Chinese EVs are gaining ground in South Korea, but Japan remains a tough market. While South Korean buyers now choose cheaper Chinese models, Japanese drivers still prefer local hybrids. "They enter first, watch what happens and gradually adjust their strategy," said Liao Jingnan, as Chinese firms look for global growth.

The questions came swiftly.

"Everyone reacted like, 'Why did you buy a Chinese car? Are you trying to get yourself killed?'" the 48-year-old Seoul resident said. Her purchase would have been unthinkable just a few years ago in South Korea, where Chinese cars have been long dismissed as shoddy.

After rapid expansion in Europe and elsewhere, BYD and other Chinese automakers are now targeting South Korea and Japan, two countries with entrenched car industries - and no shortage of sceptical consumers. They are making inroads in South Korea, but Japanese sales have been muted.

The difference is partly due to EV uptake. Roughly a quarter of the new cars sold in South Korea this year were EVs, versus 3% in Japan, according to industry data.

Chinese automakers have proven their ability to spend years building dealer networks and adapting cars to local tastes, according to industry executives and analysts.

It is a strategy born of both confidence and necessity: China produces some of the most technologically advanced cars available anywhere at prices rivals struggle to match. But its domestic market is ⁠so saturated with brands that carmakers need to look overseas for growth and profit.

"They enter first, watch what happens and gradually adjust their strategy," said Liao Jingnan, founder of MobyInfo, a Tokyo-based consultancy.

Reuters interviewed more than a dozen people including company executives, dealers and EV buyers in both South Korea and Japan for this article.

SOUTH KOREA BREAKTHROUGH

BYD has been able to take advantage of South Korea's growing appetite for cheap EVs, said Lee Jae-il, a senior analyst at Eugene Investment & Securities. Petrol prices have surged almost 10% since the US-Israeli war on Iran started, but Hyundai and Kia focus mainly on premium EVs, offering only a few for under $30,000.

"The timing has worked particularly well for BYD," Lee said.

South Korean carmakers are worried. Jeong Dae-jin, the chairman of the Korea Automobile & Mobility Association, ‌has called for ⁠tax incentives for Korean-made EVs.

Automakers were "very desperate," he said.

JAPAN PROVES TOUGHER

Japan may end up testing the patience of Chinese automakers. Foreign brands account for only about 6% of passenger car sales and drivers prefer hybrids, the technology championed by Toyota.

Relations between Tokyo and Beijing have been fraught since last year under right-wing Prime Minister Sanae Takaichi, who has taken a harder line on China.

BYD, which started selling cars in Japan in 2023, has more than 75 dealerships and plans to eventually expand to 100. It sold fewer than 4,000 ⁠cars in Japan in the first nine months of the year, just a 0.1% market share.

In July, it launched a boxy EV in Japan's "kei" minicar segment, which is dominated by domestic firms. As of September, it had only sold about 650 of them, although BYD's overall Japanese sales have risen every year.

"It's not the market share," said Marc Yamada of consulting firm Alvarez & Marsal. "It's the growth."

EMT, a startup backed by Chery, plans to launch a kei car in the first half of 2027 and three more models by 2029, Chief Technology Officer ⁠Koji Yamamoto told Reuters. It aims to build cars locally by the 2030s, he said.

Zeekr plans to launch a luxury van in Japan, initially targeting taxi fleets and chauffeur services, said Hiroyasu Koma, CEO of folofly, Zeekr's distributor.

One person who will not be buying a Chinese car anytime soon is Fumio Kuwabara, an early adopter who has been driving Japanese EVs since 2010. He does not trust the reliability of Chinese cars, he said.

"I feel like they've cut corners in places you ⁠can't see," he said.

Ruling party lawmaker Daishiro Yamagiwa told Reuters that Japan must consider the security risks from Chinese cars that can be controlled from outside the vehicle.

It is still unclear whether Japanese consumers will hold out or end up overcoming their wariness as South Korean Lee Seong-dong did.

"Honestly, I didn't have a good image of Chinese cars, either," said Lee, a content creator in Seoul, who bought a Dolphin.

"Seeing the car in person and driving it changed my thinking a lot," he said.

Reporting by Heekyong Yang and Hyunjoo Jin in Seoul, Daniel Leussink, Maki Shiraki and Kentaro Okasaka in Tokyo and Ju-min Park in Beijing; Editing by David Dolan and Thomas Derpinghaus

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Daniel Leussink is a correspondent in Japan. Most recently, he has been covering Japan’s automotive industry, chronicling how some of the world's biggest automakers navigate a transition to electric vehicles and unprecedented supply chain disruptions. Since joining Reuters in 2018, Leussink has also covered Japan’s economy, the Tokyo 2020 Olympics, COVID-19 and the Bank of Japan’s ultra-easy monetary policy experiment.