Until next Tuesday the Shanghai Autoshow takes place again, and of course I visited this year as well. I say of course, because I worked for 7 years in the automotive industry (for Daimler/Mercedes-Benz) and that is what brought me to China. I even used to write columns for Dutch car magazine Autovisie about the Chinese automotive industry (I stopped doing that about a year ago).
I was lucky to get trade visitors tickets to the show (thanks to BMW China), so I did not have to go during the extremely busy public days. I went with some people from Tudou, who had journalist passes. Tudou is an official media (I never realized that actually) and has its own teams at the Autoshow that produce original content for our car channel at http://auto.tudou.com/. If you want to see some footage of the show, that is a good place to go.
The exhibition has changed a lot over the years, from a small not-too-important auto show it is now among the most important in the world. It is huge: you need hours to just walk around the whole place to see all the models. Because I did not have that much time, I only went to the most important or interesting brands. For me those are mainly the Chinese brands: outside China people laugh about them (well, also still some people inside China do this) but they have come a long way and I think the next General Motors will come from China. The name of that company? Likely Chery, but also BYD and Geely stand a chance. One of these brands will first build out their business in China and then conquer the rest of the world.
Their quality may not be up too Western standards yet, but that will eventually come. Or maybe some people won’t care that much about extremely high standards when you can get a good car for maximum half the price of a Western model. Their designs are so much better than just 2-3 years ago, it amazes me how quickly these companies improve and innovate. Look at BYD for example, this company started in 2003 (yes, that’s less than 6 years ago – before that they made batteries) and is now already one of the top players in the electric vehicle segment. Their F6 model (a mid-size sedan) can be recharged up to 70% in just 10 minutes time!
Chinese car companies also like to copy designs, and Geely did once again an excellent job at that during this show. After copying Mercedes-Benz models for many years they now decided to go one step higher and copy a Rolls-Royce front. Decide for yourself if they did a good job. The car has one major innovation, however: the back seat consists of just one huge emperor-like seat! I don’t think that will sell well in Western markets, but I am sure many Chinese bosses outside the tier 1 cities would love to show off being driven around in this car.
Those chinese companies will all close in the next 10 to 15 years. No chance for such brands outside China. They will have enough work with the competition in China as a lot of people in China still won
I obviously don’t agree with you, I think that the automotive industry is very different from electronics. Just look at Chery for example, they have a low cost strategy and are now aiming for markets where low cost is more important than a brand name or good design. They have a network in 14 African countries and 6 South-American countries already, and they are even thinking about building a 700 million dollar plant in Brazil. I don’t think we have to wait 10 years to see the (good) results of this strategy.
Well a discussion maybe makes not really sence as you love China and maybe all things working fine for you at the moment and so you may see not the problems.
My god, I am happy to hear that Chery is not bankrupty. Ok, read this as a starter:
http://bit.ly/B4M0R
Did you know that a joint-venture with Fiat is set on ice. A lost of 175.000 units for 2009 is confirmed by both companies. Fiat is talking about the financial crisis, but unofficial they are more interested to invest in Opel. Why is a huge company like FIAT trying to do so? Why not China, the growing market, and why not paticipate from selling into very low cost reagions like africa? From 2007 to 2009 the carmakers learned that Africa is not ready in the next 20 years car prizes above 10.000 Euro. In the next 3 to 5 years good selling of brand new cars in Africa is impossible.
Why? Arround 1.5 Million used cars in Europe are ready to ship to Africa mid of this year as result of goverment programs inside the EU countries. People in Germany and other countries bought new cars coz of financial help from the goverment. The new Dacia Logan from Renault was the big seller for only 5000 Euro in Germany. And the old cars? Not really old cars. They are ready to ship, done by experienced people distributing them to Africa in a very fast time. You will see 1.5 Million used european cars from Volkswagen, Opel, Ford, Renault, Citroen etc. in Africa and this will not make it easy to sell any new cars in the next 3 years, not easy for EU carmakers, and for sure not easy for chinese carmakers.
We’ll see Anonymous, I am used to the fact that people like to be negative about China.
It might be interesting for the writer of your article to check why the Chinese second hand car market still has not taken off. Main reason? If you can get a new car for a price similar to that of a second hand car, people want the new one. Africa is not China, but I don’t think Chery has much to worry about.
I am not bashing China. I am here since 1998 and I earn money in China since 2001 and I agree with the writer of the articel.
