China Is Moving to Dominate the Global Auto Market

  • By Chosun Ilbo columnist Kim Ki-cheon

    June 22, 2009 11:18

    China's Geely Auto unveiled a new model called the GE at the Shanghai Motor Show in April, grabbing the world's attention. The reason was that the model looked like a knockoff of the Rolls-Royce Phantom. Not only was the overall exterior the same, but the GE even copied the British automaker's trademark grill and "Spirit of Ecstasy" emblem complete with wings. However, there was one obvious difference between the two models, the price tag. While a Rolls-Royce Phantom costs more than W500 million, a GE costs just W60 million (US$1=W1,272).

    Chinese automakers have become notorious for producing knock-offs of foreign vehicles. Most compact and mid-sized cars popular in the global market, including Hyundai Motor's Santa Fe and GM Daewoo's Matiz, have been copied without authorization. Now, even the most luxurious car in the world has become a target. However, Chinese carmakers do not seem to care despite growing criticism from around the world. Geely claims it has merely "recreated" the classic style of the Rolls-Royce. Chinese media have even lauded Geely, saying a home-grown carmaker has finally entered the luxury car market.

    And now, Geely, China's first privately-run carmaker, has taken the world by surprise once again. The company, established in 1998, has reached a tentative agreement with Ford Motor Company to buy Volvo from the U.S. carmaker, which bought the 82-year-old Swedish carmaker in 1999. Although Geely is only China's 10th largest car company, it has already acquired a stake in a British taxi cab manufacturer in 2007, and earlier this year purchased an Australian manufacturer of gearboxes. Given all this, the world can no longer look down on the company.

    Tengzhong Heavy Industrial Machinery Company based in Sichuan Province recently bought GM's Hummer division, which is famous for producing military vehicles. Another Chinese company also bought the brake and suspension division of Delphi, the world's largest automotive parts maker. Shanghai Automotive Industries Corporation, the largest shareholder of Korea's Ssangyong Motor, owns Britain's MG Rover. Although ending in failure, Chinese automakers also demonstrated interest in acquiring Chrysler and Opel, the European unit of GM. The global automotive landscape is undergoing major change with Chinese carmakers at the center of it.

    Until recently, China's automobile industry was a target of ridicule. None of China's 100 plus carmakers was able to compete internationally. However, once the global economic crisis has passed, things will surely change for Chinese carmakers. Equipped with world-class brands and technologies by acquiring leading global companies, they look set to dominate the world auto market, starting from the small car segment. It remains to be seen whether Korean carmakers will be able to survive these big changes led by China.

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