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China goes on offensive at auto expo
Nation doubles its presence at Detroit engineering forum as it aims to grow globally.
Top countries at 2005 SAE World Congress on April 11-14 in Detroit, ranked by amount of exhibit space:
• United States -- 107,900 square feet
• South Korea -- 6,600
• Germany -- 6,300
• China (includes Hong Kong) -- 4,000
• Canada -- 3,100
• India -- 2,800
• Italy -- 2,700
• Australia -- 2,500
• Mexico -- 2,100
• United Kingdom -- 1,600
Source: Society of Automotive Engineers
Websites of Chinese automotive manufacturers:
Auto Accessories And Spare Parts
Websites of Chinese automotive suppliers:
Seeking to win new business and raise their profile in the United States, Chinese auto companies plan to come out in force at next month's SAE 2005 World Congress in Detroit.
Five years ago, Chinese automakers and parts suppliers were bit players at the annual Society of Automotive Engineers convention. But for the 2005 show, Chinese companies have booked more than 4,000 square feet of exhibition space at Cobo Center -- nearly twice as much as last year -- to display their products and technology.
Supported by the Chinese government, the country's auto sector has ambitious plans to follow Japan and South Korea in becoming a major global player.
The SAE show April 11-14 will host 22 auto suppliers from China, automaker Qingling Motors Group and several dozen Chinese economic development and government officials. About 50,000 engineers and others are expected to attend the show.
The Chinese suppliers could use the show to make contacts with North American companies looking to outsource work to Asia.
"It's always a threat when suppliers with some of your capabilities come into the market," said Neil De Koker, president of Original Equipment Suppliers Association, which represents parts makers with operations in North America.
Led by a surge in passenger car sales, China's vehicle market has exploded in the past five years to become the world's third-largest, behind the United States and Japan.
Automakers and automotive suppliers have invested more than $30 billion in plants and research facilities across China.
In a strategy directed by the government in Beijing, China is seeking to attract investment and the most-advanced engineering and manufacturing technology, while touting the improving quality of its manufacturers and the country's low labor costs.
With a population four times larger than the U.S., China could become the world's largest vehicle market by 2025, industry analysts say.
Chinese manufacturers have established offices in Detroit and Los Angeles in recent years with a goal of exploring the world's most lucrative auto market.
"You're seeing Chinese auto companies eyeing the United States for importing vehicles," said Raymond Xu, president of the Detroit Chinese Business Association in Dearborn, a trade group with 1,500 members.
Earlier this year, automotive entrepreneur Malcolm Bricklin announced a deal to import Chinese-made cars to the United States.
Bricklin plans to import 250,000 cars a year, assembled by Chery Automotive Co. in China, to the United States starting in January 2007.
Chinese auto suppliers have gone on the offensive as well. Two years ago, Andus R&D Inc., which manufactures components for use on vehicle platforms in China, opened a 10-person sales office in Novi. It now is scouting Metro Detroit for a research and development center, said Jeff Zhao, president of Andus R&D in Los Angeles.
"The Chinese automotive industry is most interested in testing their own quality and technical skill against that of the U.S. and Metro Detroit, which is the brain center of the auto industry," said Jamie C. Hsu, professor of management and engineering at Lawrence Technological University in Southfield and former director of global technology management at General Motors Corp. in Detroit.
Hsu, who spent 31 years at GM in product planning and emerging technologies, will moderate a panel during the SAE convention about China's automotive engineering, design and product development capabilities.
Panelists, including executives from Delphi Corp. in Troy, Philips Semiconductors China and Pan Asia Technical Automotive Center, are expected to discuss China's rapid strides in automotive manufacturing as well as lingering concerns about rampant piracy of technology despite the Beijing government's vows to crack down on trademark and intellectual property theft.
In addition, the Detroit Chinese Business Association will host a forum on China's automotive industry at the Troy Marriott on April 10, a day before the SAE convention starts. The forum will include discussions on business and investment opportunities in China.
"The Chinese automotive industry is just starting to grow, but there are some quality issues, much like when Japan and Korea were first growing their own auto markets," Hsu said.
"But we have seen the Japanese and Koreans improve their quality substantially, and China is looking to do the same thing."
Bernie Pekor, director of new markets in Asia for the Detroit Regional Chamber, visits China as many as three times a year and has been impressed by the growing sophistication of Chinese manufacturers.
The United States and China are benefiting from increased trade between the countries, he said.
Michigan companies exported $607.2 million worth of goods to China last year, up 66 percent from $366.7 million in 2003, according to the Michigan Economic Development Corp., a quasi-public development agency in Lansing. In 2004, China was Michigan's seventh-largest export market, up from 10th place.
Driving the growth is a nearly threefold increase in the value of vehicles shipped to China from Michigan. China imported $234.7 million worth of vehicles last year, up 289.6 percent from $60.2 million in 2003, MEDC figures show. Its demand for rubber, wood, aircraft parts, paper and books also increased.
Rising costs in coastal cities such as Shanghai have encouraged companies to set up offices and manufacturing facilities in less-traveled urban areas of China, where labor often is cheaper, Pekor said.
"You go to Wuxi (90 minutes by train from Shanghai), and the hotels are filled with engineers and technicians from America," Pekor said. "When there is a technical problem with a machine, the Chinese turn to U.S. companies to fix them."
For several years, the Detroit Regional Chamber has been working with the MEDC, the state economic development agency, to lure Chinese businesses to the state. The two agencies also assist companies looking to establish a toehold in China.
"Much of the growth you're seeing in China is being prompted by the Chinese government," said Harry C. Whalen, MEDC's senior vice president of international development. "The growth of China's economy has benefited Michigan in terms of increased trade, and now we're seeing Chinese companies looking to set up offices in Michigan and the U.S."
Asian companies also have made significant investments in Metro Detroit in recent years.
Toyota Motor Corp. plans to expand its North American research and development capabilities by expanding its Ann Arbor-based technical center, while Hyundai and Suzuki Motor Ltd. plan to establish or expand research and engineering options in the state.
Hyundai's $117 million technical center in Superior Township will employ 450 people this summer.
In recent weeks, Nissan Motor Co. opened a $14 million design studio in Farmington Hills, and later this year DaimlerChrysler AG, Mitsubishi Motors Corp. and Hyundai plan to open the first of two engine plants in Dundee. The second plant is scheduled to open in late 2006.
The two factories are part of a $700-million investment that will produce 840,000 power plants per year in 2007.
You can reach R.J. King at (313) 222-2504 or rjking@detnews.com.
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