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China, the ‘auto’-mobile zone

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  1. Introduction
  2. The foundations of a flamboyant industry
    1. The arrival of foreign manufacturers
    2. The delay of local builders
    3. The reasons for this popularity abroad
  3. General market characteristics
    1. Production and sales
    2. Imports and exports
    3. Builders : Leaders who are well-defined
  4. Outlook
    1. Regulatory aspects
    2. Political aspects
    3. Oil issue
  5. Conclusion

China has long been regarded as the land of the bicycle. This Asian country is now a new Eldorado for the automotive industry. In 2005, China became the third largest producer of cars after the U.S. and Japan, and the fourth largest market in the worldwide vehicle sales. Within a span of a few years, it will emerge as the world champion in auto sales. This progress is mainly due to the considerable potential of the emerging markets that it represents. The population size and rapid growth in purchasing power are two key factors that facilitate the sales. The car has become a symbol of success and high mobility for the emerging Chinese middle class.

This market is characterized by a very strong presence of foreign automakers who are directly integrated into this industry. They are also responsible partly for this explosive growth. In a context where all the big nations are trying to take advantage of market potential in China and set up activities in order to exploit the potential, the automotive industry is a perfect example of a controlled and successful implementation.

One might question the characteristics and outcomes of the market affected by this confrontation. What are the prospects for the Chinese automotive industry?
Thus, we will consider, firstly, the historical background which led the industry to grow so strongly. Then, we will examine the characteristics of this market by taking into account the nature of builders. Finally, we will see the future prospects of the Chinese automotive industry.

Since the implementation of the policy of opening up of the country in 1978, following the reforms of Deng Xiaoping, the Chinese auto industry has grown rapidly. During that time, the automotive sector mainly specialized in manufacturing buses for civil or military and commercial vehicles. The fleet was estimated at 1.36 million motor vehicles. China had completely neglected the production of cars.

Large groups were rooted in Chinese factories and were distributed throughout the territory. The first car manufacturing plant, First Automotive Works (FAW), in Changchun, was located north of Beijing and the second plant, (Dong Feng Motors) in Hubei Province, is located in the center of the country. Big cities like Beijing, Shanghai and Guangzhou had their own factories. The names of the major automotive groups recall their current home city such as the Beijing Automotive Industry Holding, Shanghai Automotive Industry Corporation and Guangzhou Automotive Industry Group.

Thus, the Chinese automotive industry focuses on five main areas: in northern China with the Beijing-Changchun-axis Tianjin, in southern China in the Guangzhou region, around the cities of Wuhan and Chongqing and in the Shanghai region.
Tags: Chinese automotive market,auto industry, emerging markets.

[...] By the early 1980s, foreign carmakers had begun to focus on the Chinese market. They followed the limited approach by an import quota system and highly restrictive and high import taxes. The implementation has proven to be the most favorable option. European groups, including Volkswagen and PSA, were the most active.Americans, and General Motors, arrived later. Initially, the Japanese preferred the approach of the Chinese market through the transfer of technology that was rather obsolete. However, since the early 2000s, they decided to invest massively in the image of Toyota in northern China and Honda in Guangdong province in south-east China. [...]

[...] The Chinese government obviously wants to design cars that China in which can fully occupy a significant market share in the years to come. A group of Chinese professionals came forward to compete with the foreign brands: the Qirui (Chery), occupied a very aggressive position in this segment of entry-level cars. The QQ, flagship brand Chery The reasons for this popularity abroad The Chinese market is a strategic market for all major manufacturers worldwide. It is currently limited to 380 million Chinese who benefit directly from growth, but this figure remains higher than any other world market. [...]

[...] Changing migration patterns within large cities and urban development plan of the poorest regions. II) General market characteristics Production and sales In 2005, overall sales totaled 5.70 million vehicles, including 161,600 imported vehicles, an increase in the overall figures by 14% over 2004. The fleet of motor vehicles rose from 1.36 million in 1978 to over 24.21 million in 2004. These figures show that the rise of the automobile industry has been very rapid. Comparative Tables for production and sales from 1999 to 2005 : vehicles vehicles Source: China Association of Automobile Manufacturers (CAAM) There was an increase from 10 to 15% per annum which should continue until the end of this decade but it is difficult to comment on the longer term. [...]

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