The business of building and selling motor cars, as the modern world knows it, is changing. While the established mainstream manufacturers struggle to keep costs down to remain competitive, their workers demand even higher wages. China, in the meantime, has an already enormous motor industry, largely owned by the state, which is destined to become the biggest on the planet. As the domestic market there slows down, the focus is shifting towards exporting millions of cheap cars to the West. Hard times are looming for the established automakers, their shareholders and their workers.
A number of local companies have announced that they will be offering Chinese cars on the South African market within the next year or so. But consumers have to wonder — does the “Made in China” sticker translate into “Cheap, unsafe junk?” It’s difficult to take models with names like Happy Emissary, Great Wall Deer, Chery, JiangLing Landwind, Geely Beauty Leopard, and Hi Fantasy seriously, but anybody who ignores the arrival of the Chinese is either very foolish, very arrogant or both.
The Chinese auto export drive hit its first speed bump earlier this year, when Brilliance Jinbei Automobile, Great Wall Automotive and Jiangling Motors all put a hold on the entry of their passenger cars into Europe. Only Honda is importing its Jazz, built at a joint venture plant in Guangzhou, into the European Union. This resulted from the very poor performance of the Jiangling Landwind SUV in independent crash testing in Germany.
Chinese labour being ridiculously cheap by Western standards, production costs are low and the government is ruthless when it comes to achieving its aims. Most large cities have banned or severely restricted the use of motorcycles, to force commuters to buy cheap cars and some have banned “clean air” imports to help their industry sell locally manufactured low-tech cars.
Safety is not yet considered a priority — the World Health Organisation in 2004 estimated that 600 Chinese are killed and 45 000 injured daily — that’s 219 000 deaths and 16 425 000 injuries a year. Most of these probably result from inadequate driver training, but poorly designed cars must form part of the problem.
Between 1990 and 2004, the number of new vehicles on Chinese roads rose from 1,6-million to 25-million and production reached well more than five million units in 2005 — second only to the United States. The China Association of Auto Manufacturers says production will continue to increase until the 2008 Beijing Olympic Games. With more than 1,3-billion people in the country, car ownership per capita is still relatively low, with a ratio of one car per 52 people — way behind the Western average of one car for every eight people — but as the population benefits financially from the booming Chinese economy, the gap is likely to narrow.
China has already engaged in a massive roads development programme, with motorways more than doubling between 2000 and 2005, to 34 000km. Only the US has more highways.
China’s steel industry too has kept pace with the booming economy — it’s the world’s largest producer and in the past four years has added the equivalent of the US’s entire production capacity.
The Chinese government has invested heavily in the motor industry and the rapid growth of its domestic market cannot be sustained indefinitely. Don’t expect to see any factories mothballed owing to a reduction in domestic sales, though. China is on a serious export drive and anybody working in the Western motor industry who disregards the threat is in for a torrid time. From the factory worker who strikes for more pay to the chief executives who sneer at Chinese quality, reality is going to hit home.
Almost all of the big Western players have hopped into bed with the Chinese, but there are more than 60 non-aligned manufacturers in China, most of them independent and all of them hungry for new markets. Many of their products are cheaply made copies of old Western designs that don’t comply with Western safety and environmental standards, and Africa is an obvious target market. South Africa is unlikely to become a dumping ground for cheap rubbish, however. Any new vehicles imported for sale in this country have to be homologated by the South African Bureau of Standards (SABS).
“Our standards are based upon the United Nations Economic Commission for Europe standards, which are in turn formulated around EEC [European Economic Community] specifications,” says Alan Cohen of the SABS.
“They’re different to the standards of other nations, particularly the US. We’re presently busy with the homologation of certain Chinese vehicles, mainly pickups, for which no crash testing is required. Passenger vehicles will, of course, have to provide evidence of compliance, including for frontal impact crash testing, before being approved. As far as emissions are concerned, we’re still a step behind Europe.”