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back to index backCHINAtalk April,  2005

China serves notice it will not only build its own auto industry but make it a serious global player

The Chinese government served notice with two separate actions recently that it is not only determined to build its own independent auto industry, but to make it a serious player in the global market. China's General Administration of Customs issued new rules that that will double the tariffs on imports of knockdown kits to 30% effective April 1, and extend that to all parts that make up more than 60% of the vehicles for which they're intended, as of July 1, 2006.

Separately, the Export-Import Bank of China announced plans to lend Chery Automobile C¥5 billion ($600 million) for the company's overseas business expansion,” the China Daily reported.

China's exports of assembled vehicles, though small, grew 93.3% last year, to $779 million, while imports totaled $5.4 billion, the paper observed. It added that the government seems determined to make the export figure grow fast, if only because the balance of automotive trade is still lopsidedly in favor of the foreigners.

Chery is the Anhui province maker accused of pirating a GM Daewoo design that has nevertheless signed with American entrepreneur Malcolm Bricklin to start large-scale exports to the U.S. in 2007.

China Ex-Im said it will make the loan both to help Chery improve its domestic plants so they can meet global automotive standards, and to invest in new overseas production facilities. The China Daily said the loan furthers state support to the domestic car industry in its efforts to enter the international market.”

Formidable Competitor:

As Auto Resources Asia founder Michael J. Dunne put it in a commentary published last month, there is good reason to believe that Chery can develop into a formidable competitor.” Its president, Yin Tongyao and his senior managers collectively have decades of experience in the auto business, and know what it takes to build a world-class car.” Equally important, Dunne said, is that Chery has friends in Beijing, not least Prime Minister Hu Jintao, who hails from Anhui province, the government of which is an investor in Chery. The Chinese industry itself has sent signals in recent weeks that it's gearing up for a major program not only of exports but of overseas manufacturing.


Landwind SUV To Holland:

A report from the Netherlands last week said Dutch dealer Peter Bijvelds will put the first Chinese made vehicle ever on the European market, the Jiangling Motors Landwind” SUV, in April.

Bijvelds said he has signed a contract with Jiangling covering 27 countries, and though he doesn't yet have a dealer network in place, he's negotiating with three large Dutch dealer groups.

At the same time, the Dutch dealer group Autobinck Holding is reportedly negotiating with both Chery and rival subcompact maker Geely, for a European distribution deal — and Chery is simultaneously discussing marketing of its vehicles with two other European distributors, neither of which was named.

All those arrangements are the result of an Oct. 1 deadline for foreign makers to get in under the current Euro 3 emissions rules. Those who beat the deadline can sell vehicles that meet the less stringent standard until 2008. Those who don't will need to meet the tougher Euro 4 standard immediately. Earlier the paper said Chery is also looking at three additional assembly sites in Syria, Pakistan and Venezuela. Separately, the South China Morning Post said Wei Jianjun the chairman of Great Wall Automobile, which it called the mainland's largest private automaker,” told it his company exported 3,000 vehicles in January alone.


Exports To Double:

He added that Great Wall is targeting overseas shipments of 10,000 this year, or double its 2004 exports. It ships mainly to the Middle East and North Africa, and is planning to add several dozen” overseas dealers this year. Great Wall makes the Hover SUV and a range of pickups.

The paper wrote its story as Great Wall opened a 70,000-a-year addition to its existing 100,000-a-year assembly plant at Baoding, about 100 miles southwest of Beijing. It said the company plans to invest an additional C ¥2.8 billion ($340 million) by 2007 to more than double capacity to 370,000 a year.


Cairo Assembly Plant:

And late last month, the China Daily said Shenyang-based Brilliance Jinbei, which assembles BMWs for the domestic market, is talking to an unnamed Egyptian company about setting up a plant in Cairo to build its Italian-designed, Mitsubishi-powered Zhonghua sedan for Middle East and African markets.

The paper said a Brilliance executive told it the company expects to clinch a deal” this month or next. That, said China Daily, would make it the third Chinese automaker with overseas production, after Chery and Hebei province-based Zhongxing.

Source: Japan Automotive Digest - GAI

For a free, sample copy of the Japan Automotive Digest, click here.

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