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. [...]
[...] In 2001, the authorities had announced, at the beginning of the tenth five year plan, that they wanted "the car enter the home." If, within the framework of the WTO, it had to make concessions in the automotive field, the impact on imports is still very limited: it opens doors for imports (lower tariffs, elimination of quotas on imports of vehicles and parts) but it does so because all major global automakers are already producing in its territory and that the risk of massive imports is limited. [...]
[...] China had completely neglected the production of cars. Trends in car sales (excluding imports) : Source: China Association of Automobile Manufacturers (CAAM) Large groups were rooted in Chinese factories and were distributed throughout the territory. The first car manufacturing plant, First Automotive Works 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 image of Beijing Automotive Industry Holding, Shanghai Automotive Industry Corporation and Guangzhou Automotive Industry Group. [...]
[...] In 2005, for the first time, China had exported more than it imported with about vehicles exported (about cars and trucks over with a tonnage less), mostly to Asia Southeast and the Middle East. However, these figures remain low compared to the total car market and the year 2006 marked a turning point for Chinese exports. Indeed, many Chinese manufacturers were trying to enter the markets of developed countries, and countries with car manufacturers have invested in China. This is particularly true of the Chery brand in the U.S. [...]
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