China IS COMING and why Detroit should be worried

[nadepalma]

SOURCE: http://www.detnews.com/apps/pbcs.dll...01090364/1148/

China IS COMING and why Detroit should be worried





DETROIT -- If turnabout is fair play, the Motor City players pouring billions into the booming Chinese market should get set for metal from the Middle Kingdom.

In an auto show press event more akin to diplomatic ceremony than industry unveiling, more a geopolitical statement than one of business strategy, China's Changfeng Group took the wraps off a few not-so-special SUVs Monday and issued a clear statement -- it wants to enter the U.S. market, preferably with an American partner.

Yes, be it a $25,000 Liebao CS6 SUV or a Feibao CT5 pickup from Changfeng, a $10,000 sedan from Geely or a tiny car from Chrysler made by Chery, the Chinese are coming.

"We are actively looking for collaboration opportunities with the major auto companies and suppliers in the world," Changfeng Chairman Li Jianxin said. "Many of them are right here in Detroit. Changfeng's participation in this auto show symbolizes the initiation of our internationalization campaign. Through the collaboration with local dealers, we will jointly promote Changfeng's products in the North American and global market."

And scare the wits out of the United Auto Workers, suppliers and automakers from Detroit to Stuttgart and Toyota City. Not because comparatively tiny Changfeng (with global production capacity of 200,000 vehicles, less than one typical auto plant today) and Geely, which made its unofficial debut last year at the North American International Auto Show, are towering competitive threats.

Because, by themselves, these Chinese government-controlled entities aren't -- at least not in the next decade or so.

The challenge they pose is a new low-cost standard they could set, provided their cars, SUVs and pickups meet the quality expectations of American consumers awash in world-class choices -- from Detroit, Japan, South Korea, Germany, Sweden, the United Kingdom.

The Chinese also need to field innovative designs that don't evoke a Nissan X-Terra SUV, circa 1999. They need to establish or, preferably, join, an established dealer distribution network. They need help negotiating the tricky bureaucratic maze of certifying cars and trucks for sale in the United States.

None of which is impossible in a global economy.

Never say 'never' again

General Motors Corp.'s product czar, the ever-voluble Bob Lutz, says he doesn't expect Chinese-built cars to make a dent in the rich U.S. market for three to five years which, as any industry wag knows, is on the short side of a typical product life cycle.

Translation: It goes by in the blink of an eye. Notice that Lutz, for all his bravado, isn't using the word "never" regarding the Chinese. Could Detroit's old lions, those now struggling to wrest profits from nagging losses, have finally learned the cost of dismissing the Asian competition?

"Right now, China is the shadow hanging over the industry," said Harley Shaiken, a labor expert at the University of California-Berkeley. "It will be the defining issue a few years from now."

If not later this year when the UAW and Detroit's automakers bargain a new national contract amid brutal downsizings. Add, too, plans by at least one -- DaimlerChrysler AG's Chrysler Group -- to partner with China's Chery Automobile to build Chrysler-designed cars in China and ship them into the United States.

Yes, with or without us, the Chinese are coming.

"It's going to take them years to be competitive in this market," said Bill Pochiluk, president of Automotive Compass LLC, a consulting firm. "Give them five years, and they're going to be here."

Give them savvy designers more attuned to the tastes of western Europe and North America, said Fisker Coachbuild CEO Henrik Fisker, and the Chinese could theoretically cut their arrival time even shorter.

"What we do know is they are approaching design houses all over the world," said Fisker, designer of the BMW Z8 and Aston Martin DB9. "If they came to us, we could develop a car for them in three or four years."

'Our doors are open'

Yes, they are coming.

GM, allied with Shanghai Automotive, says it has no plans to import Chinese-built cars into the States. Of course, it would say that, considering the success of its low-cost Daewoo venture in South Korea and the fact it's just months from beginning bellwether talks with the UAW.

To hear Chairman Li read his remarks, to watch a tedious video extolling Changfeng's aspirations, to see the earnestness of its people and products is to realize that the industry's global players -- the Chinese threaten more than the American business model -- have a choice:

They can do nothing and hope the Chinese stumble. Or they can do what Chrysler President Tom LaSorda is doing by cutting a deal with a Chinese player and getting them on the team building less expensive subcompacts lest they become the other team.

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[Xeper]

I dont really see a threat coming from China. Americans will choose a more reliable brand, a brand that they have heard of before like Chevrolet or Ford... or even Honda. But some weird chineese brand? Throws people off.

