China Working On Leading Global Car Industry

Two years ago, the Chinese were viewed as car industry amateurs. Most of their design and manufacturing skills came from joint venture partners in the US and Europe. Chinese cars where shown at the international auto shows and the reaction was always the same. The car built in China was too crude to sell well in the large developed car markets.

Of course, the same observations of primitive design and production were made about Japanese and Korean cars. Those criticisms are lost in the fog of time. And China may have an edge that neither of the other Asian nations did.

Because all major industries on the mainland operate under the de facto control of the central government, all have potentially huge access to capital. The fact the the great car companies in Japan, the US, and Europe are struggling with sales and balance sheets is surely not lost on the Chinese. That gives the country and its car industry a nearly unprecedented opportunity.

According to The New York Times, the Chinese are aiming at becoming global leaders in the manufacturing of electric cars. And, they are aiming to do it in three short years. Because Western car companies have been in China for over a decade, the local companies have learned a great deal. For firms like GM (GM) and VW, it has been a deal with the devil. They have had the chance to sell hundreds of thousands of cars in the fastest-growing  auto market in the world, which has substantially improved their global earnings. At the same time, they have given the local industry a tremendous education.

The tables may be turned now. If China can even come close to its goals of producing high-quality, alternative energy cars in the near future, it could become one of the largest auto exporters in the world. That would be unexpected, but its should not be surprising for a country where the government is the bank.

Douglas A. McIntyre