World Automobile Giants' China Strategies in 21st Century

Part One

In the 20th century, motor vehicle, or the auto industry, had not only brought rich and comfortable lives to people, but also turned numerous entrepreneurs into promoters of all industries and even the entire economy worldwide through "product manufacture". During the period, competition among factories had never ceased. This contest had influenced the prosperity and decline of enterprises all the time, the century-old history of auto industry can be termed as a history that repeated itself in an endless cycle during this process.

In the past one or two years, foreign companies have strengthened their overall penetration and control over China's automobile industry in terms of funds injection, model introduction, product series, sale rights, financial credit and automobile culture. In a sense, with foreign firms advancing from the backstage to the front stage, domestic auto market competition has become contest among foreign companies. Meanwhile, the domestic market demands for diversified and serialized products, figuratively speaking, it needs "hundred flowers" instead of "a single blossom".

There is only common interests, no eternal friend. The corporation between foreign and Chinese carmakers can only be called a "win-win deal" when foreign companies gain economic returns they expected and, at the same time, through their products conforming with the purchasing power of Chinese consumers, bring real benefits to Chinese people and sharpen the competitive edge of national industry. For international car groups, no matter early birds or new comers, or those withdrawing halfway, their gains and losses on the Chinese market reflect their different "China Concepts", "China Strategies", as well as cultural difference and links.

The 21st century is due to see major changes in the pattern of world automobile industry. Experts predict 70 percent of global market growth in the next years will stem from Asia, with China placed at the center by its huge consumption potential.

What major problems will world automobile encounter at the dawn of the new century? What cards are in giants' hands? And what plans for their battle for market will be launched in China?

Three American Giants: same goal, different means

  • General Motors


    • Cards in Hand

    World biggest automobile manufacturer - General Motors has since 1989 invested some US$ 2,000m in China to set up three vehicle joint ventures and one solely- funded accessory sale center, including Shanghai GM, Shenyang Gold Cup GM, and Liuzhou Wuling Motor Co.,Ltd. under negotiation. By now GM has successfully brought a series of its products into China, containing de luxe model of Buick, Buick GL8 for business, Sail family car, Chevrolet and Pickup vehicles.

    Scheme for the game

    GM has planned to turn Shanghai GM into its production base in Asia.

    Comment

    GM boasts the largest alliance in Asia and claims 49 percent shares of Isuzu, 20 percent of Suzuki and 20 percent of Fujiheavy. While Isuzu has its subsidiaries in Jiangxi and Chongqing, two enterprises mainly engaged in light truck production, and Isuzu also joined capital with the Guangzhou Auto to make buses. GM should take an overall consideration of accession strategies of its numerous subsidiaries and holding companies and, make most of China's cheap human resources and advantages in raw material processing to secure a promising future.

  • Ford


    • Cards in hand

    Compared with its opponents, Ford apparently falls behind in its market development in China.

    As the first American automobile manufacturer to enter the Chinese market in June 1978, Ford currently has more than 10 sales agencies, over 40 patent service facilities and 2 global accessory sales agencies, as well as a technology training center. Its Transit vehicle, co-developed with Jiangling of China, has been put into batch production. On top of that, it has attained the Chinese government's go-ahead to set up a joint venture with Chang An Automobile (Chongqing) to put out small family car priced around 100,000 yuan.

    Scheme for the game

    Currently Ford only has one Mazda corporation in Asia and, after giving up the idea of purchasing Daewoo, it will adopt a slow but steady Asian investment plan without any one-off big deals.

    Comment

    For Ford, its current investment and cooperation in China is far from enough for such a huge market and the project with Chang An testifies to its recognition of China's vast potential in small cars.

  • Daimler-Chrysler


    • Cards in hand

    Chrysler's China product - Beijing Jeep declined continuously in sales, calling for urgent strengthening of technological cooperation. On September 27, 2000, it declared, together with Beijing Automotive Industry Group, an additional fund of US$226m to strengthen and expand the project.

    Chrysler joined hands with Yaxing-Benz (Yangzhou) in bus production, had permission in lorry manufacture in Baotou, Inner Mongolia, and signed a technology transfer agreement with Ankai Auto (Anhui) to produce plushy car.

    Scheme for the game

    Chrysler's advantage lies in lorry and business car and is in urgent need of a Chinese lorry maker to cooperate with. It will further its Asian markets and has promised a new product for each year in China.

    Comment

    Although Chrysler favors the Chinese market and has new cooperation agreements signed, it still at a trial stage to seek proper market positions and lacks a long-term plan.

    ( To be Continued ...)



    By PD Online staff member Li Heng


    People's Daily Online --- http://english.peopledaily.com.cn/