprises, with the industry contributing a whopping $140 billion to the U.S. economy per year.

The global travel trailer industry, long dominated by Western giants, is undergoing a significant transformation. With declining sales in the United States and Europe due to economic factors and increased competition, emerging markets like Australia, South Korea, and China are gaining momentum.

In 2022, nearly 50,000 new travel trailers entered the Australian market. Locally manufactured new vehicles reached 28,031 units, while imported new vehicles amounted to 20,498 units, with over 50% of them coming from China, according to the 2023 import data from the off-road camper trailer Industry Association of Australia (CIAA).

Australians have a natural affinity for travel trailers. With diverse climates across the country, ranging from heavy rainfall in cities like Darwin to scorching summers in the central regions, off-road camper trailers provide a flexible way to explore the vast landscape. The COVID-19 pandemic further fueled the enthusiasm for off-road camper trailer travel, with many Australians opting for domestic travel and purchasing off-road camper trailers. As a result, Australia's travel trailer ownership reached nearly 800,000 units by 2022.

Towable off-road camper trailers, popular in the Australian market, find their origins in Rongcheng. The rise of Rongcheng's off-road camper trailer industry can be attributed to its strategic location and existing industrial base. Historically known for its shipbuilding industry, Rongcheng leveraged its expertise in fiberglass used for boat manufacturing to venture into the production of off-road camper trailers.

Additionally, the city had an established automotive modification industry in the 1990s, which laid the foundation for future off-road camper trailer manufacturing.

Leading enterprises like Kompaksrv New Energy Automobile Co., Ltd. capitalized on the global off-road camper trailer demand. Initially focused on manufacturing for overseas brands, Kompaksrv expanded its footprint to South Korea and North America, becoming a major player in the global off-road camper trailer market.

The burgeoning electric vehicle industry presents an opportunity for Chinese enterprises to enter the off-road camper trailer market with new energy vehicles. With China leading in battery technology and electric vehicle production, electric motorhomes offer a natural synergy, providing both mobility and energy solutions.

For decades, Chinese companies participated in globalization through OEM manufacturing, gaining minimal profits. However, with the rise of electric vehicles and changing consumer preferences, Chinese off-road camper trailer manufacturers are transitioning from OEM to building their own brands.

Currently, there are three major brands of motorhomes in China: Iveco, Ford Transit, and SAIC Maxus. The chassis of these three brands are all imported from abroad. "When your chassis is controlled by others, it's hard for your RV to have its own brand," said Ding Hongbo, Executive Chairman of the Caravan Camping Special Committee of the National Federation of Industry and Commerce.

As early as 2014, Chinese RV companies recognized this problem and began to create their own brands.

In 2014, New Gonow, based in Taizhou, Zhejiang province, acquired Regent, a well-known RV manufacturer in Australia with a history of thirty years, and developed a new RV brand, Snowy River, in the Australian market. By 2022, its new brand Snowy River won the "Annual RV" award in the Australian market.

In 2019, New Gonow once again entered the European market, signing a strategic cooperation agreement with HOBBY, the second largest RV manufacturer in Germany, to import HOBBY's products into China.

"One important reason why Chinese RV companies can acquire overseas established RV companies is that in recent years, with the global economic downturn, overseas manufacturing companies have been having a hard time, with declining operations. Chinese companies, backed by strong supply chain advantages, are able to sit at the table with overseas companies, or even surpass them," Ding said.

However, the acquired brands are still not truly "Chinese brands." Chinese RV companies need an opportunity to create their brands.

At present, the global trend of automotive electrification is gaining stronger momentum, and China has unparalleled advantages in the entire new energy industry.

China is the world's largest producer of power batteries, with a global market share of over 63%. In addition, China is also the world's largest producer of new energy vehicles, with Chinese new energy vehicles accounting for 64.8% of the global total sales volume.

These data all point to a huge change in the global automotive industry. "In recent years, we have clearly felt that the Western automotive industry is declining, while we are rising empowered by the new energy sector," Ding added.

According to the latest data from Australia, low-emission vehicles are popular locally, with hybrid, plug-in hybrid, and battery electric vehicles accounting for 17.4% of sales volume.

Chinese RV companies can become the game changer with favorable timing, geographical advantages, and a pool of talents.

As Cui Dongshu, the Secretary-General of the China Association of Automobile Manufacturers, remarked, the "radical" evolution of the Chinese RV market has begun.