China's Motor Industry Expanding and Improving
China's Car Makers Get Better
China's motor industry is booming and about to get even bigger. Industries in other countries need to take note. As it is, the car parts the Chinese make are being used in car plants the world over. They simply need to carry this success over to the car export market. To do this they need to make better quality vehicles and market them well.
Currently they rely on the emerging countries where lower prices are paramount. Zhao Jie, the vice-president of International Business, a Chinese company, says their aim is to build 2 million cars and export 1.3 million of them overseas. The main targets for the exports are the US and EU, with smaller prosperous countries such as South Africa also being lined up. If they meet proposed targets they will surely take over sales from traditional brands such as those from Germany and Japan among others although smaller manufacturers will also lose out.
Domestic Demand
Profit is not to be found overseas only. Domestic demand is also on the rise, with sales of passenger vehicles rising 21% to 5.2 million in 2007. The current ratio of cars and trucks to people is currently below 10 to 100. Compared to the US rate of 80 to 100, it's easy to see that the market is limitless.
The new middle class wants status. People want big, luxury cars that offer safety and reliability therefore they are very selective. To compete, some Chinese makers are adopting unscrupulous methods to stay ahead of the competition. One such method is international copyright breach. At a recent Beijing show one of the most attractive cars was a clear rip-off of Mercedes-Benz Smart. If they are to be taken seriously, manufacturers must avoid this tendency.
Craig Mundie, Microsoft's technology chief, said in The World Is Flat by Thomas Friedman, that "a major American auto company recently discovered that some Chinese firms were using new digital-scanning technlolgy to scan an entire car and churn out computer-aided design models of every part within a very short period of time."
Outside Help
Others, however, are looking to get experienced staff to help them improve their quality. Zx Auto Company hired John Brogan who had been with Ford for 38 years. He had already retired but they managed to make him a profitable offer. Partnerships are another way in the form of joint ventures between local and international car plants. Beijing Auto has a joint venture with Mercedes-Benz and Hyundai while the local Chery is developing relationships with Chrysler and Fiat.
China is clearly learning from its visitors. Soon their expertise will have grown and they will be able to produce truly world class cars and compete equally on the global stage.
