Page 2 of 2 China's optimistic auto makers
look overseas By Olivia Chung
year. A firm wanting to construct a second
plant must have sold at least 100,000 cars or
50,000 sport-utility vehicles or multi-purpose
vehicles (such as minivans), the notice said. It
also stipulated minimum sales requirements for
trucks and buses.
Analysts say the new
measures mainly target small players, which will
have little impact on major auto makers.
Amid increasingly fierce market
competition and toughened
regulations at home and with
the influx of foreign giants, small Chinese car
makers are beginning to focus on exports in the
hope of "conquering" the overseas markets with the
so-called "China price". But the products they are
exporting are of low quality and virtually without
after-sale services.
"Low cost does not
necessarily mean low quality, but it could mean a
challenge to good products,'' Hong Kong-based
industry writer and commentator Tang Sai-kit said.
"But exports of low-quality products made in China
hurt the reputation of all Chinese exports. And
the most negative impact is that this will make
[it even harder for] Chinese car makers ... to
penetrate the overseas markets, taking them years
and years and years to achieve their goal once the
reputation of China's exported cars is tainted.''
Complaints about domestically manufactured
cars have become among the top 10 consumer
complaints in the country since 2003, according to
the China Consumers' Association. The group said
it received more than 6,600 complaints about cars
in 2006, of which more than 80% were about quality
problems, maintenance and after-sale services.
Recognizing that quality problems could
hurt the domestic auto industry as a whole and the
reputation of Chinese exports - the same kind of
problems that initially tainted the reputation of
Japanese and Korean exports in the US - China has
introduced policies to consolidate the auto
market.
Chinese banks have been tightening
credit requirements for car loans, while Beijing
has been encouraging mergers and acquisition
(M&A) in the auto industry and raising the
market threshold for market access to curb the
expansion of production capacity.
Aware of
problems with car exports, the government has also
begun to tighten requirements on domestic car
makers and trading companies for qualification for
car exports by introducing a licensing system. The
export license, which will come into effect on
March 1, is aimed at weeding out companies that
are too small to be serious exporters and
rebuilding the image of the "made in China" label,
according to the Ministry of Commerce (MOC).
China's auto exports are expected to reach
a record high of 340,000 units in 2006, almost
double the 172,000 units in 2005. Passenger car
exports are expected almost to triple to more than
90,000 units in 2006, according to the MOC.
Developing countries in Africa and Southeast Asia
topped the target markets.
There were
1,175 car exporters last year. But 669 of them
each sold fewer than 10 vehicles overseas and
another 204 sold just one unit each. "The
establishment of the new rules is expected to
eliminate about 700 car exporters," Zhang Ji,
deputy director of the MOC's Department of
Mechanics, Electronics and High-tech Industry, was
quoted as saying by the Xinhua News Agency.
Analysts say China needs to overcome a
long list of problems, including poor quality,
high costs, weak design and a lack of distribution
networks, before Chinese car makers can seriously
compete with their Japanese and South Korean
counterparts.
Wharton management's John
Paul MacDuffie was quoted as saying by the
English-language newspaper Shanghai Daily that
Chinese companies will have to improve their
products before exporting to the US. "If anything,
American consumer standards for quality have only
gotten higher," he said.
Hong Kong-based
car analyst Tang said it is unlikely that a
significant number of Chinese brands will be seen
on North American roads in the near future. "In
addition to investing more to develop their own
engines, Chinese car makers will find it difficult
to produce cars suitable for places where the
environment might be totally different from
China.''
Tang said it's also unrealistic
to count on Sino-foreign joint ventures in China
to export vehicles to the US, because of their
long-established manufacturing bases in other
emerging countries close to the US and world trade
restrictions on car exports. "The Sino-foreign
joint ventures seem too busy to take their eyes
off the Chinese market, which should be their
focus for now.''
General Motors Corp
chairman Rick Wagoner said his focus in China is
on GM's sales there, the Detroit Free Press
reported. "I certainly don't rule out over time
importing and exporting more out of China, but at
this point our focus is taking advantage of
[China's] domestic market opportunity, and I see
that as the game for the foreseeable future."
Other car makers have different views.
DaimlerChrysler's Chrysler Group recently said it
was joining forces with Chery to manufacture small
cars in China that will then be sold abroad,
driven by the economics of China's auto industry.
Olivia Chung is a senior Asia
Times Online reporter.
(Copyright 2007
Asia Times Online Ltd. All rights reserved. Please
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