And that exactly is the problem - taking them 5 years to release a new design.
I'm working for one of the Chinese companies (.... With the dreams in the name) and what I had to learn was the speed in execution and the adaptability to the changes. I've been working for 20 years in an American company, and working for a Chinese company was a shock (and still is) for me.
While the Germans (and to a certain extent the Japanese also) take 3-4 years to release a car, and after that another 3 years to make a facelift, the Chinese can make a new model in 6-12 months. The design is "frozen" until a change must be done, even if that means that the car is already in production for one month.
They adapt and make the changes along the way. In China there isn't such a thing as "frozen design" and they don't touch it for another 3 years.
Chinese are still not at the same quality level as the German ones, but the flexibility and speed of execution is getting them there.
Germans will not be able build cheap cars in China like their competitors, because for that they will have to completely change their way of working, which in the end wouldn't be Mercedes or BMW anymore. But sourcing most of the parts locally in China, will help to decrease the cost.