Waiting for Chinese cars
| By Shang Zuo In January, four Chinese automakers showed up at Detroit's International Auto Show: BYD, Geely, Changfeng, and ZX. This was not the first time that Chinese companies came to the show. But this year, I saw more reports in the media about their presence, probably due to their improved quality and design, as well as rising concerns about China-U.S. trade issues. It's very clear that you won't see Chinese cars in America this year. But it's equally clear that their arrival is inevitable and more competition in the auto market will benefit consumers. China's auto industry is a fast growing sector. China produced two (2) million cars in 2001. In 2007, the figure leaped to nine (9) million, only trailing the U.S. and Japan. During this progress, several local companies have emerged as promising players. I will briefly introduce three of them. Chery Chery is the largest homegrown auto company. Unlike giant Shanghai Auto and First Auto that make cars under foreign brands, Chery developed its own business model. In many respects, Chery is still a low-technology company. They outsource many design jobs to Europe. But over the years, they have accumulated experience managing the entire car-making process, and have established their own brand. Last year, Chery signed a cooperation contract with Chrysler to design and build small Dodge- branded cars that target overseas markets. The contract was perceived as a confidence vote from a major auto company on Chery's quality control. Chery is a good example of how to succeed in the age of globalization. Many consumers don't care in which country a product is designed, manufactured, assembled, and where its components come from. What is important are the expertise and available resources tapped right. Chery has demonstrated the ability to incorporate these resources to meet customers' needs. BYD Even among Chinese car companies, BYD is one of the youngest. BYD is a dominating manufacturer in global battery market. Seventy-two percent of cell phone batteries are made by this company. The profit from their core business enabled them to expand to the auto industry in 2003. And their strength directly stems from their battery technology. In the Detroit show, BYD attracted a lot of attention with their plug-in hybrid car. The power system of a hybrid car consists of a gas engine, an electric engine, and a battery that supports the electric engine. Today's hybrid car charges the battery by the gas engine and the momentum of the car itself. But a plug-in hybrid can be charged directly by home electricity. You can park your car in your garage, plug it in, and it will be fully charged for you the next day. It is even more energy efficient. BYD developed a new kind of battery called ferrous battery, different from the lithium batteries widely used today. The technology boosts the performance of BYD's hybrid cars. Their plan is to commercialize this technology this summer. If they succeed, this will be the first car of its kind in the world, at least two years ahead of Toyota and GM, who both announced their plans to introduce plug-in hybrids in 2010. Brilliance Brilliance is among the few high-end Chinese brands. They initially built their high quality image through a joint venture with BMW. They make BMW cars for the Chinese market, and their own brand designs are significantly influenced by BMW. Even though some Chinese companies are accused of stealing ideas from established brands, it never happened to Brilliance. I like their style very much and personally think they build the best looking Chinese cars. I, myself, will seriously consider owning a Brilliance when they become available in the U.S. As of today, Americans may think it’s a bizarre idea to buy a Chinese car. But I believe when consumers see a real car in the showroom, or even have a test drive, the idea will become tangible. So that begs the question: when will we see Chinese cars in America? They have been selling in the Middle East, North Africa, Russia, and Europe. But it will still take years for Chinese companies to get ready for the U.S. The U.S auto market is the most competitive market in the world, and is likely the last country for the Chinese to work on. But according to some news, a small company called Zhongxing (or ZX) will start selling SUVs and pickups as early as 2009. Most Chinese companies don't have marketing channels in the U.S., but ZX has a North American distributor, CHAMCO. This might be their unique advantage to become the first Chinese car in the U.S. Will they succeed? We'll need a little patience to wait and see. |