China's Auto Industry A BIG FAILURE!

China's Auto Industry A BIG FAILURE!

Posted in the China Forum

CCP makes CHINA WEAK

Port Moody, Canada

#1 Apr 18, 2013
China
Voting with their wallets
Chinese car buyers overwhelmingly prefer foreign brands
Apr 20th 2013 |From the print edition


THE BIGGEST THREAT to the world’s established carmakers in recent years was expected to come from Chinese competitors (and from a few Indian ones with international ambitions), but so far it has not materialised. Under plans drawn up by the government in Beijing in 1994, two or three world-class Chinese makers should be going head-to-head with GM, Toyota and the rest by now, but this has not happened. As China’s domestic market has boomed, the local brands have become increasingly sidelined as consumers have bought foreign ones.

Chinese car companies started off working with foreign joint-venture partners, which the Chinese government hoped would be quickly pushed aside as the domestic firms learned how to make cars to international standards. Instead, the local firms have remained utterly dependent on their foreign partners for everything from technical knowledge to marketing nous. As a former industry minister has put it,“we are hooked on joint ventures like opium.”

As Bernstein’s study on the Chinese car market notes, the streets are full of American, European, Japanese and South Korean cars, mostly made in joint-venture factories in China, with the foreign partners raking off handsome royalties for the use of their brands and technology. The market share of Chinese brands has continued to slide, from about 30% in late 2009 to less than 26% by the end of 2012. China’s favourite car last year was the Ford Focus. The rest of the top ten was made up of four kinds of VW, three GMs and two Hyundais. If they were making their own cars, China’s largest firms would be approaching world scale (see chart 3), but mostly they are producing foreign brands under the direction of their foreign partners.

...
CCP makes CHINA WEAK

Port Moody, Canada

#2 Apr 18, 2013
...
For their study, Bernstein’s analysts bought two fairly well-regarded Chinese cars—a sedan from Geely and a Great Wall SUV—and took them to Europe for road-testing and a “teardown”, with specialist engineers examining their build quality. Even though the Chinese firms seemed to have made some progress in areas such as bodywork, overall the cars were badly put together and not pleasant to drive. The study concluded that China is still five to ten years from building cars to global standards without foreign help. A recent poll by McKinsey, a consultancy, found that Chinese car buyers thought the same.

The Chinese makers are striving to catch up, but they are having to spend a lot of money on advice from foreign engineers and consultancies, sometimes offering salaries of up to $500,000 a year to lure experts from abroad. At the same time they are skimping on basic research, which means they will become increasingly reliant on foreign carmakers or foreign component makers. Two Chinese companies that bought foreign firms with useful technology—SAIC, which absorbed the remnants of Britain’s Rover Group, and Geely, which bought Volvo of Sweden—do not seem to have much to show for their purchases yet.

...
CCP makes CHINA WEAK

Port Moody, Canada

#3 Apr 18, 2013
...
Its initial plan having flopped, the Chinese government has recently been pressing foreign carmakers to create new “joint-venture brands” with their local partners, in the hope of weaning the local firms off foreign technology and styling. But neither the foreign nor the Chinese makers seem enthusiastic about this, and the policy could just as easily entrench local firms’ dependence on the foreigners. Meanwhile, worsening air pollution in Chinese cities is prompting the government to impose strict Western-style limits on emissions. This is likely to increase the technology gap between the foreign firms (which have already done lots of work on low-emission cars for their home markets) and the local makers.

Where is China’s GM?

Some worry that the Chinese government will soon turn nasty, forcing the foreign carmakers to hand more technology to their Chinese partners and accept smaller royalties from the joint ventures. But BCG’s Xavier Mosquet reckons that eventually China will accept that it is better to have a strong foreign-owned industry creating well-paid jobs than to prop up uncompetitive national champions. This policy change will not be announced, he predicts, but it will be noticeable.

Even so, Western makers still expect at least a few competitive Chinese rivals to emerge one day:“I worry about them all the time,” says Fiat’s Mr Marchionne. And as they try desperately to regain local market share and to export their surplus production, they could trigger price wars at the mass-market end, eating into the foreign giants’ profits.

China’s government has repeatedly talked about consolidating the 100-odd local carmakers, but many of them are owned or subsidised by powerful city and provincial governments, which are turning a deaf ear to such suggestions. New entrants keep popping up: at the Geneva motor show in March, Qoros, a Chinese start-up, caused a stir by exhibiting good-looking prototypes. The company is a joint venture between Chery, a private-sector Chinese carmaker, and Idan Ofer, an Israeli shipping magnate. It is building a factory in Changshu, a city near Shanghai, helped by the local government, which will have an initial capacity of 150,000. Qoros is planning to raise a total of $2.7 billion, with Mr Ofer taking a 50% equity stake.

He insists that “there is always space for a new brand” and says that in his shipping business he is quite used to waiting for up to ten years to make a profit. But he probably knows that to succeed in the status-conscious Chinese market, he will first have to sell at least some of his cars to the discerning Europeans who set the trends.

