The luxury Rolls-Royce Phantom priced at 6.6 million
yuan (US$825,000) is drawing envious glances at the ongoing Beijing
Auto Show, but what makes this year's expo really different is the
unprecedented number of homegrown Chinese brands.
The explosion of homegrown brands in the Chinese auto
industry in the five years since the country entered the World
Trade Organization has made a mockery of worries expressed in 2001
that international competition would harm the fledgling local auto
industry when the country cut customs duties and opened up its
domestic market.
According to the organizers, homegrown brands account
for one third of the 572 vehicles on display, the biggest share in
the history of the biennial event.
First Automobile Works (FAW), the country's largest
automaker, wheeled in 29 vehicles and 10 of them are homegrown
brands. The luxury Red Flag HQ3 -- in its stretched and bulletproof
versions -- was the highlight.
The new Red Flag, no longer based on the old Audi 100
designs, was developed to rejuvenate the country's
image.
In 1958, it took FAW only 33 days to churn out China's
first V8 limousine - later known as the Red Flag CA72 - for late
Chinese leader Mao Zedong. The model made a great stir when it
appeared at the National Day celebration ceremony in the capital
city in 1959.
Zhu Yanfeng, FAW general manager, said his company
will sell two million vehicles in 2010, half of which will be
homegrown brands, worth a total of 200 billion yuan (US$25
billion).
The state-owned auto giant plans to transform itself
from a loss-making enterprise into a competitive one, with priority
given to developing homegrown brands and earning profit, said
Zhu.
At present, FAW's own brands are mainly cheaper models
manufactured in a Tianjin-based plant and priced at about 50,000
yuan each, according to Shanghai Securities
News.
Shanghai Automotive Industry Corporation (SAIC) took
part in the exhibition with the highly anticipated Roewe sedan, the
company's first own-brand high-end model. Up to now, SAIC's
high-end models all came from its joint venture partners General
Motors and Volkswagen.
SAIC expects to produce two million vehicles a year by
2010, including 600,000 cars marketed under local brands, said
company president Hu Maoyuan.
An advanced automotive engineering center will be
built to facilitate the development of homegrown brands, said
Hu.
In its 1,100 square meter exhibition space, Chery
Automobile Co. Ltd. unveiled three concept cars, five engines and a
gearbox, all with proprietary intellectual property
rights.
The company, based in Wuhu of eastern Anhui Province, is one of the few Chinese
companies that successfully develops and produces its own models
rather than manufacturing foreign brands under licence.
Chery sold 300,000 cars in 2005, taking a 30 percent
share of the homegrown passenger car market, said Yin Tongyao,
chairman and general manager of Chery.
Fifty thousand Chery cars had been sold overseas by
the end of September this year.
Asked whether domestic automakers can compete with
multinational giants, Yin said that "we often underestimate
ourselves, while foreign counterparts have a clearer
view".
Chery's exhibition stand has attracted top names from
the auto industry, including Philip Murtaugh, vice president of
SAIC. Meanwhile, Tom LaSorda, president of Chrysler Group,
announced that his company is negotiating with Chery about
establishing a joint venture to produce compact cars for the Dodge
brand.
The privately-owned Great Wall Motor Co., Ltd.,
originally an SUV producer, grabbed a slice of the compact car
market this year and displayed three new models - Perey, Florid and
Coolbear. Other domestic automakers, such as Brilliance, Geely and
Chang'an, also had a strong presence at the auto show with a dozen
brands.
It is only five years since Chery and Geely, now
regarded as the flag-bearers of Chinese homegrown brands, broke
into the market, with "good cars that ordinary people can
afford".
These well-equipped compact cars, priced between
30,000 and 50,000 yuan, became household names as soon as they hit
the market, forcing down the prices of foreign brands made by
Chinese-foreign joint ventures.
However, for many years homegrown brands were regarded
as low-end, substandard products in China because many of them
proved unreliable. That is now a thing of the past. According to
the Economic Observer, this auto show is a historic watershed --
homegrown brands such as Red Flag and Roewe are now moving into the
more lucrative high-end market currently dominated by foreign
automakers.
Homegrown brands are "a beautiful butterfly that is
struggling free of its ugly chrysalid", said Chen Guangzu, an
expert with the China Automotive Industry Consultative
Committee.
They will give the Chinese auto industry a competitive
edge in the world, said Chen.
Geely's ambitions know no bounds. The company has said
it wants to be a world famous brand by 2015, with an annual output
of two million cars, including 1.3 million sold
overseas.
The year 2006 saw Chinese homegrown brands reach a new
level of sophistication -- besides improving product quality and
exterior design, they are now developing their own
engines.
This August, Geely put China's first continuously
variable valve timing (CVVT) engine into production in its plant in
Ningbo, in east China's Zhejiang Province. Great Wall said it would
equip all its SUVs and pick-ups with its newly developed oil-saving
diesel engine. Meanwhile, both Brilliance and Chery turned out
their own 1.8T turbo engines.
Statistics show that homegrown brands are taking an
increasing share in the domestic market for passenger cars, up from
10.5 percent in 2004 to 26 percent in 2005. Tianjin Xiali, Chery
and Geely rank among the top 10 best sellers in 2005.
Sales of homegrown brands outperformed those of
Chinese-foreign joint ventures in the first two months this
year.
The history of the industry is simple, said Shen
Ningwu, vice secretary general of the China Automotive Industry
Association. Chinese automakers used to manufacture foreign brands
under licence, then they began developing and producing new models
with foreign companies, and now they are building their own
research centers, and nurturing homegrown brands.
Chinese automakers have the bit between their teeth
and will become rivals of their counterparts in the United States,
Japan and Germany in the near future, said analysts, quoted by the
Shanghai Securities News.
China, once known as the
kingdom of bicycles, has been transformed over the last two decades
into a car culture, with vehicle ownership up 30 times between 1985
and 2004.
A roadways plan devised by the Ministry of
Communications will more than double the existing expressway
network, bringing it to 85,000 kilometers within 30 years. The
roads are needed to accommodate the growing number of cars and to
support economic growth.
(Xinhua News Agency November 24, 2006)
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