Houston Community News >> Chinese Auto Aim for the U.S.

1/10/2007 DETROIT–It's not a wave yet, but China's auto industry is causing more ripples in North America.

Changfeng Group Co. opened its first exhibit at the North American International Auto Show yesterday with high hopes of soon entering the United States, the world's richest market, and Canada.

"We will try to do this in about two years," Yia Jian Min, Changfeng's corporate planning director, said through an interpreter. "If we want to get in here, we will have to meet a number of environmental and safety standards and establish a close relationship with dealers that already have experience."

Changfeng follows Geely Automotive Co., which landed in a tiny display off the main lobby of the auto show last year. Without the glitz and hype of the main show, Geely became the first auto maker to unveil a Chinese car in the U.S.

This year, Changsha-based Changfeng showed off two Liebao sport utility vehicles and two Fiebao pickup trucks the company has already exported to nine countries, including Russia and South America.

The company has been able to progress in technology and production in the last 10 years through a joint venture with Japanese auto giant Mitsubishi.

Industry watchers say some Chinese auto makers are overly optimistic about making a dent in the North American market. They will need to build strong distribution networks and improve brand recognition while trying to overcome quality and styling concerns.

Bill Pochiluk, president of research firm Automotive Compass, said Changfeng's auto designs and body structures are five to 10 years behind those of other world auto makers.

He said Chinese auto makers need foreign partners for guidance in design, production techniques, marketing and distribution overseas. Failing that, the makers face huge challenges in breaking into the North American market.

Doug Fox, vice-president of the Detroit Auto Dealers Association, said Chinese companies that form alliances with international vehicle makers will be the first to gain a beachhead in North America.

"Whole new start-ups will take four to six years and longer."

One Chinese auto maker, Chery Automobile, reached a deal last month to produce small cars for sale as DaimlerChrysler vehicles in North America. DaimlerChrysler indicated it could not make money producing small cars in North America, so the giant found a partner in China, where labour costs are much lower.

"It gives Chery a big advantage over the others in China," Pochiluk said.

Changfeng, the symbol for which is a cheetah, is the biggest producer of sport utility vehicles in China, but output of sport utes and small pickup trucks totalled fewer than 100,000 last year. That's less than half of the normal output of North American assembly operations.

In a promotional film at the auto show, the company said it will continue "to leap forward" and hit annual production of almost 300,000 vehicles by 2010.

"We will pursue greatness," the film's narrator added. "It is in the Chinese corporate soul."

About half a dozen other Chinese auto makers have contacted the auto show's organizers about participating at the annual Detroit auto fest, one of the biggest industry events in the world.

"I think we can expect to maybe see two more next year from China, and perhaps someone from India, too," said Fox, whose association organizes the auto show.

Fox noted some other Chinese auto makers are starting to develop relations with marketing firms in the U.S. after realizing they are dealing with a different culture here.

Meanwhile, slumping General Motors Corp. and Ford Motor Co. reported their sales in China, with its economic boom, jumped last year. GM's volumes shot up 32 per cent to 876,747 vehicles. Ford's business, including brands like Volvo, soared 87 per cent to 166,722.

Foreign auto makers are competing aggressively in China, the world's hottest market. The China Association of Automobile Manufacturers forecasts sales will rise another 15 per cent to about 8 million this year. Foreign auto makers are also spending billions to expand production in China.

(Contributed by TheStar.com)