China automakers still stretching to expand abroad

China's own automakers are proving they have the prowess to put together practically any type of vehicle imaginable.

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April 23, 2009 07:56
3 minute read.
China automakers still stretching to expand abroad

china car 88 248. (photo credit: )

From the glossy black Geely Excellence "business limousine" to Great Wall's tiny Gwperi subcompact, China's own automakers are proving they have the prowess to put together practically any type of vehicle imaginable. But they have yet to demonstrate they have mastered the expertise to design, make and sell world-class cars in markets outside the developing world, those working in the industry say. Visitors to Shanghai's auto show, which opened to the public Wednesday, swarmed into exhibits by both global industry leaders and China's domestic brands, eagerly trying out the seating and steering in the latest models, or posing for pictures. Like the Ferraris and Rolls Royces, sequestered behind glass walling to prevent fingerprints from marring their flawless paint jobs, the Geely GE (E is for Excellence), a big black sedan very similar to a Rolls, was only to be admired from a distance. Those allowed close enough to get a peek through the privacy-tinted windows might of got a glimpse of the limousine's rear seat, which is equipped with a massage function and foldable leg rest. An ionized air purifier provides a "very relaxing mobile oxygen bar," the company says. Nearby was Geely Automobile Holding's egg-shaped ig (intelligent geely) concept model, a three-plus-one seater that is meant to be solar-powered and cost 10,000 yuan ($1,300), not including the engine. There is no questioning the aspirations of these up-and-coming automakers. "Grand Hwatai in Great China" declared a slogan at Hwatai's big booth, where all five vehicles were big Santa Fe model SUVs. "It's obvious we have a price advantage which will help our automakers to export our homemade vehicles to the global market," Zhang Xiaoyu, vice chairman of the China Machinery Industry Federation, told a conference on the sidelines of the auto show. "That's why I'm not worried at all. We will get stronger." On the way to marketing, though, some things get lost in translation. Many of the domestic makers confine themselves to cryptic alphanumeric model names, like the popular Chery A3 and QQ, and battery-making BYD Auto's new hit sedan, the F3. But with many of the most evocative names - Mustang, Thunderbird, Cutlass - already taken, there are plenty of tongue twisters: Chery Automobile Co. has the Fulwin; Great Wall Motor Co., the Gwperi, the Wingle A5 four-seat pickup truck, the Cowry and the Florid. Unable for now to break into Western markets, China's automakers are making inroads Latin America, the Middle East, Russia and Africa, exporting 680,700 cars in 2008, up 11 percent from 2007. Such emerging markets, including China, are bound to offer the biggest potential for growth in coming decades. But Chinese automakers will not overtake their Western rivals if they just keep on copying the competition, said Thomas Schiller, managing director at Arthur D. Little China. "It's good for testing the market, but what about the next step? They need to develop technical competence in research and development. They need competence on product strategy and marketing," he said in an interview. Partnering with global big names like General Motors Corp., Volkswagen AG and Toyota Motor Corp. has helped China build a modern automotive industry and ramp up production - now the world's second-largest market. Its passenger car sales exceeded US sales in January-March. But those tie-ups have left local manufacturers beholden to foreign technology in most areas. State-owned FAW Group's vehicles, for example, run on Mazda platforms, with Toyota bodies and Audi-based designs. "There is nothing of their own in that vehicle," said Wang Zhongwei, a former Ford Motor Co. engineer now working for motorcycle maker turned automaker Li Fan Industry (Group) Co. "Chinese car makers use foreign engines, foreign chassis, foreign designs, foreign this and foreign that," he said. "This makes producing cars very expensive." BYD has so far done the most to develop its own components, outsourcing only tires, engines and glass. Few others have that degree of control over cost and quality. As growing numbers of domestic and foreign automakers crowd into the industry, competition is pushing prices relentlessly downward - bad news for everyone, except car buyers. "Companies think they can make a lot of money by making cars, just like GM and Ford did," said Wang, who began his career at FAW before spending 20 years in the US. "But the profit margins are very small."


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