2nd hand market was booming since 2000. According the the chinese Ministry of Commerce it sill can grow 30 percent each year. There are other reasons why the 2nd hand market fall back a bit in the past month or is not as big as in the US or Europe and if you understand China, you can easy find them out.
http://german.mofcom.gov.cn/aarticle/nachrichten/200902/20090206038795.html
The 2nd hand car booming since 2000? Your link says that in the US 3 times as many second hand cars are sold than new cars, and in Germany 2 times. In China the # is just 1/3 of new cars. That means for every new car sold, in the US 9 times as many second hand cars are sold as in China. Sure, if the figure was 1/10 in 2000 you could call it booming, but compared to the rest of the world it’s still a tiny figure. I invested in a second hand car website a few years ago, so I have been following this market closely. There is just no demand because people want new cars, your link proves that as well.
Anyway, thread is going in a different direction. I believe in Chinese brands and you don’t. We’ll see in a few years who was right.
I have to say if there is a direction to your posts, Marc, is that they are almost consistently pro-China. You’ve been here 9 years, but perhaps you should get out a little more, and a little longer too sometimes. Or perhaps you are just trying to counter-balance the China-bashers, and I could understand that, but going on the other end of the spectrum doesn’t make it any better.
I do agree with you that the Chinese brands are making good progress, but what about the financial health of those companies? Any data on that? What about the fact that they are still licensing and importing frames, engines, and parts from foreign manufacturers? And once those guys are ready to go out on the world market, after having taken the best of foreign technology while there was little legal protection, do you think nobody will resist?
Right now their cost is low because their quality is low. As they keep raising their quality, so will their costs. Have you noticed how a Hyundai now pretty much costs the same as a Honda? (or at least, offers roughly the same “bang-for-the-buck” ratio?).
Yep I agree with that. I am a bit tired of phrases like “you do not understand china” or “you have to understand china and the chinese culture” coz such argumentations are crap. China has to understand ne, foreigerns and the rest of the world like Singapore did.
China-bashing? NO, I will not accept that argument. If you think so, you must understand my next words as German-bashing.
Did you know the history of the label “Made in Germany” Today people all over the world understand this “Made in Germany” as a label for high quality. But that was not so in 1887. In 1887 the label “Made in Germany” was born. The british goverment decided to mark all german imports with sauch a “Made in Germany” label to protect consumers and the own companies from german cheap goods with low quality. During that time germany was far behind from innovations from people like Mr. Adams or products from Mr. Watt. The germans produced very cheap copies of famous british knifes, machines, watches and so on. Is that now german-bashing? Germans were stupid enough for some more tries to sell cheap, but the 1st world war destroyed all their dreams. Who will by from the enemy? New huge problems for Germany. No customers, production, no food, highest unemployment ever. They accept that the only chance now will be to be better. They also lost their face in the 1st world war and so they invest everything they can into innovation, innovation and innovation plus quality. But they also learned that it is sometimes better to earn more and sell low quantity than to sell high quantity but earn low. Step by step, and the 2nd world war could not stop them, the label “Made in Germany” getting better up-to what it stand for now! High quality! And yes, that bastard Hitler was one of the big motivators. So what is about China?
Cheap, cheap and only a view innovation. It is not really a inovation to fly to the moon 50 years after the americans did and to produce a passenger airplane or to show the world that a country is able to setup sports center very fast? 10 years they viewed over the shoulders of western engineers, studying in the US or Europe, and still the results are copied cars? Not wondering that one of chinese leaders 2 days ago asked for more OWN innovations.
I am sure if they fail to be more innovative hemselfs without pressure and plan from the goverment, they will not go the next steps and maximum will work like today in best case. I dont want to think about the worst case scenario.
Marc, I even doubt the used car market will eventually be a big one.
Westerners are used to buy second hand stuff, but look at the Asians, the Japanese, the Koreans and the Chinese, they do NOT like used stuff very much.
Nothing will beat a determined Chinese as we had seen what they had done in Olympics. more than a decade ago, foreigners used to laughed at Chinese athletes for using drugs to cheat at winning medals. A short 10 years later, they are already world beaters in gold medal tally. Now, they are looking at innovation, quality, safety and green clean technology. Would you bet your money against them?
It’s all bad news for poor old planet earth. The thought of millions more Chinese produced cars polluting the atmosphere – whether in China, Brazil or India appals me. The only positive note is to hear that China is developing electric cars.