China Trade Facing
New Scrutiny by Joseph Szczesny (3/22/2004)
Unions complain as the U.S. courts more Chinese business..
Rolls-Royce, Aston Martin, Maybach, and Lamborghini. These are not the names one normally associates with a communist society. But forget the Long March. In China, these days, it’s all about the long drive.
If he were still alive, China’s spiritual leader, Mao Zedong, might have a hard time reconciling what goes on display later this week at the Beijing motor show. More formally known as Auto China 2004, it’s the country’s biggest new car show. So big, in fact, that organizers have had to cut off ticket sales. They’re looking to nearly double exhibition space when an all-new conference center opens in 2006.
The People’s Republic is about to pass Germany as the world’s third-largest national new-car market, trailing only Japan and the United States. Though sales have cooled a bit from the triple-digit growth of 2002, manufacturers are still struggling to keep up with demand as they invest billions in new production capacity and roll out scores of new products.
Yet there are also some ominous signs on the horizon. Beijing bureaucrats have just announced new rules that could lead to an industry shakeout, especially among the dozens of smaller Chinese manufacturers. And while sales remain strong, there’s growing concern that government efforts to cool an overheating economy could have a particularly chilling impact on the auto industry.
In all, over 600 cars and light trucks will go on display at Beijing’s International Exhibition Center. Ford Motor Co. will be the largest of the exhibitors, with more than 40 different vehicles representing the Ford brand, as well as the automaker’s Volvo, Mazda, Jaguar, Aston Martin, Lincoln, and Land Rover nameplates.
Nissan TeanaEnlarge Photo
It’s not alone. Auto China 2004 will be a veritable Who’s Who of global automakers. That includes mainstream manufacturers, such as Nissan — which will introduce the Tian-lai, a Chinese interpretation of Japan’s Teana sedan — and Peugeot, which is expected to show off its small 307.
To Beijing, Jeeves
But this year’s Beijing motor show will also bring an explosion of high-line products appealing to China’s fast-growing entrepreneurial class. Maybach will debut its big, chauffeur-driven M62. Lamborghini will show off its high-performance Murcielago and Gallardo roadsters.
Most of these high-line products are imported, manufacturers like DaimlerChrysler taking advantage of relaxed rules fostered by China’s entry into the World Trade Organization. Imports rose from 70,370 in 2002 to 103,039 last year For the first quarter of 2004, the numbers rose another 34 percent. That’s lagging the pace of the overall market, however, which was averaging gains closer to 45 percent through April.
“The Chinese market,” notes a report in the McKinsey Quarterly, “now has the world’s highest sales-growth rate for vehicles. Indeed, by 2010 China will become the world’s second-largest automotive market, trailing only the United States.”
Until recently, Chinese regulators kept a tight lid on foreign investments, limiting the number of manufacturers who could enter the market, as well as which products they could build. The rules are still more restrictive than in North America, Japan, or Europe, but there’s been a definite easing of restrictions that has allowed, if not outright encouraged, foreign makers to set up shop.