By Daniel Leussink and Sarah Wu

BEIJING (Reuters) -Global automakers including Volkswagen (ETR:VOWG_p) and Toyota came to this year's Beijing auto show looking to catch up to surging China EV makers that are dominating the world's largest auto market.

The show that started this week showcased a marked shift in attitude among some foreign automakers, industry executives said. After being impressed by the bold leaps made by BYD (SZ:002594) and other Chinese automakers at last year's event in Shanghai, foreign automakers are now avidly searching for Chinese partners and announcing new tie-ups, the executives said.

Among the most active were European and Japanese automakers, with announcements coming from Toyota Motor (NYSE:TM) that it would team up with Chinese gaming and social media giant Tencent on artificial intelligence and big data, and Volkswagen promoting its partnership with Chinese EV startup XPeng (NYSE:XPEV).

An executive from Renault (EPA:RENA) said on Friday it had "pivotal conversations" with Chinese EV maker Li Auto (NASDAQ:LI) and Xiaomi (OTC:XIACF), the smartphone maker that just introduced its first car, to explore EV and smart-vehicle technologies. Nissan (OTC:NSANY), meanwhile, announced a tie-up with Chinese tech firm Baidu (NASDAQ:BIDU) to carry out research on AI and "smart cars."

Nissan CEO Makoto Uchida visited several booths including that of Chinese tech giant Huawei, which is becoming a major auto supplier.

European automakers sent "much more senior management" to visit the booth of LIDAR remote sensing technology supplier Hesai Technology this year versus last year, said Bob in den Bosch, senior vice president of global sales at the Shanghai-headquartered firm.

"They're looking for a partner to close the gap," he said. "They came here with a plan and a mission."

Foreign brands have dominated China's auto business since the 1990s and have brought extensive know-how to the Asian country. But last year, foreign brands' collective share of China's passenger car market fell to 48%, down sharply from 57% just two years earlier, according to data from the China Association of Automobile Manufacturers. 

GOING LOCAL

German automakers including Volkswagen and Mercedes, in particular, emphasized their efforts to localize production and invest more in local partnerships, with Volkswagen saying repeatedly its goal was to remain the best-selling foreign automaker in China into 2030.

Hildegard Mueller, president of Germany's powerful car lobby VDA, told Reuters that the German automakers are, in addition, exploring new marketing strategies to attract Chinese consumers. This includes partnering with the country’s army of car influencers, who promote and discuss new vehicle models and trends with their large followings on social media.

"It’s huge (online) traffic and huge potential,” she said.

The market share in China of Toyota, the world's top-selling automaker, declined last year, according to data from the China Passenger Car Association (CPCA). Toyota's China joint ventures with GAC and FAW held a combined 7.9% of the Chinese auto market last year, compared with an 8.6% share in 2022, the CPCA said. Toyota has said it will include technology from Tencent in a China-made passenger vehicle the Japanese automaker will put on sale this year as part of a new tie-up.

On Thursday, Toyota took care to emphasize the new tie-up, with its chief technology officer, Hiroki Nakajima, inviting a senior Tencent executive onstage to its auto show presentation. 

"We want to, with Toyota, build products and services that are closer to consumers, to jointly build mobility solutions of the future and we look forward to the fruits of our cooperation," said Dowson Tong, CEO of Tencent Cloud and Smart Industries Group. 

PESSIMISM

Some foreign auto executives were more pessimistic about their ability to fight back. 

Katsuhide Moriyama, president of GAC Honda (NYSE:HMC) Automobile, Honda's joint venture with Guangzhou Automobile Group, cited how China's leading EV makers have found ways to slash vehicle development time.

"Manufacturers should shorten the lead time to compete with those competitors," Moriyama said outside the automaker's booth at the show. "But a two-year model cycle is too short for us."

The number of American car executives paled compared with visitors from other foreign markets, noted Hesai's In den Bosch. 

The market share in China of major American brands including Ford (NYSE:F) and General Motors (NYSE:GM) has plummeted amid declining gasoline-car sales and the shift from foreign to Chinese brands. 

Ford's chief financial officer, John Lawler, told reporters in the United States on Wednesday that the automaker wants to maintain its existing China presence but is not planning to invest more.

"We're not putting capital into China," he said.