[kenman923]

I don't think that Detroit has anything to worry about. Some are now starting to embrace the Korean brands that have been in the U.S. for 20 years. When Chinese companies open plants in America, then maybe it could be cause for concern.

[CBECK]

Originally Posted by Xeper

I dont really see a threat coming from China. Americans will choose a more reliable brand, a brand that they have heard of before like Chevrolet or Ford... or even Honda. But some weird chineese brand? Throws people off.

The same things have been said about Toyota and Nissan in the past, now look at them. If you build a quality product people will buy it--plain and simple.

[ByTheLake]

If a product is offered with decent quality, people will purchase it, especially if the price is low.

Imagine if the Chinese come to the US with a low-priced small pickup? That just might work, especially since GM's mid-sized pickups are priced a bit out of reach for those that would like one.

[wolverine]

Any so called "American" who buys a vehicle made by the Chinese government should be summarily shot as soon as they leave the parking lot with their communist vehicle. Bad enough these idiots buy cars from Japan and Korea which are our economic enemies, now the clueless American people will soon have the opportunity to buy from our military enemy as well. Something tells me the people of this country will be stupid enough to do it, too.

[ponchoman49]

China hardly poses a threat. 90% of the garbage from there is utter rubish to start with so it won't take long for people to realize this.

[T-Type]

Originally Posted by ponchoman49

China hardly poses a threat. 90% of the garbage from there is utter rubish to start with so it won't take long for people to realize this.

That is true right now, but in five years they can definitely improve a lot. Look at the Koreans and the Japanese before that. I believe Detroit has learned it's lesson. They will be concerned about the Chinese (as they need to be).

[CrunkedRL]

I dunno the resounding sentiment here thus far is that China will not pose much of a threat. But Hyundai almost two decades didn't pose much of a threat either. Now they have a full range of competitive vehicles including a descent minivan that is showing up those produced by Ford and GM. Low price and quality will definitely be an essential piece of the Chinese formula for success in NA. This has taken Hyundai pretty far over the years.

[guitarlix]

China is coming for sure. There's no way around that. However, not anytime soon. I can only hope that their first few products are absolute crap. That'll keep the public away for generations.

What I don't understand is why they want to enter the US market? They can achieve more success in their own 1 billion Chinese market.

[Stéphane Dumas]

Toyota and Honda should be worried as well, imagine a mid-size Chinese car at a interesting price with a good ratings for the NTSHA. Some "Toyonda" fans could be tempted to have an eye on them.

[Havasavana]

Warren Brown, the car guy on the Washington Post, had an interesting article regarding the Chinese entry to the US market back on October 29th. He suggested that Chrysler might be acquired by a Chinese 'company' if Daimler unloads it. That would change things for sure.

"It makes one wonder: Chery is one of the fastest-growing car companies in the world. It's been around only nine years but is rolling in cash -- probably enough to buy the Chrysler Group and the Chrysler Building here, if it chooses to do so.

Imagine that: the tallest China-owned building in the United States. It's not impossible."

Registration might be needed.

http://www.washingtonpost.com/wp-dyn...102700588.html

[jc7222]

GM and Ford need to be concerned. Any sale that is not theirs is bad news. The perception is becoming that Asian (not just Japanese) cars are more reliable than American and European autos.
I believe that GM would have been wise in keeping the Daewoo name here and developing them into what Saturn was supposed to be... the Asian auto fighter. At least they would have been able to attack two mentalities. The ones who would never purchase anything American would probably have bought a Daewoo. And the ones who would never buy anything Asian would be offered Chevy and Pontiac.

[nadepalma]

I agree China isn't anything to worry about NOW, but they WILL be down the road. The Japanese and Koreans started off in the same boat years ago but now are mainstream and accepted.

PLUS, remember that years ago there was more of a "Buy Ameircan, Keep Jobs in America" type mentality in the public. That really doesn't exist much anymore so the possibility of the Chinese gaining acceptance here in the US might be more rapid than it was for the Japanese and the Korean brands that endured a more heavily "pro-American" public.

[CrunkedRL]

Originally Posted by guitarlix

China is coming for sure. There's no way around that. However, not anytime soon. I can only hope that their first few products are absolute crap. That'll keep the public away for generations.

What I don't understand is why they want to enter the US market? They can achieve more success in their own 1 billion Chinese market.

The U.S. by far is one of the most competitive. I think Chinese belief is if they can make it here they can be successful anywhere. I don't want the raggedy cars here either but I'm sure some Chinese feel the same about our Buicks.