In the past few years, China, famous for walking, cycling and buses, is brewing a revolution in the automobile industry. This year, the sales of Chinese cars, trucks, and off-road vehicles are roughly the same as those of Germany, and the output of Chinese cars has surpassed that of South Korea.
There are predictions that China will surpass the German-Chinese auto industry in four years. The survival mode is mainly composed of local companies and multinational corporations. Since the product quality is not guaranteed, there is currently no international competitiveness. Most of the cars are still sold in China. However, China, which has dominated the global manufacturing industry, is not content to dominate only toys, fax machines and furniture. They are making plans to strive to become a major exporter of automobiles in the near future.
China’s automobile exports to the United States are currently carried out primarily through the shipment of parts and components to the United States, because automakers are reluctant to allow Chinese manufacturers that have not yet passed the assembly process and technology to directly export finished vehicles to the United States. However, with the help of the Chinese government and foreign investors, Chinese automakers have made remarkable progress. It is believed that within a few years, it is entirely possible for China to produce high-quality automobiles and various components at the lowest cost in the world. Analysts even predicted that China will surpass Germany in the next four years and become the world’s third largest automaker.
Major global automakers have stated that they have little choice but to increase their investment in China, taking into account factors such as low costs and strong demand, otherwise they will lag behind their competitors. In the past three years, the number of cars and light trucks manufactured in China each year has soared from 1.8 million to 3.8 million, while the current US is 12 million, Japan 10 million, and Germany 4.8 million. The rapid development of the Chinese automobile industry not only has a huge impact on its own economy, but it will surely have a profound impact on the global economy.
In China, 4 million families have cars, and 1 million families are buying cars each year. The rise of the auto industry has also caused some related industries to enter the rapid expansion track from then on. However, China, where the wheels are rolling, also faces serious problems such as terrible traffic congestion and rising deaths from traffic accidents. Air pollution is also deteriorating. Of the 10 most polluted cities in the world, China accounted for seven.
The success of the auto industry has caused some countries to worry that the prosperity of the Chinese auto industry has caused many countries to worry about it. The multinational companies that choose to build factories in China to expand their business are no longer required to hire too many employees in the country.
In the Chinese automotive industry, Volkswagen is the foreign car manufacturer with the largest market share. Bernd Reisner, president of Asia Pacific, estimates that the cost of producing a car in China is about 18% higher than that of an industrialized country such as Germany, but as new steel mills and spare parts factories are working The speed of construction, this cost gap will completely disappear in 2006. It is expected that Chinese automakers will have the ability to export cars to Asian markets in the next few years; then, in the markets of industrialized countries such as the United States and the European Union, Chinese cars will also be seen. However, the success of China's auto manufacturing industry is a threat to other countries. Most of these countries (such as Mexico, South Korea, Thailand, and the Philippines) are close ally of the United States and have long provided the United States with automotive spare parts.
If you pay a high price for improving the quality of your car and visit a Chinese automaker, you will find why China will take a few years to pose a real threat to Detroit and Stuttgart. Although some parts produced by China have been exported to other countries, the problem still exists.
At the Guangzhou Honda Automobile Manufacturing Plant, 90% of the steel needed for the production of the new Accord sedan and Odyssey van must still be imported from Japan, and shipping costs are very high. Chinese steel mills are currently unable to produce special steels that meet Accord quality standards. In Harbin, a car manufacturer has begun production of the latest Swedish and Japanese cars. However, due to the overcapacity of the Chinese railway system, the delivery time of steel products was extremely irregular, which led to the factory spending only extra funds and hoarding enough steel to produce 50,000 cars. In Chongqing, Ford invested in a modern automobile assembly plant. However, Ford finally discovered that many parts must first be shipped to Shanghai via the sea, and then transported through the Yangtze River route to Chongqing using cargo ships. In some auto parts factories in southeastern China, workers are still using chemical binders that are currently banned in the United States. Once these accessories are exported to the United States, there will be great difficulties due to the environmental standards of the products.
However, China's auto manufacturing industry also witnessed a good picture of quality improvement, but it paid a high price for this. China's Volkswagen has reached international quality standards, but Lesner said this is because they strictly abandon non-standard components, and this approach will undoubtedly increase costs.
How long can China's auto market prosper? Since China's accession to the WTO, trade barriers have gradually disappeared, and Chinese companies must increase efficiency and compete with imported products. For Chinese automakers and component suppliers, their success is obvious. There has been no increase in imported cars, and the cost of domestic cars has dropped significantly. In the past four years, the Honda Accord price has dropped from $50,000 to the current $27,000.
However, the Chinese auto industry also faces certain risks. Once the pace of economic growth has slowed down, problems have arisen in the financial system, and the automobile industry will also falter. If at that time, Chinese cars could not reduce costs to international standards, manufacturers would certainly reduce investment. However, if China's economy can still maintain rapid growth in the next few years, and the competitiveness of Chinese automakers will increase, even if the domestic auto market will experience a downturn, Chinese cars can still find a place in the world market.
At present, the biggest problem facing the Chinese auto industry is: How long can the domestic auto market, which has grown rapidly in recent years, be maintained? Some warnings are already evident. In China, a small but very wealthy urban elite is the main buyer of the car, and the broader middle class has not yet been born. Forty years ago, Henry Ford doubled the salary of employees and won world reputation. He believes that employees can afford to buy cars produced by the company as long as they have reasonable savings. However, at the current Honda factory in Guangzhou, the monthly salary of employees is only 240 US dollars, and the salary of auto workers in Chongqing and other places is even lower. In China, 70% of car buyers are buying cars for the first time, and sales staff spend more time explaining car functions than buying cars. The reason why Chinese automakers have established new factories is that many consumers will want to buy a second car in the future. However, the biggest concern is whether the capacity of the Chinese auto market is as large as people think.
Like most car manufacturers, GM is also facing tremendous pressure from U.S. corporate unions. GM China has repeatedly stressed that it will not ship GM cars made in China to the US market. At present, only Honda has formed a clear plan for exporting Chinese cars to industrialized countries. It can be seen that the Chinese auto industry still has a long way to go. Some seemingly simple parts are still an insurmountable gap for Chinese manufacturers. A car brake parts factory in Guangzhou faced such a dilemma, workers still can not master the relevant technology, and sometimes even a spring needs to be imported from abroad. But these obstacles did not make anyone repulsed. Phil Muta, President of GM China, stated: "The market is always going up beyond our production capacity."
Kunshan Muchun Electric Co., LTD , https://www.muchunelectric.com