Will Chinese automakers take the world stage?
The world’s major auto manufacturers have been on a tear in China, pushing sales estimates to the millions over the next several years. But what of China’s own automakers? Could they be preparing to enter to the world market? Chinese automobile quality has risen significantly over the last several years. It could be enough to tip the scales in their favor should they choose to expand to other countries.
BEIJING (Reuters) — When Ric Hull first looked at launching Great Wall Motor pickup trucks in Australia last year, he considered rebranding them, worried their obvious Chinese origins would raise questions about their quality.
Ateco Group, Hull’s auto importing and dealership company, decided against marketing the low cost models under “GWM” label, instead embracing the trucks’ made in China credentials, and sales are booming.
“We initially thought: do we resolve the brand question, do we call them GWM? But then we thought that people would know anyway, and that seems to be working very well,” Hull said.
We have more coverage at Dashboard News.
China’s economy continues to grow
China’s economy just doesn’t seem to stop growing. According to the most recent figures, China’s GDP grew by 11.9% in the first quarter of this year. That’s the kind of growth that actually worries economists because it raises stability concerns. How do you manage such explosive growth over a period of, say, a decade?
A lot of the state spending came in the form of bank lending. That’s where China and its banks will have to be careful. Plenty of Americans are shackled with debt they can’t repay, and they’ll be paying interest for years and years to come. Luckily, credit counseling services have popped up that can help, but it would probably have been better if we had never gotten into this mess in the first place.
GM expands its outlook in China to 3 million cars a year by 2015
As much as GM continues to struggle in the states, the automaker is hoping it can make a dent in China’s blooming market. Recent company statements show the company is hoping to sell 3 million cars a year by 2015. That’s not so far off. The Chevrolet Volt is expected to hit the Chinese market in 2011, and for some reason Buick continues to grow overseas. Whatever the reasons, GM is doing well in China’s young market, so it will be interesting to see how the next few years progress. Check out our full coverage on the topic at Dashboard News.
China’s thirst for Iraqi oil
BusinessWeek has a great article explaining China’s investment in the oil fields of Iraq.
BP is the largest partner in the venture, but only by a dipstick: It has a 38% stake, while the Chinese hold 37% (the rest is owned by an Iraqi company). The media focus has been on BP’s decision to take up the Rumaila challenge for a low fee of only $2 for every barrel the venture produces. But the more important story could be China’s role. “CNPC’s involvement brings together the country with the most rapid growth in energy demand in history with the country that plans the greatest buildup of production capacity ever,” says Alex Munton, an Iraq specialist at Edinburgh-based oil consultants Wood Mackenzie.
There’s also some interesting information about China’s commitment to training workers who can work in the oil industry.
China is the low-cost provider in the industry. “As a general rule of thumb, Chinese management and labor costs are about one-third if not one-fourth of Western costs,” says Gao, the ex-CNOOC executive. Nine colleges and universities focus exclusively on oil studies in China: “The Chinese treat the industry as a life-and-death issue,” says Gao. The Western oil industry’s workforce is aging rapidly. “Analysts always mention that the oil majors face personnel shortages,” says Xu Xiaojie, an independent oil and gas adviser in Beijing. “In China we have a surplus.”
The Iraq ventures still face formidable obstacles—sectarian strife, corruption, and government instability, among them. The Iraqis also may not welcome large numbers of Chinese to their fields. “Yes, bringing in low-cost engineers is China’s advantage,” says Trevor Houser, a partner at the Rhodium Group, a New York-based research firm that studies India and China. “But that has created tensions [elsewhere]. Look at Zambia, where an election was pretty much fought over China.”
It will be interesting to see this play out.