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| China Hints at Effort to Export Cars to West | China Hints at Effort to Export Cars to West |
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| WUHAN, China — Chinese automakers are starting to ask some of the largest Western auto parts companies to supply parts that meet American and European regulatory standards, according to senior executives at the parts companies. | WUHAN, China — Chinese automakers are starting to ask some of the largest Western auto parts companies to supply parts that meet American and European regulatory standards, according to senior executives at the parts companies. |
| The requests are the clearest sign yet that after more than a decade of preparation, Chinese manufacturers are starting to feel the confidence to begin high-volume auto exports to the West. | The requests are the clearest sign yet that after more than a decade of preparation, Chinese manufacturers are starting to feel the confidence to begin high-volume auto exports to the West. |
| In another sign of shifting policy, a senior Chinese Commerce Ministry official said at an auto industry conference here on Thursday that Chinese automakers should prepare for the lowering of steep tariffs on imported cars. That change has never been stated by a Chinese official. Chinese automakers “may have a very huge impact from this reduction of tariffs,” said Chen Lin, the Commerce Ministry official who oversees international automotive investment policy. | In another sign of shifting policy, a senior Chinese Commerce Ministry official said at an auto industry conference here on Thursday that Chinese automakers should prepare for the lowering of steep tariffs on imported cars. That change has never been stated by a Chinese official. Chinese automakers “may have a very huge impact from this reduction of tariffs,” said Chen Lin, the Commerce Ministry official who oversees international automotive investment policy. |
| Mr. Chen also said that Chinese automakers should be ready for China to reduce its requirement that foreign automakers set up assembly plants in China only through 50-50 joint ventures with local partners, instead of as wholly foreign-owned factories. | Mr. Chen also said that Chinese automakers should be ready for China to reduce its requirement that foreign automakers set up assembly plants in China only through 50-50 joint ventures with local partners, instead of as wholly foreign-owned factories. |
| Lower tariffs would make it much easier for multinational corporations to import cars into China, while the removal of the joint venture requirement would allow multinationals to streamline the management of their Chinese operations. Their Chinese joint venture partners have insisted on assigning managers and engineers to these projects so as to gain insights into Western technology and management. | Lower tariffs would make it much easier for multinational corporations to import cars into China, while the removal of the joint venture requirement would allow multinationals to streamline the management of their Chinese operations. Their Chinese joint venture partners have insisted on assigning managers and engineers to these projects so as to gain insights into Western technology and management. |
| Although Mr. Chen did not say so explicitly, reducing China’s trade barriers now would make it harder for Western countries to impose reciprocal restrictions later on Chinese car exports. Mr. Chen acknowledged this point indirectly when he noted that unlike China, most countries do not require joint ventures with local partners to own any assembly plants built in their markets. | Although Mr. Chen did not say so explicitly, reducing China’s trade barriers now would make it harder for Western countries to impose reciprocal restrictions later on Chinese car exports. Mr. Chen acknowledged this point indirectly when he noted that unlike China, most countries do not require joint ventures with local partners to own any assembly plants built in their markets. |
| “We are seeing this imbalance of policy,” he said in a panel discussion at the Global Automotive Forum here, an annual conference that draws chief executives from all over the world. | “We are seeing this imbalance of policy,” he said in a panel discussion at the Global Automotive Forum here, an annual conference that draws chief executives from all over the world. |
| Wang Xia, chairman of the automotive committee of the China Council for the Promotion of International Trade, a government-controlled group, said in a brief interview that he expected Chinese carmakers to enter the United States market in five years. | Wang Xia, chairman of the automotive committee of the China Council for the Promotion of International Trade, a government-controlled group, said in a brief interview that he expected Chinese carmakers to enter the United States market in five years. |
| Jeffrey J. Owens, chief technology officer and executive vice president of Delphi, the largest auto parts company in the United States, said in a separate interview that Chinese automakers were starting to order parts for delivery three years from now that meet American and European regulatory standards. The orders tend to be for parts for midsize cars and sport utility vehicles, Mr. Owens said. | |
| This suggests that Chinese automakers plan to go after the most profitable parts of Western markets, instead of starting in the overcrowded markets for compact and subcompact cars. | This suggests that Chinese automakers plan to go after the most profitable parts of Western markets, instead of starting in the overcrowded markets for compact and subcompact cars. |
| Jay K. Kunkel, the president for Asia and the Pacific at Lear, another large American auto parts supplier, said his company was also starting to see more Chinese orders for parts that meet Western regulatory standards. | Jay K. Kunkel, the president for Asia and the Pacific at Lear, another large American auto parts supplier, said his company was also starting to see more Chinese orders for parts that meet Western regulatory standards. |
