Robert_Nashville

Tiny Changfeng Gears up To Sell Vehicles in the U.S.
October 30, 2006

William Clay Ford, Jr., Chairman of Ford Motor Co., spent part of last week flying around China, a country where Ford is hiring workers and expanding its operations.

Mr. Ford, whose company is axing thousands of jobs in the U.S., made no bones about his interest in China. "There's going to be no market like China for us," he told my colleague, Gordon Fairclough.

Meanwhile, on the same day in the U.S., JianXin Li, board chairman of Chinese auto maker Changfeng Group Ltd. was paying a visit to Detroit. U.S. auto industry leaders may be excited about China. But for Mr. Li, there's still no market like America.

But now, Changfeng wants to step out on its own. And that means at least trying to test itself in the world's largest car market.

Through a translator, Mr. Li says his company is looking for feedback from American consumers and dealers, and then plans to work on improving its designs in the hope it will be ready to start selling vehicles in the U.S. within about three years. He's scouting around for "two or three good dealer groups" that will be willing to promote the Cheetah brand in North America.

"My biggest concern is we don't really know how to play the game right now" in the U.S. market, he says. "My next concern is that exports won't be influenced by political things," such as an election year protectionist backlash in the U.S.

Mr. Li's business card identifies him not just as "board chairman" but also as "secretary of the Party Committee." But Mr. Li talks like a disciple of free market apostle Milton Friedman, at least when it comes to the car business.
As the battle among car makers within China heats up, he says, "how many survive depends on how they adjust themselves to the market."

Mr. Li explains that in China, the government, at the urging of some of the largest state-controlled Chinese car makers, has adopted policies aimed at limiting the number of auto makers, the better to develop a few, large and presumably strong players.

Mr. Li, however, questions whether bigger is always better. For one thing, he says, big companies have a "low efficiency problem" that comes with their big scale. "Big companies don't want to open the windows to see what the world is," he says. But Changfeng, he says, is open to using other companies' technology and ideas, relying on suppliers such as Delphi Corp. or Robert Bosch Gmbh to provide technology Changfeng doesn't have.

Against the backdrop of the current woes among Detroit's Big Three -- all of which lost money in North America last quarter -- Mr. Li's critique of the "bigger is better" maxim doesn't sound out of place.

Still, Changfeng isn't the only -- or the first -- Chinese car maker to outline plans to sell vehicles in the U.S. market. Nanjing Automobile Corp. has announced plans to start marketing MG brand vehicles in the U.S., and eventually build cars at a plant in Oklahoma. Geely Automobile displayed cars at last year's Detroit auto show, and some of Changfeng's other rivals may have stands at this year's show. Chery Automobile has indicated it wants to crack the U.S. market, and has had discussions with DaimlerChrysler AG about supplying a small car for Chrysler to sell in the U.S.

As of now, the consensus among industry executives is that China's car makers aren't ready for the Big Show, although they are starting to gain presences in less mature markets.

Changfeng is very small in the global scheme of things. It began exporting pickups from China last year, and now ships about 7,000 to 8,000 a year mainly to Russia and developing markets in Africa. Changfeng builds about 100,000 vehicles a year in all, Mr. Li says -- less than half the annual output of a typical Ford assembly plant in the U.S. running at full speed. Within five years, Mr. Li says he hopes production of Changfeng vehicles will triple. But even then, Changfeng will be a blip on the global auto industry's navigation screen.

Still, Mr. Li is determined to bring his company's vehicles to the U.S. market, not so much because he expects to make huge profits as an exporter. His main goal, he says, is to prove to Chinese consumers that Changfeng makes good vehicles.

Right now, Mr. Li says, many Chinese consumers prefer foreign brand vehicles, because they think domestic brand Chinese cars aren't as good as vehicles designed to the higher technical and safety standards of overseas markets.

"As a Chinese brand, we need to go out to the international market to develop ourselves," Mr. Li says. "We want to send the message to Chinese consumers that our product is very good, because we can sell in markets like the U.S."

Or, as another Chairman of the Board used to put it, "If I can make it there, I'm gonna make it anywhere."

ProudPony

Things that make you go Hmmmm...


"Built in China, sold to idiots in the USA who are easy to separate from their money."
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Corporate manufacturing slogan and company motto of Chengfeng Motor Co, LTD for 2007.

AlfredB18

I think that's funny.

Face it. While China may have a potentially huge automobile market--one day, it most certainly does NOT have the buying power that the USA has from the average consumer...