ASEAN Autobiz Magazine

News	Trailing China’s Success Story

	For a year, the Thai automotive industry had been swimming in the ocean of troubles. The Hamburger crisis coupled with domestic turbulence slashed demand by half. Fortunately, the situation picked up in the last quarter, though not yet returned to the pre-crisis condition. But just as the operators here finished licking their wounds, the automotive industry in China has gone far beyond them and all companies across the globe are jumping at any open opportunity to penetrate the market. What advantages over Thailand that China possesses? Certainly, this is not an overnight success, but rather the result of two-decade efforts. From annual sale volume of hundreds of thousand units, the monthly sale figure hit the 1-million mark for the first time this year. Pure demand would not have resulted into the success, but for the well-prepared government measures. The road is long, but it is worth trailing what China has done to come to this point and what it is going to move on. Entry to new manufacturing dimension In mid-October, China's auto production hit the 10-million mark for the first time, and propelled the country to rank the 3rd, after the United States and Japan, to achieve the milestone. The 10-millionth car, a Jiefang-brand truck, rolled off the assembly line at First Automobile Works Group in Changchun in northeast Jilin Province. Aside from incessant economic growth, boosting the fast expansion was the low imports. Due to high import duties on completely-built units (CBU) and huge domestic demand, nearly all foreign auto companies have opted for domestic manufacturing to serve local consumers. Several major players have launched new models for the Chinese market, to cope with the huge and fast-expanding demand. Mr. Miao Wei, vice-minister of industry and information technology, said "It took China 17 years to boost the output to 10 million units from 1 million vehicles in 1992…China has not only become a major country for auto production in the world but also a competitive auto country." China has created automotive clusters throughout the country, particularly Shanghai which aims to become China’s Detroit, Shenyang, Beijing, Guangzhou, Shantou and Chongqing. Each cluster can produce 1 million units per year. This year, China also pushes forward made-in-China energy-efficient and own brands, after years of knowledge in auto part making and assembling at foreign companies’ plants. Major leap in manufacturing technology Analysts are of the opinion that while China’s competitiveness is on the rise, the country still needs to enhance the linkage of manufacturing, innovation and brand awareness. Mr. Xu Jianyi, general manager of China FAW Group Corporation, noted that though China has advanced in automotive development, but it remains behind global competitors particularly in term of technology. The authorities apparently know the disadvantage and many contests on energy-efficient and alternative-fuel vehicles are launched nearly on a daily basis. Educational institutions and related agencies have launched promotional measures, to encourage technology development. China also plans to invest 10,000 million yuan (approximately US$1,470 million) on research and development of new energy sources in the next 3 years. So far, eight models including hybrid BYD Auto F3 has won the manufacturing permissions. Within 2011, it is expected that 500,000 energy-efficient units would be on streets.
Issue	December 2009