China's cycling masses are soon to be offered a family car. Their government has asked 20 Western motor companies to pitch for the contract. Jeremy Hart reports
Sunday 15 October 1995
With China about to join the big league of motoring nations, it is a car salesman's dream. On this occasion, though, the salesmen are the chairmen of the world's top 20 motor manufacturers - and for them, making a sale isn't worth a shiny new suit, but the guaranteed future of their company.
Some American, Japanese and European manufacturers are already doing business in China. Last year 315,000 cars were built there, mostly in plants run as joint ventures with local companies. VW's Santana is the choice for Communist Party transport; taxis are Daihatsus; police cars are Peugeots. China's exclusive club of wealthy private motorists has always preferred something a little more plush: a Mercedes, say, or a Lexus.
Such exclusivity is about to be eroded. In the next few months, a shortlist of four companies will be drawn up from the 20 that have tendered to produce China's first mass-market car. The brief for the government-backed project is to produce four vehicles ranging in size from the Ford Fiesta to the Vauxhall Cavalier, collectively known as the "China Family Car". British companies weren't invited to pitch, perhaps because of soured relations over Hong Kong.
That is not to say British companies don't have an eye on the Chinese market. Making its first appearance in China recently was the Jip Pao XJ6 - recognisable elsewhere as the Jaguar XJ6 (jip pao means "fast cat"). But for the Family Car project, there is no British contender. By contrast, accountants at car makers from Turin to Tokyo are dreaming of the profits that could hinge on a contract to build a quarter of China's mass-market motors.
Porsche, associated more with 150mph sports cars than with utilitarian family transport, has broken the corporate mould and produced a contender for this lucrative automobile beauty pageant - the Porsche C88 China Car. If its slanted headlights and its (by Western standards) garish and plasticky interior fail to captivate the Chinese, the Germans hope it will make inroads in India, predicted to be the next motoring megamarket. "We produced it in three and half months," says Horst Marchart, director of Porsche research and development. "We worked with Chinese engineers to make sure it was a joint effort."
All contracts will be awarded on this basis. China cannot fuel its need for cars without the expertise of the West, but both know the relationship could be short-lived. "It is China's aim to become the world's biggest car manufacturing nation," Giovanni Batista Razelli of Fiat warns. His counterpart at VW, , Martin Posth, is equally aware of the challenge. "The next generation of cars will be developed partly in China; the models after that will be conceived almost without foreign assistance."
Though they might be teaching the commercial enemy of the future how to build cars, most manufacturers believe the short-term benefits outweigh the long-term risks. Each company is thinking mainly of its immediate survival.
In Peking, the reaction to the first Porsche saloon was lukewarm. The German company can only hope its sports-car pedigree will sway the speed- hungry Chinese, and next month's international motor-racing meeting at Zhuhai, just west of Hong Kong, may help. A Porsche won the first such event on Chinese soil last November, and watching were decision-makers from the China National Automotive Industry Corporation - who will pick the four winning Family Car producers.
Unlike Fiat and Porsche, most of the 20 companies competing have already dipped a toe in the still-tepid waters of Chinese motoring. Volkswagen is China's biggest manufacturer; Citroen and Peugeot have two plants in China. and Daihatsu and Chrysler are also there. Regardless of the decision over the Family Car contract, they will expand their factories to meet the increased demand.
For the newcomers, this project is an all-or-nothing exercise. Each bidder has employed consultants to help anticipate the tastes of Chinese consumers. "The Chinese expect a pretty good-looking car," says Lee Tak-chi, a Hong Kong designer who has worked with Porsche and Fiat in the race. "They are well educated, watch television and are very aware of different cars around the world. They won't accept second best."
Lee, a former student of the Central School of Art and Design in London, has produced his own family car for China. Called the Tint Dragonfly, it is not among the 20 contenders for the major prize. Lee is negotiating with the government of Wuxian province, to make and sell his car there, earlier and more cheaply than the alternative chosen by central government.
Price of the family car will be as crucial as design. Only four million households will have an annual income of more than pounds 3,000 by the turn of the century - coincidentally the lowest price they could be expected to pay for the car. "They will need some kind of financing to start with," says Lee Tak-chi, "but soon some families will be able to buy a car outright." !
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