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| China Roar! |
By:
Tom Watkins |
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China is on a roll. Expect to see China car brands on the road near you as the 21st Century unfolds. Recently, the 2006 Beijing International Auto Exhibition opened with an unprecedented number of China's homegrown brands on display. This is an amazing accomplishment when you consider private ownership of cars was not even permitted until the 1990s.
When I first traveled to China in 1989 the dominant means of transportation for the 1.3 billion people was the you can have any color, as long as it is black, "Flying Pigeon" bike. Today, China is the world's third largest auto market. The production and sales of automobiles in China are expected to surpass seven million units this year, according to the China Association of Automobile Manufactures. This is an amazing increase from the slightly more than two million autos produced in 2003.
1.3 Billion New Consumers
Consider:
By 2020 there are expected to be seven times the number of cars on China's roads than in 2004.
GM expects the Chinese automobile market to be bigger than the United States market in 10 years, and some expect it to eclipse us sooner.
The Chinese middle class, which was virtually nonexistent a quarter of a century ago now tops 100 million and is growing.
The Chinese Are Coming!
While the U.S. and other nations' automakers have been scrambling for the opportunity to enter into joint operating agreements with the Chinese to grab a part of the fastest growing auto market, the Chinese have been working on their own plans to build a car capable of penetrating the global auto market. Geely, a relatively minor player in the China auto industry made a major splash last year in Detroit by being the first China car company to debut a car in North America.
They recently inked a deal with a United Kingdom company to produce London's iconic black cabs in China, While Geely may not be the first Chinese car company to penetrate the U.S. market, you can bet just like the Germans, Japanese and Koreans before them, a Chinese car will be on our roads in the near future.
Both Daimler Chrysler and GM have openly talked about exporting a Chinese-made car to the United States in the near future. The recently appointed Ford CEO, Allen Mullaly, has extensive "guanxi" or relationships with Chinese government and business executives from his days at Boeing Co. and it is just a matter of time before Ford catches up with its Detroit competitors in China.
Why are the" Detroit Three" in China? Because that is where the growth and profits are. GM's sales jumped 36.7 percent in the first three quarters of this year and they intend to keep investing in China's fast-growing market, says GM's chairman Rick Wagoner. Yet, be very clear, while China is partnering and entering joint ventures today with foreign automakers, its goal is to produce, market and distribute a China brand that will stand on its own on the world stage.
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Clearly, the China economic muscle car is coming and we have two choices, we can do nothing and get run over, or shift into high gear and seek ways to win the race. Like Toyota and other Japanese firms, the Chinese know that Detroit is the intellectual auto capital of the world and we need to create a hospitable place for their investment.
A Michigan Road Map
Michigan needs an Asia/China economic plan that taps the best and brightest business, labor and academic minds to find ways to make China's rise work for us. Other states and nations are ahead of us, we need to shift gears and catch up.
Connect the various China initiatives out there that are in their infancy developed primarily by Automation Alley under the leadership of Oakland County Executive L. Brooks Patterson and Wayne County's Executive Robert Ficano. Both are filling a vacuum left by the inaction by the state.
Quit whining about "outsourcing" and begin to develop plans to capture the "insourcing" that is beginning to develop as the Chinese are looking for places to invest in America.
Michigan should set a goal to be the first state in the nation where Mandarin Chinese (the most spoken language in the world) along with Chinese history and culture is taught in ALL of our schools. This will help prepare our children for the future and make Michigan a magnet for future Chinese investment.
Increase our investment in human capital from preschool through graduate school. It should be our goal to make Michigan the innovative, entrepreneurial brain bank of the world, where people flock to make deposits and withdraws.
Invest in training and retraining for workers impacted by the global economy.
Just because Michigan put the world on wheels does not mean that a fickle consumer will not abandon us and go home with a new partner. Unlike a Chinese fortune cookie, we are responsible for creating our own future.
Tom Watkins is a business and education consultant. He served as state superintendent of schools for the state of Michigan from 2001-05 and as president and CEO of the Economic Council of Palm Beach County, Fla., 1996-2001. He has a long standing interest in China and has traveled their many times. Read his internationally recognized report (now translated into Chinese: The New Education (R)evolution at http://www.nacol.org He can be reached at tdwatkins@aol.com. |
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