Page 162 - 2018 White Paper on the Business Environment in China
P. 162
8 White Paper on the Business Environment in China
McDonalds and KFC have been experimenting with kiosk Most of the top-ten bestselling cars in the country are
and online ordering for two years. High-tech automatic the products of joint ventures such as General Motors’
convenience stores entered the Beijing and Shanghai ongoing cooperation with Shanghai Automotive Industry
markets in 2017. Costumers scan QR codes to enter the Corporation. British automaker Jaguar Land Rover (JLR)
store and select products and then use their WeChat announced in 2017 that it will build its new E-PACE compact
wallets to pay for the items. The mini-stores also use facial SUV with its joint-venture partner Chery at the Chinese
recognition to let customers enter after they upload a counterpart’s factory in Changshu, Jiangsu Province.
registration photo (Guo). Vehicles produced there will be for Chinese customers.
The car will go on sale in China in 2018. JLR signed a joint
Automobiles venture with Chery in 2012 and has made the Range Rover
Evoque, Land Rover Discovery Sport, and Jaguar XFL in
The growing domestic automobile manufacturing China (McNeice). Ford Motors also announced in 2017 that
industry and the increasingly strong domestic market it plans to build its popular Focus compact cars in China
drive the auto parts manufacturing industry in China. instead of Mexico. A representative for the company said
Over 200 million cars are now on the road in the country, the decision to move Focus production to Chongqing in
and that total is expected to rapidly grow in the future. 2019 would help avoid retooling costs. “Ford’s moving
Although China’s acceptance in the WTO in 2001 facilitated production to China shows China’s competitiveness
the development of auto parts industry by encouraging in manufacturing is continuously increasing and our
an open and rational market structure, membership also industrial supply chain is improving,” said Cui Dongshu,
dictated that the country had to open its domestic market the Secretary General of the China Passenger Car
by reducing tariffs and non-tariff barriers. Industry revenue Association, a government-backed trade group in Beijing.
was up 6.6 percent from the previous year, exceeding the “But this is obviously against Trump’s policies — it is quite
expected total of $675.2 billion. Exports were estimated complicated and may cause some friction in Sino-American
at $29.9 billion and imports totaled $28.4 billion. The trade in the future” (Bradsher). Dezan Shira & Associates
production of advanced auto parts is still limited in the noted that a statement on Ford’s website said, “Ford is
country. Products such as acoustic systems, integrated saving $1 billion in investment costs versus its original
chips, high-end sensors, and microprocessors are imported Focus production plan,” before adding that the plan will
from developed countries. Industry revenue is expected to improve the company’s financial health and improve its
rise at an annualized rate of 6.5 percent over the next five manufacturing scale in China. Manufacturing companies
years to $926.9 billion by 2022 (Industry Performance). large and small have long looked to China for cost savings.
Ford can certainly save by scaling up its China operation
China’s automobile market is massive. Chinese buyers instead of building or refitting factories in Mexico (Gautel),
can choose from over 130 passenger car brands available in but Western cooperation with their Chinese counterparts
the country. China offers three types of car brands: foreign, come with an unspoken cost. Beijing has put very heavy
local and sub-brands under foreign joint ventures. The pressure on Western automakers to transfer their latest,
Chinese car market first became the largest in the world most cutting-edge technology to China as a condition of
in 2009. Automakers sold over 21.1 million passenger doing business. Many companies, including Volkswagen,
cars in 2015. The Chinese domestic annual growth is General Motors and Ford, have plans to shift more research
almost as big as the entire Australian automotive market and development to China, particularly around electric
(Feijter). 2016 revenues for the industry are estimated to cars (Burkitt). The bottom line is that the second largest
total $659.2 billion, up 6.1 percent from the previous year economy in the world still does not have a top-notch car
(Automobile Manufacturing). Approximately 24.4 million brand of its own.
