'Made in China' cars aim to conquer Russia, Europe and USA

The number of cars in Beijing reaches 1.5 million – the need of export is vital

Buying clothes with a European label on, electronic appliances from Japan or air conditioners from Korea, people may often see another label stuck on the goods – “Made in China.” The statistics is rather impressive: China makes 14.3 percent of world electronics and enjoys 21 percent of the global market of clothes. One may say that China makes everything that can be made. The car industry has been a weak point in the Chinese production, although the situation is changing for the better too.

The Chinese government said some 50 years ago that the development of the national car industry was the prime goal of the state. The share of the Chinese car industry in the nation's GDP already makes up 1.5 percent. Chinese automobile enterprises manufactured 5.07 million cars last year. The car output is expected to reach 5.64 million in 2005. Furthermore, China starts bringing its car industry to the European market, to Russia, first and foremost.

The history of the up-to-date car industry started in China in the middle of the 1950s. First car giants started appearing in the country with the direct participation of the USSR and Soviet specialists. China's largest car enterprise, First Automobile Group Corporation (FAW), was founded in 1953, Expert magazine wrote. Since the Soviet Union took an active part in development of the car industry in China, Soviet vehicles became the prototype of Chinese car models. It is noteworthy that some of FAW's top managers still speak very good Russian.

The Chinese car industry started flourishing in the 1980s. The government of China was buying licenses for its numerous car companies from largest Western corporations. Nowadays, China manufactures high-quality cars in cooperation with Japanese, European and North American companies.

The current year has become a crucial moment for the Chinese car industry. According to WTO requirements, the government canceled licenses and other restrictions for the import of cars. Duties on foreign cars had to be cut by 30 percent; a further reduction of 25 percent is to follow in the near future.

Chinese car makers reduced prices on their cars by ten percent in order to be able to resist the inundation of foreign-made vehicles. The practice will most likely continue in the future, for the specific weight of foreign cars on the Chinese market is lower than four percent.

There are 123 car-making companies in China nowadays, the Trud newspaper wrote. Only two of them can be considered large enterprises, producing over 500,000 cars a year. Eight Chinese car companies make up to 100,000 cars a year. The remaining 113 enterprises work at the capacity of less than 10,000 cars a year. The competition on the Chinese car market is rather tough, taking into consideration such correlation.

In the meantime, Shanghai, Beijing, Guangzhou and other large cities of the country suffocate in exhausts. Beijing suffers from huge traffic jams, which could probably described as the heaviest in the world. The number of cars in Beijing reaches 1.5 million.

The government does not hurry to restrict the production of Chinese vehicles. One job in the car industry gives eleven vacancies in industry's adjacent branches. It is a highly important factor for the country with permanently redundant labor force.

China prefers to solve the homeland sales crisis with the help of export. Ironically, Russian consumers do not even know about the existence of Chinese cars on the Russian car market. Chinese cars would make the best price-quality ratio at this point.

As soon as Chinese car makers conquer the Russian car market, they plan to move ahead to Europe and the USA. It is worth mentioning that Chinese car giants plan to build giant factories and organize the assembly production in Russia too.

Igor Parfinenko

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Author`s name Olga Savka