Will China become the World's Next Leading Auto Exporters?

Will China become the World’s Next Leading Auto Exporter?

This article http://www.nytimes.com/2005/04/22/business/worldbusiness/22export.html by Keith Bradsher is telling the auto industry from the Great Lakes regions to Germany to make room for the Chinese auto industry. On Thursday, April 21, 2005 at the Shanghai Auto Show, Ruediger Grube a senior executive of DaimlerChrysler announced that the company intends to export small cars from China to the United States.
China already exports auto parts from parking-brake components to seat covers. Chinese owned auto makers have already started exporting fully assembled cars like Hafei and Chery to developing nations in South America, Africa and Middle East. The negotiations going on now with Daimler Chrysler are making it increasingly likely that by 2008, that the plants in China will be shipping a significant numbers of cars to the United States and Europe.
General Motors vice chairman Robert A. Lutz, said that “he expected at least one of China’s homegrown automakers to be successfully exporting around the world in the next five years.” Until recently, China has had problems which have prevented the country from using inexpensive labor to gain any significant share of the world automotive market. The China auto-makers are gradually fixing the problems. Chinese industrial workers work for $2 an hour or less including benefits, which remain among the lowest paid in the world.
Bradsher points out that the president of Beijing Hyundai in South Korea said, “In terms of quality, the cars from China and the cars from Korea are the same.” The anticipation of fully built cars from appearing on showrooms in the United States and Europe risks renewing international conflicts over China’s trade and currency policy. The United Automobile Workers in Detroit responded to DaimlerChrysler announcement with the following statement.
“The $1.50 to $1.95 per hour labor cost in the Chinese auto industry is not arrived at by any ‘natural’ operations of a free market,” Ron Gettelfinger, the union president, said in a statement, “but through artificial repression of wages by a brutal regime which outlaws independent trade unions and jails more labor activists than any country in the world.” “China’s repression of its own workers and its manipulation of its own currency,” Mr. Gettelfinger added, “are unfair trade practices which must no longer be tolerated by the United States government.”
According to auto executives China’s real challenge for the next several years lies in the auto parts industry. The Commerce Ministry predicts that the Chinese automotive exports, mainly auto parts will increase its range of $70 billion to $100 billion by 2010 on that of last year’s $11.8 billion. While the need in China for imported auto parts levels off as the domestic market and automakers car sales drops, because they are finding it more easier to purchases locally. Over the first two months of 2005, China’s automotives exports at $2.01 billion, as almost double that of its imports for the same period, at $1.17 billion. The auto parts makers along with the auto assembly plants are being encouraged to export by the Chinese government. China’s regulations bar multinationals from owning more than 50 percent of the auto assembly joint ventures in the country.