U.S. automakers angling for China's giant market
By Michael Dorgan
Knight Ridder News Service
BEIJING — Law professor Chen Changbei considered buying a Volkswagen Polo. But after careful deliberation, he concluded that the sporty Polo, a favorite of young professionals in China, is not quite enough car for a man of his elevated social stature.
So one recent afternoon at the gargantuan Beijing Asian Games Village Automobile Exchange, Chen kicked the tires and sniffed the upholstery of a roomier, midsize Mazda with a price tag of $22,000.
That's five times his annual salary. But Chen, 58, said it was not too much for the convenience and, more important, the prestige such an automobile provides.
"If some people have a car and you don't, you feel you have a lower status," Chen said. And the bigger your car, he added, the higher your status.
Such words are music to the ears of global auto executives. They are pumping billions of dollars into China to cash in on a tidal wave of consumer spending that has hit the world's most populous nation, transforming it into the world's hottest auto market.
That is a worry for environmentalists and urban planners, who say surging auto sales will add more pollution to the planet's most toxic skies and create gridlock in cities already congested with cars, taxis, trucks and buses.
"It's unfortunate that other countries tend to make the same mistakes that we did," said Asil Gezen, a Beijing-based American consultant on transportation and development issues. "Transporting a 150-pound person in a box that weighs 4,000 pounds is the least efficient means of transportation."
Only a minority of China's citizens can afford personal automobiles. But even a small percentage of 1.3 billion can be a very large number. Rising incomes and falling prices have suddenly put car ownership within reach of millions.
As vehicle sales slumped last year in the United States and Europe, they soared by 37 percent in China, to 3.25 million.
That number is expected to double by 2005 and to triple by 2010.
Eager for a piece of the action, foreign automakers are pumping billions into manufacturing operations in China, mostly in joint ventures with domestic companies. Over the past year, BMW, Hyundai, Mitsubishi, Nissan and Toyota all announced plans to manufacture in China, where Ford, General Motors, PSA Peugeot Citroen, Honda and DaimlerChrysler already have a significant presence.
General Motors, in a statement last month announcing 325 percent growth in sales in China during 2002, declared that growth potential "remains enormous."
But the American auto giant still has a lot of catching up to do in China, where Germany's Volkswagen has joint ventures now claiming 40 percent of the market. Volkswagen sold about 500,000 vehicles in China last year.
The number of households with annual incomes greater than $6,000 is growing rapidly in urban areas.
Americans at that income level struggle to pay their rent. But many Chinese, because of subsidies, pay relatively little for housing, food, medical care or education.
