There are those who state confidently that China will own the worldwide car market within a few years (these people have been saying this for years — check out this post from three years ago where I rightly said NO WAY) and there are those who state it will never get there. My only qualifications are that I come from Michigan and I have represented a few auto and truck manufacturers and a whole slew of auto parts manufacturers, including many in or going into China. But like just about everyone else, I have a view, and mine is that China eventually will do well selling low end cars worldwide, but that it is not yet close to selling good cars in the United States. I spent seven hours in my car yesterday (driving back and forth to Wenatchee, WA) and there is no way I would have chosen a Chinese car for that trip. And it’s not just me.

I landed in Beijing last month with my wife and daughter. The first taxi in line was a very old VW. The VW driver started putting our luggage into his trunk when a Chinese woman came over and asked us in pretty good English whether we wouldn’t please take the taxi behind us (a much newer, but Chinese model) because she was going on a long trip with her family. My wife asked her why she wanted the one cab and not the other and the Chinese woman gave an embarrassed look, but said nothing. I explained to my wife that this woman did not want to go on a trip with her family in a Chinese car, but she was too embarrassed/nationalistic to say so. Since we were merely going to our hotel, it was no big deal and so we allowed the switch.

On that Beijing trip, I met with Bill Russo, a former Chrysler VP in China, now head of Synergistics Limited and, most importantly, a true expert on China’s auto market. One of the things Bill told me during our meeting was that the Chinese would rather buy non-Chinese cars but buy Chinese cars based on price. That has always been my sense, but since I mostly hang out with Chinese attorneys who drive Buicks and Toyotas (mostly), I am not going to claim to have a representative sample.

But the big question regarding Chinese cars is when they will make their mark outside China and Bill Russo just came out with an extremely thorough and thoughtful piece on his blog that says, “not yet.” The post is entitled, “The Path to Globalization of China’s Automotive Industry,” and it says that China auto must achieve various intermediary benchmarks before it is ready for the world stage. If you have an interest in China’s auto industry, this post is not to be missed.

A few weeks ago, I read a blog post from a Canada-US designer, Caroline Di Deigo, who traveled to China to, among other things, see the houses at The Commune at the Great Wall. She had been very excited to see these houses after having admired them in books, but upon seeing them up close, she was disappointed by their construction:

For several years I had been excited by images in architectural books of the houses at The Commune at the Great Wall, so this trip I made a detour from our group to see it for myself. The Commune at the Great Wall was developed by Zhang Xin between 1998 and 2002, when she commissioned 11 Asian designers each to design a house, situated in a rugged hilly location within view of the Great Wall. These houses, while privately owned, now function as a resort. In my opinion however, it is really a monument, or series of monuments, to design. At first glance it’s very impressive, with unique expressions of ‘house’, ‘home’, ‘dwelling’. On closer inspection though, I found them somewhat disappointing. Possibly due to their ultimate function, they lack much of a ‘residence’ feel, and seem a bit barren, very much like ‘public spaces’, vaguely ‘museum-like’. And to get really nit-picky, the quality of construction is unfortunately lacking, and from what one reads, certain of the designers were in fact quite disappointed with the implementation of their visions, as indeed I might have been.

Chinese cars are in many ways the same.

UPDATE: In his post, “Detroit, not Shanghai, is still the centre of the car universe,“Malcolm Moore, blogging for the Telegraph, agrees.

What do you think? Have Chinese cars arrived or are they three, five, seven, ten or more years away? When will a Chinese car brand have the reputation of Toyota, BMW or even Hyundai?

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The All Roads Lead to China Blog just did very interesting and in depth post on the auto industry moving to China, entitled, “There Will Be No More 3rd Tier Suppliers in America!”  In summary, it says the following:

  • Automobiles are becoming commodities and the movement of U.S/ E.U. auto suppliers to China makes it easier for Chinese brands in the future.
  • Foreign auto makers have supplied Chinese suppliers with the equipment and components necessary to make finished parts along with the knowledge necessary to build those component parts themselves.
  • Foreign OEMs are now buying quality parts from Chinese suppliers.

The post says “the Pandora’s box” as been opened yet “many” auto parts companies have “wrapped themselves in the warm blanket of denial.”

I have friends and clients in the auto industry and I think All Roads is wrong to say many are in denial.  Everyone I know is well aware of the issue.  However, I do agree many are not acting fast enough to deal with the problem.  But I also know that we as outsiders must realize and account for how incredibly difficult it is for any domestic company to shift even a part of its business overseas. These things take time.

But what about trucks?

My firm also represents companies in the truck manufacturing industry and I am always on the lookout for information as to what is going on in China trucking.  One of our best (and few) Chinese clients is Jereh, a dynamic and successful Yantai company that, among other things is Paccar Trucks China representative.  Because of my firm’s truck industry representations, I am not comfortable writing about the status of foreign truck manufacturing in China.  However, I bring it up to complain about the dearth of information on truck manufacturing FDI in China.  I know Navistar recently signed a deal to start manufacturing engines in China and I know Cummins has been making truck engines there for some time.  The most recent report I could find on China’s truck market is from 2004 and it is hugely optimistic, which makes sense.  Asia Logistics Wrap recently did an excellent post on China trucking (not really truck manufacturing), appropriately entitled, “Trucking in China.”  I would love to hear what our readers have to say about the state of truck manufacturing in China.  Beyond this there seems to be virtually nothing out there.

So I am calling on any readers who have information here to please chip in and share your knowledge by commenting.