Chinese auto industry calls for Innovation

Friday 21 October 2011, 09:42 AM by

As China makes its way to foray into the 12th Five-year plan development period, the Chinese auto industry has constantly shown immense growth and nurtured itself to strongly respond to the frantic situations emerging in the global automotive market. Every possible effort has been put into action to attain the goal of transforming the China auto market into an innovation power, Wang Ruixiang, President of China Machinery Industry Federation (CMIF), said recently.

When China's highly acclaimed FAW (First Auto Works) Group produced the first ever automobile for the country in 1956, the citizens of China had no idea of what was coming their way. In a matter of a few decades that followed the debut production, China became a proud owner of a number of vehicles. Moreover, in 2009, China unprecedentedly surpassed United States to become the world's largest auto market, following the 13.6 million units vehicle sales that year.

Chinese auto industry calls for Innovation | CarTrade.com
Chinese auto industry

Since China got associated with the World Trade Organization (WTO) back in 2001, its auto industry witnessed a coercive boost and subsequently made developments like never before. As per the World Trade Organisation rule, China's tariff on imported cars was axed by around 80 per cent in 2001, settling at an average of 13.4 percent currently.

Such a favourable move unlocked doors for the country, as a result of which the China was exposed to an open and flourishing market. More importantly, the constantly falling car prices enabled maximum number of ordinary people in China to afford their personal cars. Amid car makers from around the globe, thronging for space, Chinese brands and its joint ventures stood apart owing to the relatively higher cost performance.

A noticeable boom in demand caused the China's auto production to shoot up drastically from 2.07 million units in 2002 to 18 million units in 2010, a nine fold growth in the time period of nine years.

As the car market trends frequently changed, inducing a high level of competition, some Chinese car makers muled upon bringing in technological innovation, in order to survive as the fittest contender. China's First Auto Works Group, one of the country's largest auto makers, displayed an example of the changing mindset by launching its two hybrid bus models at the eighth China Automobile Fair, currently held in Changchun, during July.

It is important to note that the China's emerging car makers have been inclined towards expansion, by operating in the overseas markets. On 8th October 2011, China's JAC Motors shared its plans regarding an investment, to the tune of $500 million, in its first overseas facility, which will be located in Brazil's northern state of Bahia.

In spite of being the leader of the auto industry, owing to the 10-years of rapid development, Chinese auto sector has been experiencing a number of barriers, of which, the technological gap with other leading car companies is the biggest deterrent, said Zhang Xiaoyu, Executive Vice-President of China Machinery Industry Federation. "The auto industry never lacks market and capital. What it urgently needs is technology, but the key to acquire the technology is the talent that masters the technology," Zhang added.