Chinese automakers see U.S. as a challenge

updated 5:41 p.m. ET Jan. 13, 2008

DETROIT - In a year where toys made with lead paint and tainted toothpaste fueled distrust about the "Made in China" label, Chinese automakers still are showing increasing interest in cracking the lucrative U.S. market.

It may be a challenge to persuade American drivers to buy Chinese, observers say. But with high-profile recalls failing to squelch demand for China-made products, the day for Chinese cars on U.S. roads is nearing.

"It really comes down to a quality product at a good price," said Chris Byrne, a New York-based toy consultant. "If the Chinese are able to deliver a car that runs at a good price, I think a lot of the stuff about country of origin becomes a tempest in a teapot."

Record imports last year, including shipments of toys, are contributing to the widening trade imbalance with China. And Byrne said that while the recalls prompted some American consumers to say they wouldn't buy toys made by the world's largest toy manufacturer, cheap prices mean they still sell.

"You can always buy a Mercedes if you don't want to do that," Byrne said of the prospect of buying a Chinese-made car. "But I think the reality is people are buying costume jewelry at Wal-Mart, not at Tiffany."

Auto analyst Rebecca Lindland, however, said China's automakers were dealt a setback in their U.S. ambitions with the international attention on Chinese product safety — especially recalls related to a pet food ingredient linked to dog and cat deaths in North America, as well as lead-laced toys.

"They have inadvertently touched on the first two things you don't hurt: Children and pets," said Lindland, of Global Insight, an economic research and consulting company. "People are still buying them, but they're buying them reluctantly. The awareness of where products are sourced from is higher."

The Chinese companies have used the past year to work on the quality and performance of their vehicles, but they'll need to convince American drivers that an inexpensive, Chinese-made car is a better value than, for example, a used car by an established American or Japanese company.

"This is not a decorative item on your house or a piece of clothing," Lindland said. "This is your car. ... The significance of this is much greater."

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Two years ago, a lone Geely Automobile Co. sedan marked the first time a Chinese automaker displayed at the North American International Auto Show. Last year, Geely was absent, but China's Changfeng Motor Group showed a pair of small sport utility vehicles and two pickups in a more polished display.

This year, four Chinese automakers and an importer have displays. Geely is back with eight vehicles, and Changfeng returned with two SUVs, plus two more vehicles that were to be unveiled Monday.

BYD Auto Co. was showing five and has hopes for selling in the U.S. market in three to five years. Henry Z. Li, general manager of BYD's auto export trade division, said the company is aware of the worries U.S. buyers might have in considering some of the first China-made cars on the U.S. market.

"It takes time for us," Li said. "We focus on quality. We first have to make ourselves successful in the Chinese market."

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