BIZCHINA / Analysis
Ambitious road ahead of country's car industry
By Jin Jing (China Daily)
Updated: 2007-04-23 14:13
China's car companies should shift gear and focus less on expansion and
more on product innovation in order to compete in the global marketplace.
"It is urgent for Chinese companies to be more active in the auto
sector's production and technical innovation to build China's own brand
reputation in the world," Feng Fei, director general of the Industry
Economy Research Department of the State Council Development Research
Center, said at the CBN (China Business News) Auto Summit yesterday.
According to Feng, the profit margin of Chinese car companies decreased
sharply because of scale expansion which led to intensive competition in
the domestic market. As a result, the profit margin dropped from 11
percent to around 5 percent, equal to the average on the international
market.
The auto summit coincided with yesterday's opening of the Shanghai Auto
Show where China's up-and-coming automakers displayed new sedans and
SUVs. They also hope to showcase their ambition in order to expand abroad
as global producers try to ramp up sales in China's booming market.
At an exhibition center on Shanghai's eastern outskirts, thousands of
spectators crowded displays by Chinese companies while their US, Asian
and European counterparts look at China as a potential place to boost
revenues amid a sales slowdown in other parts of the world.
While booming sales last year made China the world's second largest
vehicle market, the Shanghai show has become a key event for global
producers to woo newly prosperous Chinese buyers and for domestic
companies to get attention abroad.
Currently, China's car companies are mainly joint venture initiatives.
State-owned and individually owned companies account for just a small
part of the market share.
"Chinese car companies have developed quickly in recent years by
acquiring advanced technology from joint ventures and it is time they
built their own brand," said Feng.
Xia Zhibing, president of BYD Automobile, an individually owned company,
agreed and said Chinese-owned brands are expected to take a prominent
position in China in the future.
"Chinese car companies have an advantage on cost-efficiency," he said.
The market share of Chinese-made passenger cars accounted for 31.1
percent in the first quarter this year, up 28.4 percent from last year,
according to statistics from National Passenger Cars Association.
"Some joint venture companies lowered the price in the first quarter to
match the fierce competition," said Rao Da, secretary-general of National
Passenger Cars Association.
"The car industry has become the pillar industry for China's economy,"
said Zhang Xiaoyu, vice-president of China Machinery Industry Federation.
"We expect car output to increase to 9 million this year and car exports
will continue to rise," he added.
China produced 7.3 million cars last year, surpassing Germany to become
the world's third largest car producer. And sales in 2006 reached 7.2
million, turning China into the world's second largest market for cars.
Agencies contributed to the story
(For more biz stories, please visit Industry Updates)
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