From the print edition: Special report
CCP makes CHINA WEAK

Port Moody, Canada

#4 Apr 18, 2013
CCP makes CHINA WEAK

Port Moody, Canada

#5 Apr 18, 2013
"The market share of Chinese brands has continued to slide, from about 30% in late 2009 to less than 26% by the end of 2012. China’s favourite car last year was the Ford Focus. The rest of the top ten was made up of four kinds of VW, three GMs and two Hyundais."

WOW! Such a TOTAL FAILURE of Chinese Communist Party economic planning!

The "plan" said they would dominate the world market by now, but they can't even hold onto their own domestic market!

CCP are SUCH INCOMPETENT LOSERS!
CCP are DESTROYING CHINA

Port Moody, Canada

#6 Apr 18, 2013
"The Chinese makers are striving to catch up, but they are having to spend a lot of money on advice from foreign engineers and consultancies, sometimes offering salaries of up to $500,000 a year to lure experts from abroad. At the same time they are skimping on basic research, which means they will become increasingly reliant on foreign carmakers or foreign component makers. Two Chinese companies that bought foreign firms with useful technology—SAIC, which absorbed the remnants of Britain’s Rover Group, and Geely, which bought Volvo of Sweden—do not seem to have much to show for their purchases yet."

Gee. The Wu Mao here always say that CCP China now leads the world in tech, etc., etc......

But how can China LEAD from SO FAR BEHIND?
It is Amazing

Kuala Lumpur, Malaysia

#7 Apr 18, 2013
The thread reads "China's Auto Industry A BIG FAILURE!"

LOL When a country has a 23 million annual car sales, how can it ever FAILED?

I did not even bother to read any of the above posts because the LOGIC itself have FAILED me.

Old Jew

San Francisco, CA

#8 Apr 19, 2013
The next country only sells 17 million and that is the USA. Now you see why Israel teamed with China not the USA----QUOROS.
CCP makes CHINA WEAK

Port Moody, Canada

#10 Apr 19, 2013
It is Amazing wrote:
The thread reads "China's Auto Industry A BIG FAILURE!"
LOL When a country has a 23 million annual car sales, how can it ever FAILED?
I did not even bother to read any of the above posts because the LOGIC itself have FAILED me.
Sales of Chinese cars are FALLING even in China, dummy!

"The market share of Chinese brands has continued to slide, from about 30% in late 2009 to less than 26% by the end of 2012. China’s favourite car last year was the Ford Focus. "

How can it EVER SUCCEEED?
CHINA SPRING

Surrey, Canada

#11 Apr 22, 2013
Keep hiding........

HA HA HA HA HA HA HA!
CCP are MASS-MURDERERS

Port Moody, Canada

#12 Apr 23, 2013
Has ANYONE EVER SEEN a Chinese brand auto on the streets of North America?

Europe?

Japan?

South America?

Australia?

Africa?

no. not one.
CHINA SPRING

Surrey, Canada

#13 Apr 24, 2013
Not a single, solitary one can be found in the world's most important auto markets!
It is Amazing

Kuala Lumpur, Malaysia

#15 Apr 24, 2013
The real reason why China is not successful in exporting its cars to USA perhaps more of a POLITICAL ONE rather than the issue of quality, safety or technology. Many foreign cars than are currently sold in USA are lower even in quality compared with those from China.

Imagine at this moment if Chinese cars are allowed to enter the USA market, the trade surplus may expand far beyond USA ability to handle its economy.

Like it or not, China's own proprietary high technology products are about to enter into every segment of the world market like Japan did 30 years ago.

Ignorant anti-other nation trolls here can run Chinese made as cheap inferior sweatshop products, etc.

But the truth is, China without even entering into the USA car market has USA automobiles makers as partners and they are now using Chinese made parts e.g. Wanxiang Autopart, etc which is now the biggest auto-spareparts maker in the world today.

Last week, Japan automobiles manufacturers are looking to China as their main sources for their parts for their products.
OCCUPY TIANNANMEN

Port Moody, Canada

#16 Apr 25, 2013
Not a single, solitary one can be found in the world's most important auto markets, even though there are no tariffs at all or other trade barriers!

Why? Because Chinese car brands are very low quality and cannot compete!
OCCUPY TIANNANMEN

Port Moody, Canada

#17 Apr 25, 2013
Not a single, solitary one can be found in the world's most important auto markets, in spite of the fact no tariffs or trade barriers exist!

Why?

Because the cars made by China's automakers are very low quality and built by copying much of foreign companies' patented technology!

Tell me when this thread is updated:

Subscribe Now Add to my Tracker

Add your comments below

Characters left: 4000

Please note by submitting this form you acknowledge that you have read the Terms of Service and the comment you are posting is in compliance with such terms. Be polite. Inappropriate posts may be removed by the moderator. Send us your feedback.

China Discussions

Title Updated Last By Comments
News Chinese province orders religion out of school 2 hr Qixx 5
News Palestinian protester shot by Israeli troops dies (Aug '15) Thu Test 9
News Clash of the TV titans: will China win the pixe... Wed Russian Ainu 1
News Obama faces looming trade row with China Wed Isis Tranny Bathr... 2
News Q&A about the market turmoil in China and beyond Tue Test 2
News China pollution scandal: air, water in school n... Apr 28 toxic China 1
News Today in History - Thursday, April 21 Apr 28 truth 5
More from around the web