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back to index backASIAtalk February,  2017


Emerging markets key to China's intl automotive growth

Chinese carmakers' efforts to expand into more emerging markets have spurred optimistic forecasts on export growth, amid strengthening international political ties.

The General Administration of Customs reported better-than-expected trade data for January as demand picked up abroad, with about 70,000 vehicles exported that month, 65.7 percent more than in the same month last year.

The overall annual growth rate of the nation's car exports is likely to hit 5 percent and the total volume could reach 750,000 vehicles in 2017, according to the China Association of Automobile Manufacturers.

The association made the prediction off the back of a survey of the 15 largest auto-manufacturing groups by volume in China last year.

"Chinese auto brands are now more competitive in the global market, especially in the SUV segment," said Xu Haidong, assistant to the secretary-general of CAAM.

Liu Xiaoming, principal of A.T. Kearney Greater China, a global management consulting firm, told China Daily that export growth could remain moderate in the coming one to two years.

He said: "Five percent annual growth is an optimistic forecast, since the export industry just underwent a contraction in 2016 as a result of rising trade protection in many markets, including the United States and European countries."

Liu highlighted emerging markets as key growth drivers, saying that many trade relationships are promoted by the country's political relationships instead of market expansion. As such, he identified critical opportunities in the emerging Middle Eastern and North African markets, and fast-growing Indian and South Asian markets.

"There is room for development in Iran, India, Indonesia and Malaysia. The Indian market deserves Chinese auto makers' attention because demand is climbing and the market is developing at high speed," he said. "Some Chinese carmakers have spotted these opportunities and shifted their focus."

Geely Automobile Holdings has targeted export destinations in the Middle East, South America, Africa, Russia and Belarus, with plans to launch the latest Geely 3.0 Generation models this year. The Zhejiang-headquartered carmaker expects its export figures to surge 90 percent year-on-year, exceeding 40,000 vehicles sold in 2017.

Liu noted that "a monthly export volume of 3,000-4,000 cars would be recognized as excellent performance, while auto exports to developed markets are far lower and more fragmented."

Xu said: "The majority of exported Chinese-branded vehicles are shipped to developing countries. The car export market is subject to many factors, including overall market environment, location, economic situation and local residents' spending power."

Xu gave the example of the recently inaugurated United States President Donald Trump exerting influence on the country's international trade. The US has finalized Chinese tire tariffs and has begun to levy heavy duties on truck and bus tires imported from China, as a measure to protect US companies.

"Luckily, vehicle exports to the US have not yet received a heavy blow and not a lot of Chinese auto parts were previously shipped to the US," he added.

China is not likely to alter the export environment in developed countries in the near future, as these saturated markets leave only limited opportunities for Chinese exports, according to Liu.

The US has a complicated legal framework and its market situation differs in each state, while the Russian auto market has been curbed by economic recession following trade sanctions. Liu added: "It is more practical to boost exports to emerging markets that have strong ties with China and closer government relationships.

"In addition, Chinese products are more suited to the local needs there, in terms of parts, materials, road performance, emission standards, and driving safety."

Source: China Daily - GAI




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