China's automobile industry has identified four major problems
holding back its further development, even if it is experiencing a
period of high prosperity and rapid growth, according to Yang
Hexiang, director of the Industrial Department of Industry
Development Research Institute under the National Development and
Reform Commission. He was speaking at the 2005 Outlook Liuzhou
Forum held from November 26 to 27 in Nanning, capital of south
China's Guangxi Zhuang Autonomous Region.
Yang said the industry's rapid development partially tackles the
challenges created by China's entry to the World Trade
Organization, but this should not be allowed to obscure the fact
that contradictions and problems still exist. He identified the
four major problems as follows:
·Saturated industry
Currently, there are 27 provinces and regions developing and
manufacturing automobiles, 21 of them manufacturing passenger cars.
There are 2,443 automobile enterprises in the country, including
115 assembly plants, 551 refitting factories, 154 motorcycle
manufacturing plants, 56 engine producers, 1,567 auto and
motorcycle spare parts factories, and 168 related industrial
entities.
Yang said the current annual car manufacturing capability was
5.5 million and this was expected to rise to more than 15 million
by 2007, when supply would far outstrip demand.
·Weak development capability
Yang said the domestic car market was now dominated by foreign
brands. In 2002, only 32 percent of vehicles were independently
developed by domestic companies, and only 10.5 percent of which
were cars. Currently, China develops most of its new car models
based on imported technologies and joint Sino-foreign or foreign
investment.
Technically, the Chinese automobile industry is merely an
assembly workshop of big auto-manufacturers, and its market is led
and controlled by multinational firms.
·Scattered and disorderly domestic industry
Special steel and spare parts required by many domestic joint
ventures still have to be imported. Due to the low efficiency rates
of the domestic railway system, steel and spare parts cannot be
delivered on time, and this increases transportation and stock
costs.
The cost of manufacturing one automobile in China is 18 percent
higher than that in high-developed countries, Yang said.
·Consumption challenges
Car ownership has seen a phenomenal rise in the last few years,
leading to massive traffic jams and parking shortages in major
cities. Rising international oil prices have also driven prices up.
Further, financial support services continue to be inadequate
compared to demand. All these factors taken together will severely
hold back potential consumption, thereby slowing the industry down
still further, Yang predicted.
(China.org.cn by Li Jingrong, December 1, 2005)
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