passenger cars and 3.7 million commercial vehicles were
produced in 2016. More than one tenth of all passenger For the past five years, rising urban and rural domestic
vehicle sold in the world is produced in China. The majority demands along with an increasing export industry have
of Chinese cars are sold to Iran, Algeria, Russia, Egypt and driven revenues to increase at an annualized rate of
other developing countries; however, even though the 8.9 percent. More people have been able to purchase
production sales of vehicles in China has increased rapidly, vehicles especially in big cities as household incomes have
China has not claimed an increased market share of its increased and prices have remained competitive. Favorable
own passenger car brands (Production of Cars). government policies such as reduced purchasing fees
for new cars, subsidies for car buyers in rural areas, and
162
McDonalds and KFC have been experimenting with kiosk Most of the top-ten bestselling cars in the country are
and online ordering for two years. High-tech automatic the products of joint ventures such as General Motors’
convenience stores entered the Beijing and Shanghai ongoing cooperation with Shanghai Automotive Industry
markets in 2017. Costumers scan QR codes to enter the Corporation. British automaker Jaguar Land Rover (JLR)
store and select products and then use their WeChat announced in 2017 that it will build its new E-PACE compact
wallets to pay for the items. The mini-stores also use facial SUV with its joint-venture partner Chery at the Chinese
recognition to let customers enter after they upload a counterpart’s factory in Changshu, Jiangsu Province.
registration photo (Guo). Vehicles produced there will be for Chinese customers.
The car will go on sale in China in 2018. JLR signed a joint
Automobiles venture with Chery in 2012 and has made the Range Rover
Evoque, Land Rover Discovery Sport, and Jaguar XFL in
The growing domestic automobile manufacturing China (McNeice). Ford Motors also announced in 2017 that
industry and the increasingly strong domestic market it plans to build its popular Focus compact cars in China
drive the auto parts manufacturing industry in China. instead of Mexico. A representative for the company said
Over 200 million cars are now on the road in the country, the decision to move Focus production to Chongqing in
and that total is expected to rapidly grow in the future. 2019 would help avoid retooling costs. “Ford’s moving
Although China’s acceptance in the WTO in 2001 facilitated production to China shows China’s competitiveness
the development of auto parts industry by encouraging in manufacturing is continuously increasing and our
an open and rational market structure, membership also industrial supply chain is improving,” said Cui Dongshu,
dictated that the country had to open its domestic market the Secretary General of the China Passenger Car
by reducing tariffs and non-tariff barriers. Industry revenue Association, a government-backed trade group in Beijing.
was up 6.6 percent from the previous year, exceeding the “But this is obviously against Trump’s policies — it is quite
expected total of $675.2 billion. Exports were estimated complicated and may cause some friction in Sino-American
at $29.9 billion and imports totaled $28.4 billion. The trade in the future” (Bradsher). Dezan Shira & Associates
production of advanced auto parts is still limited in the noted that a statement on Ford’s website said, “Ford is
country. Products such as acoustic systems, integrated saving $1 billion in investment costs versus its original
chips, high-end sensors, and microprocessors are imported Focus production plan,” before adding that the plan will
from developed countries. Industry revenue is expected to improve the company’s financial health and improve its
rise at an annualized rate of 6.5 percent over the next five manufacturing scale in China. Manufacturing companies
years to $926.9 billion by 2022 (Industry Performance). large and small have long looked to China for cost savings.
Ford can certainly save by scaling up its China operation
China’s automobile market is massive. Chinese buyers instead of building or refitting factories in Mexico (Gautel),
can choose from over 130 passenger car brands available in but Western cooperation with their Chinese counterparts
the country. China offers three types of car brands: foreign, come with an unspoken cost. Beijing has put very heavy
local and sub-brands under foreign joint ventures. The pressure on Western automakers to transfer their latest,
Chinese car market first became the largest in the world most cutting-edge technology to China as a condition of
in 2009. Automakers sold over 21.1 million passenger doing business. Many companies, including Volkswagen,
cars in 2015. The Chinese domestic annual growth is General Motors and Ford, have plans to shift more research
almost as big as the entire Australian automotive market and development to China, particularly around electric
(Feijter). 2016 revenues for the industry are estimated to cars (Burkitt). The bottom line is that the second largest
total $659.2 billion, up 6.1 percent from the previous year economy in the world still does not have a top-notch car
(Automobile Manufacturing). Approximately 24.4 million brand of its own.
passenger cars and 3.7 million commercial vehicles were
produced in 2016. More than one tenth of all passenger For the past five years, rising urban and rural domestic
vehicle sold in the world is produced in China. The majority demands along with an increasing export industry have
of Chinese cars are sold to Iran, Algeria, Russia, Egypt and driven revenues to increase at an annualized rate of
other developing countries; however, even though the 8.9 percent. More people have been able to purchase
production sales of vehicles in China has increased rapidly, vehicles especially in big cities as household incomes have
China has not claimed an increased market share of its increased and prices have remained competitive. Favorable
own passenger car brands (Production of Cars). government policies such as reduced purchasing fees
for new cars, subsidies for car buyers in rural areas, and
162
