Blog: China industry consolidation
Dave Leggett | 12 August 2009
I was interested to see that a key product guy at Chery was poached by BAIC which is planning new products under a new brand. Although the Chinese market is performing relatively well this year, competitive pressures abound. The foreign brand JVs still take a big share of the Chinese domestic market and efforts to get domestic brands off the ground will surely intensify. Securing higher sales means lower unit costs and a competitive advantage over rivals.
And the Chinese government is aware that the Chinese auto industry remains relatively highly fragmented and internationally uncompetitive. It wants to see consolidation. There has already been some - eg SAIC and Nanjing Auto - but achieving more won't be easy. Local politicians tend not to want to give up on auto industry firms, that are often deeply embedded in teh local economy and local public finances.
I seem to remember a Chinese government official telling me the grand plans for national consolidation when I was in Beijing way back in 1993 (the gent made me take him and eight of his mates for a slap-up meal in a 5-star hotel while we discussed the matter). It never happened because Chinese economic power is decentralised and Beijing has trouble telling the regions what to do when it comes to money.
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