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U.S. carmaker Ford’s Chinese partner, Changan Automobile Group, looking to escape a price war at home, is drawing up plans to export to overseas markets such as the United States.
The parent of Shenzhen-listed Changan Automobile, the country’s third-largest vehicle maker, must carve out market abroad if it hopes to survive, according to Changan vice president Ma Jun.
“They can come here,” Ma said. “Why should we not be able to go over there? There’s enough space on the planet.”
Ma said the Chinese market opportunity was limited, despite explosive growth of recent years, as raging domestic price wars meant margins were slim.
“The home market is limited. There will come a day when we have to go down the international path.”
Changan has partnerships with Suzuki and Ford. It recently expanded its agreement with Ford following Chinese Government approval to build a new US$1 billion plant that will assemble Fords and Mazdas.
The company has been a strong performer in China. Last year price cuts helped Changan to increase sales by 43 percent to 579,000 units, outpacing the market’s 15-percent rise.
Such a move would echo the recently formulated strategies of other domestic carmakers.
Chery Automobile has recently announced it would start selling cars in the United States in 2007. Geely, another domestic carmaker, said last year it wanted to export 20,000 cars this year. Honda and Volkswagen also plan to start exporting cars from China this year.
Western automakers are bracing for a potential onslaught from China rivals, some say toward the end of this decade, driven abroad by a growing glut.
Exporting may be a huge leap for Changan, but Ma, an engineer who rose through the company’s ranks, remains confident.
“We’ve already started exporting to the United States. Not many, about 20, in fact,’’ he said.
“The biggest problem we’ll have is after-sales service. A service network has to be in place before we can even consider large-scale exports to the United States.’’
(Shenzhen Daily January 25, 2005)
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