| Mr. Owens and Mr. Kunkel declined to identify which Chinese automakers were most interested in exports. Mr. Owens said auto parts designed to Western regulatory standards would also meet Chinese standards but would tend to be more expensive. | Mr. Owens and Mr. Kunkel declined to identify which Chinese automakers were most interested in exports. Mr. Owens said auto parts designed to Western regulatory standards would also meet Chinese standards but would tend to be more expensive. |
| Parts meeting international standards can be made in China. Delphi has opened three factories in China this year and is building six more. | Parts meeting international standards can be made in China. Delphi has opened three factories in China this year and is building six more. |
| Recent public statements suggest that newer automakers in China and those with mostly private sector owners, like Geely and Great Wall, are the most interested in exporting to Western markets. Older, state-controlled manufacturers have been less enthusiastic. | Recent public statements suggest that newer automakers in China and those with mostly private sector owners, like Geely and Great Wall, are the most interested in exporting to Western markets. Older, state-controlled manufacturers have been less enthusiastic. |
| Zhou Langhui, vice president of SAIC Motor, which is controlled by the Shanghai municipal government despite an initial public offering of stock three years ago, said in a brief interview that his company was not interested in exports. | Zhou Langhui, vice president of SAIC Motor, which is controlled by the Shanghai municipal government despite an initial public offering of stock three years ago, said in a brief interview that his company was not interested in exports. |
| Zhu Fushou, the general manager of Dongfeng Motor, a bastion of Chinese heavy industry for half a century, said during a panel discussion that it was valuable to have an international strategy, but he said almost nothing about what his company’s strategy was. He warned of the dangers of moving too fast. “If we do not take the right steps, we may damage our brands.” | Zhu Fushou, the general manager of Dongfeng Motor, a bastion of Chinese heavy industry for half a century, said during a panel discussion that it was valuable to have an international strategy, but he said almost nothing about what his company’s strategy was. He warned of the dangers of moving too fast. “If we do not take the right steps, we may damage our brands.” |
| He did not confirm or deny persistent reports in the French news media that Dongfeng is negotiating the purchase of a 30 percent stake in PSA Peugeot Citroën of France. | He did not confirm or deny persistent reports in the French news media that Dongfeng is negotiating the purchase of a 30 percent stake in PSA Peugeot Citroën of France. |
| China has created the world’s largest auto manufacturing industry behind the protection of the highest trade barriers for any large auto market. China has a 25 percent tariff on imported cars and minivans, for example, compared to a tariff of only 2.5 percent in the United States. | China has created the world’s largest auto manufacturing industry behind the protection of the highest trade barriers for any large auto market. China has a 25 percent tariff on imported cars and minivans, for example, compared to a tariff of only 2.5 percent in the United States. |
| China has a history of growing world-class industries behind high trade barriers and then lowering those barriers when it wants to export. China dropped its high domestic content requirements for solar panels and wind turbines four years ago as it began to increase exports in both categories. It is now the world’s largest manufacturer of both. | China has a history of growing world-class industries behind high trade barriers and then lowering those barriers when it wants to export. China dropped its high domestic content requirements for solar panels and wind turbines four years ago as it began to increase exports in both categories. It is now the world’s largest manufacturer of both. |
| American and European officials have long been leery of allowing China to tap their home markets in industries where the Chinese home market remains heavily protected. When China joined the World Trade Organization in 2001, it still qualified as a developing country and was permitted to keep trade barriers lower than other developing countries’ but higher than those of most industrialized countries. | American and European officials have long been leery of allowing China to tap their home markets in industries where the Chinese home market remains heavily protected. When China joined the World Trade Organization in 2001, it still qualified as a developing country and was permitted to keep trade barriers lower than other developing countries’ but higher than those of most industrialized countries. |
| Multinational and domestic factories in China export growing numbers of cars to other emerging markets, particularly in Asia. They have not tried large-scale exports of fully assembled vehicles to industrialized countries, although their exports of auto parts to the West are already extensive and growing. | Multinational and domestic factories in China export growing numbers of cars to other emerging markets, particularly in Asia. They have not tried large-scale exports of fully assembled vehicles to industrialized countries, although their exports of auto parts to the West are already extensive and growing. |
| Analyses by J. D. Power & Associates and other consulting firms have found that Chinese-brand automakers lag multinationals in quality. | Analyses by J. D. Power & Associates and other consulting firms have found that Chinese-brand automakers lag multinationals in quality. |
Hilda Wang contributed reporting. | Hilda Wang contributed reporting. |