A hard blow to the image of the made in China

Wuhu, Anhui province. An industrial city Chinese booming, like so many others, with its chaotic traffic, its haze of pollution and its pavement two three lane lined with concrete buildings, warehouses and shopping centres. It is here, 350 kilometres to the West of Shanghai, that is the cradle of Chery, the first automobile manufacturer 100 Chinese. An agglomeration of 2 million people in the heart of China to the middle classes, remained out of the Westernization that were able to know the major mega-cities of the country. The average wage is roughly 200 euros per month. "When our company was created in 1997, it had not much here", reflects Lu Fujun, the Director of purchasing, showing a photo representing a warehouse on a lake in open country.

Kit cars

Chery is one of builders China experienced the most rapid progress, with its vehicles under $ 10,000, particularly popular local motorists. But not only. It is also that, for the moment, the race at the top borders, and why, in the term, could make Wuhu first Chinese export base in the car. According to data of the Association of Chinese auto manufacturers, this start-up sold 46.900 vehicles out of China on the first seven months of the year, to Changan (36,000 units) and Great Wall (32.800 units).

And the goal is to continue to win new markets abroad. This year, the group plans to export 100,000 cars, in countries such as the Russia, the Turkey, the Iran or the Chile. The horizon of 2015, Chery could sell about 240.000 cars abroad, according to the consultant JDPower forecasts, which would make him the second Chinese exporter behind Geely - knowing that the latter benefiting from sales of its Volvo subsidiary.

Most often, Chery manufactures key components in China to assemble then overseas CKD plants, commonly called the "kit" cars An investment of $ 700 million is under study at the Brazil, for a site for the production of a capacity of 170,000 units. "We want to continue to invest in innovation, develop exports and control our costs to become one of the largest automakers in the world", launches, without any hesitation, Lu Fujun.

In recent years, manufacturers such as Chery are shiver staffs of European and American auto giants. And if, the image of Japanese and Korean, the Chinese landed in Europe with cheap vehicles knockdown China has in effect of many assets to bully him mature markets: a labour cost (including payroll) remains of 10 to 20 times lower, despite the recent wage claims; an internal market as it can bring economies of scale to more easily make the platforms; a transfer of technology that operates at high speed through joint ventures with Western builders; reserves of cash that allow them to invest all over the place... Not to mention the emergence of a new technology, electric vehicle, which puts new entrants in the car virtually on an equal footing with the century-old constructors.

Absent from the world

And yet, still no cars Chinese on European roads. Still no concession Saic or Great Wall in the towns of the old Continent. The "yellow peril", as had appointed it cabinet Estin & Co in a study dated 2007, does still not materialized. Despite voluntarism displayed by Chinese manufacturers, none so far, has managed to open the doors of the European market. Indeed, CCFA (Committee of French automobile manufacturers) did not identified the lesser France Chinese vehicle registration these past two years. None will be even present to the world of Paris, which opens its doors this week, then that Chery, Geely, and others to were offered a booth in Frankfurt in 2005.

Already importing of many Asian brands in Europe, including Kia, Toyota and Suzuki, the Swiss company Emil Frey closely monitors the evolution of the Chinese. "Of course, that we interested to import their vehicles in Europe." But, for now, I do not see one only constructor that is ready, reflects Peter Hug, Director of the branch in Zurich. It has been seven years that I work on this subject, and each year, we have the feeling that they will be ready within two to three years... "Chery confess himself: it is still too early for Europe. "We are still very cautious," confirms Jin Yibo, Director of communication. Europe and the United States are the two largest markets outside China, we must be sure to succeed.

These hesitations are explained primarily by the setbacks that have known the first entrants to the European market. The video where the Brilliance BS6 sedan ends crushed in a "crash test" at 60 km/h has been viewed thousands of times on the Internet. A hard blow to the image of the made in China. Chinese manufacturers also faced barriers in terms of intellectual property, and a few symbolic convictions were enough to temper their enthusiasm. In Germany, off-road Shuanghuan society CEO was the subject of a complaint from BMW who accused the Chinese manufacturer copied the design of its X 5. Ditto for Great Wall, followed by Italian Fiat to have imitated the Panda. This is added the constant progress of environmental standards in Europe, which seeks a systematic adaptation: when the Chinese reach the Euro 4 standard, the Europeans are already moving to Euro 6...

A colossal local market

Finally - and this is perhaps the most paradoxical aspect-, they are struggling at the moment to offer competitive prices. The selling prices charged by brightness for its full-size were not far from those of the Skoda Octavia. In Germany, Landwind is trying to make his return on the European market with a small minivan sold from 14.995 euros or 2,600 euros less CV9 only a Renault Scénic. "It is linked to transport, said the cost of 8, and customs duties, which represent approximately 10 of the final price." "Above all, the Chinese have not yet mastered the motorization and must purchase their engines, significantly increasing manufacturing costs," explains Elisabeth Young, President of Asia car. This importer was signed in 2006 a distribution contract with the brands shine and Landwind in France, but has not sold a single vehicle since. According to Elisabeth Young, these difficult beginnings even led Beijing to rethink its export policy: "If the five-year plan 2006-2010 was a priority of export, the recent initiatives of the Chinese Government give rather the benefit to the development of the hybrid or electric." In addition, the auto market in China has grown such these past two years that local manufacturers had already in their local market to a reservoir of tremendous growth. Where this objective set by Beijing: to ensure that 70 of the Chinese needs are covered by domestic manufacturers on horizon 2020.

However, developed countries will be unavoidable if the Chinese want, here in ten years, compete with the West. "All have the ambition to become a world leader." "The automotive sector is highly sensitive to economic conditions, should be present in all regions to ensure a geographical diversification", decrypts Lin Huaibin, senior analyst at Global Insight. So an implementation in developed countries is as much a selling point for the consumer as a way to distinguish themselves from Beijing to obtain grants. The Utac, the body in charge of the approval of vehicles with France, it is estimated that Chinese manufacturers are no longer very far from being able to take the tests. "It will have the maximum five years, provides Jean-Loup Marduel, technical director. They tried at first to go out the window, it didn't work. But they will soon overcome their early mistakes. "Already the Chinese went on the offensive in the acquisition of new technologies, a movement that began with the acquisition of MG Rover by Nanjing and which is amplified recently with the takeover of Saab by Baic patents and the acquisition of Volvo by Geely. But until ready for Europe, the Chinese manufacturers still have much to do in their local market: it remains in the streets of the swarms of cyclists and drivers of tricycles Wuhu motor who dream to afford their first automobile.