Auto Industry

Room for vroom

In China the ‘clone war’ has less to do with Star Wars than car wars

Geely: negotiating to acquire Volvo

“Nothing better reflects the wealth and vitality of a country than automobiles.”

That was the considered editorial opinion of the Global Times last week, on news that the ten millionth vehicle had been sold in the domestic market this year.

Industrial giants need a super-scale auto industry, goes the argument. Recent speculation has been linking just about every struggling international car brand with a potential Chinese buyer, and there are particular hopes that a local champion will emerge in the new technology (hybrid/electric) segment.

As the year 2010 AD fast approaches, in Beijing that ‘AD’ now connotes ‘After Detroit’.

There is no questioning the aspiration. But a look at Chinese car design offers pause.

Exhibit one: the tendency of many local carmakers to copy established international brands.

The China Car Times calls it the “clone war” – a practice of “borrowing” ideas from a range of other models. Then just slap a Chinese logo on the bonnet.

A genuinely confident (or imminently dominant) sector would be delivering a lot more products of its own creation. This may well be going to happen one day – especially in hybrid vehicles – but it hasn’t quite yet.

The aping of overseas styles can extend right down to choice of corporate logo.

But at least it keeps the lawyers busy. Making the case in China itself is unlikely, although BMW did win an injunction against the sale of an SUV similar to its own X5 in Germany and a Turin court also blocked imports of Great Wall’s Peri (which looks a lot like Fiat’s Panda brand). Mind you, Great Wall counter-sued last week.

Still, foreign carmakers will not want to jeopardise access to the Chinese market (nor to its assembly-and-supply manufacturing base).

The clone wars may soon pass, too. Older heads recall similar complaints when Korean and Japanese cars first began to be sold in volume. Others simply regard it as the cost of entry to the Chinese market, even if the fear is that when local product standards reach international levels, Chinese firms could blow their rivals away with lower-cost competition.

Best, then, to delay the day of reckoning as long as possible? That may have been the thinking behind Ford’s decision to pull back from selling its Volvo brand to Geely last week, although the speculation this week is that talks have resumed.

Volvo vehicles are built on a shared platform, so the blueprints could afford insights into Ford’s technology strategy in general. Ford has extra reason to feel a little sensitive at the moment, following the arrest of a former engineer for hawking confidential designs around Chinese manufacturers. But GM also seems to have had similar concerns, in choosing not to sell Opel to Beijing Auto in July.

Still, for the foreseeable future, Chinese brands are not the market leaders.

Exhibit two: no more than 30% of the cars sold in August were of indigenous design, according to Xinhua.net.

Foreign manufacturers will be doing their best to keep it that way. A key component of the strategy is to make more of their design decisions China-related.

GM already has three global vehicles with China-inspired features, like wood grain on the steering wheel, says the Wall Street Journal.

Limousine-like back seats, more advanced entertainment and climate-control systems are also more popular among China consumers. Mercedes is incorporating similar features in its own product designs, not just for sale in China but in some international markets too.

It’s an interesting role reversal. The Chinese carmakers have started out heavily influenced by foreign design. But now their international competitors are increasingly gravitating towards a China-influenced agenda. Perhaps the auto industry is at a crossroads after all.


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