BIZCHINA / Biz Who

Countries' roads, take me there
By GONG ZHENGZHENG (China Daily)
Updated: 2006-03-27 08:13

Geely will start assembling cars at the end of this year with a local partner in Malaysia to begin sales of vehicles throughout Southeast Asia. Initial annual production will be 10,000 units.

Li says Geely will directly export its cars to the United States and Europe, in order to take advantage of low tariffs from the beginning. He will not provide a time frame, however.


Performers of the Chinese traditional Beijing Opera pose in front of a Geely sports car during the 61st International Car Show in Frankfurt, Germany, September 13, 2005. China's first private car maker Geely was the only one being invited to the show among China's home-grown brands. The show ended on September 25, 2005. [sina.com]

"We will also consider building plants in the United States and Europe if we faced anti-dumping charges and increased tariffs," he adds.

Chinese-made textiles and home appliances have faced a long list of anti-dumping charges over the past several years in the United States and Europe because of rising protectionism.

Li says Geely will build thousands of sales and service outlets throughout the world by 2015, mainly by employing local people. The company currently has more than 100 stores overseas.

Li is not alone in his determination to conquer the West. Other Chinese vehicle producers are also on the move.

Chery Automobile, in East China's Anhui Province, will begin exporting cars to the United States in 2007 through Visionary Vehicle, a US-based auto trader.

Jiangling Motor, Ford's partner in East China's Jiangxi Province, started to sell its sport utility vehicles in Europe last year, despite ongoing quality issues.

Shanghai Automotive Industry Corp (SAIC), a partner of both General Motors and Volkswagen, plans to sell its own independently branded cars in Europe next year. In the second half of this year, SAIC will begin production of an independent sedan based on the Rover 75 model, which it bought in 2004 from collapsed British automaker MG Rover.

China's vehicle exports have been growing rapidly in recent years, due to the efforts of domestic manufacturers in foreign markets. Official statistics suggest overseas vehicle shipments increased by 120.5 per cent year-on-year to 172,800 units last year. But most of these were cheap, technologically unsophisticated products. Vehicle exports were only worth US$1.6 billion in 2005, less than one-third of the value of China's vehicle imports.

Analysts warn that Chinese carmakers should improve product quality if they want to establish their brands in overseas markets, particularly in the United States and Europe.

"They must have top-flight product reliability. Without the quality, there will be no end to the misery," Dunne says.

"American buyers are ready to try new things, but they punish product mistakes with a vengeance."

Li has recognized the importance of product quality. There's no better way to establish the Geely brand in the United States and Europe, he says, than improving quality, technology and services. This is why the company has plans to inject more money into research and development.
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