Items Tagged With International Trade

The buzz this week at the Detroit auto show is now less about IF there will be Chinese cars entering the US market soon and more about WHEN they will begin doing so. Take for example the car you see above. Fully loaded mid-size SUV with leather interior made by a US company named Chamco who is manufacturing in China. Price tag? Only $14,000

Now I know what's going to happen in the mainstream media. I can almost write out Lou Dobbs' headlines on Monday over this one. RED STORM RISING AND FLOODING THE USA WITH CHEAP CHINESE CARS. Honestly, is anyone surprised? Keep in mind that American car manufacturers, in their quest over the past decade to enter the China market, have willingly formed joint ventures with state owned Chinese companies in order to jump on the opportunity to sell millions of cars to the Chinese. I remember back in 1999 my father and I went on a tour of the new Buick factory in Pudong courtesy of the American Chamber of Commerce in Shanghai. With the exception of a few key American executives, the entire operation was run by Chinese middle managers and employees. Where there are joint ventures with Chinese companies, there is a passing of intellectual property to them over time. You don't have to be a rocket scientist to understand that one. After a decade it's only a matter of time until the Chinese companies begin manufacturing their own cars and eyeing the U.S. market. So again, is anyone surprised?

Will these Made In China cars be successful? Probably not overnight. Apparently they still have a learning curve to overcome in regards to manufacturing cars that meet strict U.S. safety and quality regulations. Even after that hurdle is overcome, there's still the issue of whether or not American consumers will trust Chinese made cars enough to purchase them on a scale that really does give other car companies a cause for concern. If there's one thing I've learned over the years, it's that Chinese companies are very efficient at turning out widgets that compete on price. However, they have a long ways to go in understanding how to build strong international brands.

That's not to say they won't eventually come around to figuring that out either though. Lenovo's emergence as an international brand in the PC sector is a good example of that.

Will American consumers purchase cars made in China? Is this trend any different from when Japanese followed by Korean cars entered the U.S. market? What do you think?

Granted, I'm not an automative industry expert. But I'll make a prediction based on my consumer goods and retail background. I bet Made In China hybrid vehicles would make it a lot more affordable for the mass market in the US to afford one. I confess, it's not a wild guess. It's already in the works.