Beijing, November 18:
Thousands of auto designers, technicians and engineers are busy preparing scores of new models for the next round of competition in Chinaâ€™s car market.
â€œThe Chinese are coming, itâ€™s only a matter of time,â€ one China-based auto executive said of an expected surge in exports of Chinese cars to Europe in the next few years. As top executives from multinational auto giants gather here this weekend, many of the latest models will be shown at the Beijing International Automotive Exhibition. The executives will be looking beyond their strategies to increase their share of the still rapidly growing Chinese market, with exports on the horizon for most firms.
China exported just 32,000 of the 5.7 million cars it produced last year.
It also exported about 90,000 trucks and 16,000 buses and minibuses in 2005, according to Chinese customs statistics. With car production surpassing Germany last year, China is now behind only Japan and the US.
Its exports are forecast to double this year, and industry analysts see Chinaâ€™s auto industry growth continuing for the next 10 years. So far the exports are mainly to other developing nations such as Malaysia, Iran, Syria and Russia, and Chinese firms are planning joint-venture productions in Southeast Asia and Latin America. But exported cars have already begun to trickle into Belgium and Italy, mostly Honda Jazz and Chery QQ models.
Meeting the higher quality standards of developed nations remains the main challenge for Chinese exporters, the Hong Kong division of KPMG said in a recent report on Chinaâ€™s car market. â€œRaising quality and safety levels, building brand equity and establishing distribution services and networks have been some of the key hurdles for domestic manufacturers looking overseas,â€ KPMG said.
The Chinese government has promoted the auto industry as a â€˜pillar industryâ€™ in the last decade, building hundreds of new roads, encouraging car ownership and investing relatively little in public transport.
Cheap compact models from Chery, Geely and other Chinese firms have rapidly gained market share with cars costing as little as $4,000. Geely has plans to test the US market, while Chery has reportedly held talks with DaimlerChrysler on a possible joint venture to export compact cars to the US.
Volkswagen, which leads car sales in China, has already exported parts worth about one billion euros from China this year, sources said. But a flood of Chinese exports is unlikely until the Chinese and foreign firms have satisfied the appetite of domestic consumers.
The Chinese market will â€œhit a wall when everyone who can afford a car, has a carâ€, auto industry researcher Burce Belzowski of the University of Michigan told the US-based Investorâ€™s Business Daily last week. â€œThatâ€™s when China will become a big exporter,â€ Belzowski said.