From China With Love
With all the problems the American automobile industry has been facing, perhaps nothing is more telling about the future than the fact that in the first part of 2009 sales of automobiles in China surpassed sales in the United States. Just a little more than 20 years ago China's automobile industry was backward and dependent upon liaisons with foreign companies. American Motors began a joint venture in China in 1984 to build Jeeps and Volkswagen followed shortly thereafter to build a version of the first-generation Golf. Other joint ventures with Audi, Renault, Mercedes-Benz, and General Motors followed, but private cars were all but unknown on China's streets.
In 1994 the Chinese government embraced automaking as a "pillar of industry" to help expand mobilization through the automobile. The deal was this: Almost every carmaker was invited to build a plant and make cars and trucks in China, but foreign investors had to own less than 50 percent of any venture. The floodgates were open to outsiders, yet some Chinese companies began to spring up to build homegrown automobiles not specifically related to any of the foreign models.
In 2000, as the home auto industry was finding its legs, there were just 6 million cars in China. In 2007, that number had climbed to 41.7 million. Of the 73 million cars built in the world in 2007, 8.8 million were built in China, and more Buicks are sold in China than in the United States. If you want to be a player on the world stage as an automaker, you have to build in China. In 2006, GM manufactured 2.3 million cars there and 4.1 million in the United States. With the dramatic downsizing of General Motors in this country, it won't be long before GM's Chinese production surpasses that in the U.S.
It's not just foreign nameplates finding success in China; its homegrown models are also growing. China's domestic manufacturers went from 15 percent of the market in 2000 to 26 percent in 2006. Several of these all-Chinese companies are already exporting cars to Europe and models are under development that would appeal to American buyers.
Why would Americans be interested in buying cars from China? For the same reason that millions shop for Chinese goods at places like Wal-Mart: price. If you look at the label on your cell phone, on your computer, your personal data device, your children's toys, or even your clothing, there's a good chance it says "Made in China." Chinese companies have become adept at building exactly what we want for a price that undercuts the competition from U.S. manufacturers. If they can do this with computers, flat-screen televisions and cell phones, why can't they do it with automobiles?
For a long time many engineers and technologists dismissed China's engineering and vehicle development capabilities. As recently as 2003, a report by the U.S. National Academies and the Chinese Academy of Engineering dismissed any vehicle development capabilities as coming from China's overseas collaborators. By 2006, Chinese manufacturers like Geely, Chery, and Brilliance were building cars using their own competitive technologies. Whatever previous generations of Chinese automobiles may have lacked in sophistication or technological capability, the current generation is rapidly closing the gap with the American and European manufacturers, and at a price that beats all rivals.