China’s Auto Industry Takes On the World

March 30, 2007 at 8:14 pm | Posted in China, 科技, 經濟, 经济, 美国, 美國, Economics, News, Technology, United States, 新聞, 新闻, 中国, 中國 | Leave a comment

nanjingmgrover

Dexter Roberts, Mar. 28 2007 BusinessWeek

A little piece of England came to China this week. On Mar. 27, the classic British brand MG Rover began production in Nanjing, in Jiangsu Province, with 1.8-liter and 2.5-liter MG7 sedans and a 1.8-liter MG TF roadster rolling off a Chinese factory line. Next up will be other MG nameplates with engine sizes ranging from 1.1 to 1.6 liters, says Nanjing Automobile Group, the new owner of the once-iconic British brand. Unlike other Chinese auto companies that have either partnered with foreign auto companies or developed their own brands, Nanjing Auto is taking “a third path” aimed at creating an internationally competitive auto player, said Chairman Wang Haoliang on Mar. 27, according to the China Daily. The company has ambitious plans to spend $2 billion, which include the opening of a factory in Ardmore, Okla., next year in a bid to crack the world’s biggest auto market…

And the Chinese car companies are not content to stay at home. Hefei (Anhui Province)-based Chery, which produces the popular minicar the QQ on the mainland, recently signed a deal with DaimlerChrysler that will see it produce Dodge-brand vehicles for the U.S. and Western Europe markets. Shenyang-based Brilliance Automotive, which has a joint venture producing BMWs with the German company in northeastern China, showed three new models at the Geneva Auto Show this month. Those included a sporty sedan called the BS6, a BS4 compact, and a two-door BS3 coupe, all of which it aims to sell in Europe…

Despite those inroads abroad, cracking developed Western markets certainly won’t be easy. One huge challenge will be breaking into distribution channels and convincing overseas customers to trust Chinese autos. Chinese car companies have an often-deserved reputation for being more concerned with cost cutting than building high-quality, innovative vehicles. “The weak foundation of the Chinese car industry still makes it difficult for China to produce a car of decent quality and safety level,” cautions Beijing-based auto analyst Jia Xinguang.

Indeed, even succeeding at home is a challenge in the highly competitive, cutthroat Chinese auto market. So Nanjing Auto has asked Beijing for loans and subsidies totaling close to $400 million to fund its big plans to sell the Rover in China and overseas. Whether or not Beijing provides that major handout, though, MG Rovers will soon be tooling the roads of China.

Sustainable competitive advantage. U.S. Consumers would be attracted by the relatively cheap prices of Chinese automobiles, but what else can these cars offer to differentiate themselves from other established brands?

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