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BY MARTON PETTENDY | 29th Apr 2008
Speaking exclusively with GoAuto on the eve of this month’s Beijing motor show, GM China chairman and former GM Holden official Kevin Wale said it would be wrong to dismiss any of China’s emerging car-makers as incapable of making an impact on the Australian new-car market, which Chery will become the first to enter in early 2009.
“I don’t know the range that they’re going to introduce but the reality of life is that all of these brands need to be respected,” he said. “I think the big danger is to simply blow everyone away as not being capable. I think that’s a risk.
“Having said that, they are young brands and they’re going to have to work their way through the maturity stage.” “I think the Chinese local manufacturers are made up of a couple of different types of categories. There are those that want to focus on the local market and want to specialise in that area and there are a number of them who clearly have global ambitions.
“They are very keen and very committed to try and create global opportunities and they’re doing that by leveraging global design and engineering talent as well.
“A lot of the Chinese companies use a lot of international engine companies and design houses as you’re aware. So it’s not this little internal organisation – they’re quite large global organisations, although they’re China-based.
“Those that want to go global are all experimenting with different approaches to see what works. Some have tried to get into Western Europe (through distributors), others have expressed their intention on getting into the US and of course they’re running into the regulatory issue there.
“A number of the companies who are starting off with the less developed markets – Eastern Europe, Africa, Middle East – are just learning what’s required to operate internationally.
“So they’re using a variety of techniques, but the common issue there is that there would be a number of them who are interested in participating in the global industry because they think that does demonstrate their international capability and their credibility and they’re taking different approaches to do that,” he said.
Western car-makers in partnership with Chinese makers make up 75 per cent of China’s new-car market and the best-known joint-venture is the Volkswagen Group’s arrangement with the FAW Group Corporation of China, formed in 1990.
Volkswagen is China’s biggest passenger car brand while FAW is the biggest automotive industrial conglomerate in China, with more than 35 assembly plants across the country, 11 subsidiaries controlled solely by FAW, 12 holding companies and 14 joint-ventures. VW’s Polo sedan became the first Chinese-built vehicle sold in Australia a number of years ago, but Mr Wale said 100 per cent Chinese brands, such as Chery, were more likely to export than joint-venture car-makers.
“GM has manufacturing facilities all round the world, so what we want to do in China is develop capabilities to sell in China,” Mr Wale told GoAuto.
“If you compare that to a local Chinese manufacturer they have no international distribution, so they see that as a market opportunity, so it’s being driven by opportunity rather than anything else and so I don’t think that the hypothesis is necessarily one that will play out that way, mainly because it is about global distribution of your manufacturing capabilities.
“There are always opportunities. In the long term people will see opportunities to address market opportunities and to maximise capability, but certainly it’s not what GM is focussing on at the moment. It would be a bit presumptuous of me to speak on behalf of other global manufacturers but no it’s not what we’re focussing on.
“We’re focusing on making sure we continue to grow our business in China and there’s a huge amount of expansion and new product introductions we have to do in China,” he said.
Asked whether Australia would one day become a destination of GM vehicles built in China, and whether GM China had the potential to supersede GM Daewoo as the source for most of its models produced outside Australia, Mr Wale said: “You can never say never.
“But the focus that we’ve got is growing our business for China. We’ve got excellent facilities elsewhere in the world that produce lots of cars, so it’s not on our mind to be honest.
“I can’t comment on where Holden’s going to get their product from but like the rest of the world they have the opportunity to source from all round GM and as we go global our products will be built in different parts of the world.
“I just don’t think that it’s necessarily a conclusion that Korea will be the source for all products,” said Mr Wale.
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