China automakers gear up to expand overseas

Masaki Taketani, an analyst who studies Asian markets for Detroit-based CSM Worldwide, said Chinese automakers aren’t expected to make a big dent in the U.S. marketplace until at least the next decade. For now, he said, China lags others in design, engineering and advanced technology.

Taketani said China likely will follow the model set by Japanese and South Korean automakers, who have slowly gained U.S. market share over the past two decades.

“They’ll increase sales little by little, but right now we’re not optimistic,” Taketani said.

Chery is pushing ahead with plans to export up to 50,000 cars this year and to begin production at factories in Iran and Malaysia with components shipped from China.

Apart from its QQ minicar, which sells for as little as $3,600, Chery also makes larger sedans like the Fengyun, Qiyun and Oriental Son, most of which retail for less than $12,000.

Geely signed an agreement in May with IGC Group of Malaysia, Southeast Asia’s biggest auto market, to export 10,000 complete cars this year and 30,000 complete knockdown kits of parts and components to be made into cars, to be assembled at a new plant there next year.

“Malaysia will be our production base for Southeast Asia,” said An. “Six or seven factories were vying to cooperate with us but we chose Malaysia.”

Those deals are just the beginning, says Yale Zhang, an auto market specialist for consulting firm CSM Asia Corp. in Shanghai.

“Will they become major exporters? It won’t happen within three to five years, but it might be on a large scale in five to 10 years’ time,” Zhang says. “The local ones are starting and the foreign (joint venture) ones will start to export when they find the quality is good enough.”

Geely’s tycoon founder Li Shufu started out making refrigerator parts, shifted to making refrigerators, then selling real estate and making motorcycles. The company, whose name means “auspicious benefit” in Chinese, began making cars in 1998.

During a recent visit to Geely’s Ningbo factory workers were busily stacking up components for the CK-1, called the “Ziyoudian,” or “Freedom Cruiser” in Chinese.

Although relatively new, the company’s spacious factory appears far less modern than those of its international competitors, including General Motors Corp.’s main Shanghai plant.

Only the robot-equipped welding station was fully automated, though workers stood by to steady the auto bodies as they were plucked from the station and moved to the next stage of production. Side panels are transferred by hand from one work station to another.

Geely’s efforts to improve efficiency are spelled out on signboards scattered throughout the plant.

“Take responsibility for the brand name, leave customers satisfied forever,” says a slogan hanging over the main avenue through the plant.

Geely’s top priority for now, An says, is to upgrade technology and build a brand name.

“The Chinese market is very good now. The market for our cars is very good,” An said. “But our goal is to sell to the whole world.”

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