« William Poole on Inflation Targeting | Main | Prices in the Waiting Room »

Friday, February 17, 2006

More Competition for U.S. Automakers?

It doesn't seem like it would be cheaper to move an entire engine plant over 8,000 miles from Brazil to China rather than to build a new one, but apparently it is. It's not going to get any easier for struggling U.S. automakers:

China Seeking Auto Industry, Piece by Piece, by Keith Bradsher, NY Times: China is pursuing a novel way to catapult its automaking into a global force: buy one of the world's most sophisticated engine plants, take it apart, piece by piece, transport it halfway around the globe and put it back together again at home. .. [A] major Chinese company, hand-in-hand with the Communist Party, is bidding to buy ... a car engine plant in Brazil. Because the plant is so sophisticated, it is far more feasible for the Chinese carmaker, the Lifan Group, to go through such an effort to move it 8,300 miles, rather than to develop its own technology in this industrial hub in western China...

If the purchase succeeds — and it is early in the process — China could leapfrog competitors like South Korea to catch up with Japan, Germany and the United States in selling some of the most fuel-efficient yet comfortable cars on the market, like the Honda Civic or the Toyota Corolla. ... Lifan says it is the sole bidder for the factory and wants to ... start producing engines in 2008.

Though China's Communist Party is actively behind the effort, the bold moves are being driven by one of China's remarkable entrepreneurs: Yin Mingshan has become one of China's most successful and most politically connected corporate executives, with a hardscrabble upbringing that included spending 22 years of his earlier life in Communist labor camps and prison as punishment for his political dissent.

Now the enormously wealthy ... and principal owner of Lifan, Mr. Yin has his sights on exporting to Europe in 2008 and the American market in 2009. ... Mr. Yin said he wanted to rebuild the factory on vacant land next door to his car assembly plant here. His goal is to understand the technology thoroughly so that he can supply engines not only for Lifan but also for other Chinese automakers. ... Any attempt to buy a comparable factory in the United States might be blocked. But Mr. Yin said that Brazil did not have comparable restrictions on the export of high technology. ...

[S]everal more years of work is needed before the company is ready to compete in industrialized countries, Mr. Yin said. "Chairman Mao taught us: if you can win then fight the war, if you cannot win, then run away," he said. "I want to train my army in these smaller markets, and when we are ready, we will move on to bigger markets." .... Mr. Yin has no doubts that China can also compete with the United States. "Americans work 5 days a week, we in China work 7 days," he said. "Americans work 8 hours a day, and we work 16 hours."

Update: Here's a chart from the Financial Times from an article on the rise of competition from Asian automakers:

    Posted by on Friday, February 17, 2006 at 12:22 AM in China, Economics | Permalink  TrackBack (0)  Comments (4)


    TrackBack URL for this entry:

    Listed below are links to weblogs that reference More Competition for U.S. Automakers?:


    Feed You can follow this conversation by subscribing to the comment feed for this post.