China's Car Makers Ready to Go Global?

[Outofin]

============================================

This is Chery QQ.

This is Spark.

Is it just me or you also feel QQ is way better (cuter) than Spark, even though they are just a little different, technically?

=============================================

Yahoo News

China's Car Makers Ready to Go Global?

Edit: No need to copy and paste complete articles - link and quote. Roddy

[bhchao]

To get its foot in the door, China needs to learn total quality management first, a practice the Japanese learned from the US in the 1950's.

[gougou]

The first Chinese cars are going to arrive in Europe shortly, this article (unfortunately in German) says. The car in question is called Zhonghua, of Jinbei Automotive.

Starting this autumn, it shall be available at around 1000 outlets all over Europe at a minimum price of 15.000 €.

PS: The article refers to china.org.cn, maybe more information in English is available from there.

[Outofin]

Oh so early. I thought they would try middle east or north africa first. Chery is gradually building their brand in those areas. But germany is the homeland of volkswagen and BMW. I'm afraid that Jinbei won't do anything but building up a image of low quality. Cheap is not good, but on the other hand, is not bad at all. Low-quality and less safety is another story.

Car, maybe the last and ultimate market Chinese manufactures want. It has become a dream. I know nothing about car-making. Just some years ago, I wondered why we could build a rocket sending a man into the space but could not make a car! But, all of a sudden, a bunch of Chinese companies started churning out cars. What's happening? I though it must be a tremendous job but now it seems so easy.

[gougou]

In fact, this move does not so much stem from Jinbei's initiative: a European company wants to import those cars.

I don't know about the quality, but judging from the features included, it does not seem to be targeted at the lower end of the market...

[gato]

What is "QQ" supposed to mean? Why is it everywhere, from internet chat to now cars?

[bhchao]

It would be nice if Chinese automobile companies are implementing these. I still remember a little from what I learned in my Operations Management course during college. Note #4.

1. Create constancy of purpose for improvement of product and service. Contancy of purpose requires innovation, investment in research and education, continuous improvement of product and service, maintenance of equipment, furniture and fixtures, and new aids to production.

2. Adopt the new philosophy. Management must undergo a transformation and begin to believe in quality products and services.

3. Cease dependence on mass inspection. Inspect products and services only enough to be able to identify ways to improve the process.

4. End the practice of awarding business on price tag alone. The lowest priced goods are not always the highest quality; choose a supplier based on its record of improvement and then make a long-term commitment to it.

5. Improve constantly and forever the system of product and service. Improvement is not a one-time effort; management is responsible for leading the organization into the practice of continual improvement in quality and productivity.

6. Institute training and retraining. Workers need to know how to do their jobs correctly even if they need to learn new skills.

7. Institute leadership. Leadership is the job of management. Managers have the responsibility to discover the barriers that prevent staff from taking pride in what they do. The staff will know what those barriers are.

8. Drive out fear. People often fear reprisal if they "make waves" at work. Managers need to create an environment where workers can express concerns with confidence.

9. Break down barriers between staff areas. Managers should promote teamwork by helping staff in different areas/departments work together. Fostering interrelationships among departments encourages higher quality decision-making.

10. Eliminate slogans, exhortations, and targets for the workforce. Using slogans alone, without an investigation into the processes of the workplace, can be offensive to workers because they imply that a better job could be done. Managers need to learn real ways of motivating people in their organizations.

11. Eliminate numerical quotas. Quotas impede quality more than any other working condition; they leave no room for improvement. Workers need the flexibility to give customers the level of service they need.

12. Remove barriers to pride of workmanship. Give workers respect and feedback about how they are doing their jobs.

13. Institute a vigorous program of education and retraining. With continuous improvement, job descriptions will change. As a result, employees need to be educated and retrained so they will be successful at new job responsibilities.

14. Take action to accomplish the transformation. Management must work as a team to carry out the previous 13 steps.

Right now Indian companies have the edge in quality over their Chinese counterparts because the former is implementing TQM. I would hesitate on buying any Chinese car until its quality is proven.

Those cars look good on the outside, but can they actually run?

[Outofin]

What is "QQ" supposed to mean? Why is it everywhere, from internet chat to now cars?

It sounds like "CUTE! CUTE!". I believe the web messenger QQ and the car QQ have no business relations between them. It's the time that everyone wants to be cute.

It would be nice if Chinese automobile companies are implementing these. I still remember a little from what I learned in my Operations Management course during college.

You got these from your head? I'm amazed.

Right now Indian companies have the edge in quality over their Chinese counterparts because the former is implementing TQM. I would hesitate on buying any Chinese car until its quality is proven.

Those cars look good on the outside, but can they actually run?

The same goes here. I don't even dare to buy Korean cars.

Yes, they run. They do slice a piece of cake from the market. Not that bad, is it?

[bhchao]

You got these from your head? I'm amazed.

Oh no, I'm not that good and do not know all those steps by heart. But your post made me remember my former instructor speaking about TQM and the continuous effort to improve quality. He mentioned about how Edward Deming, the founder of TQM, was sent by the US government to post-war Japan to aid General MacArthur's reconstruction efforts. Deming's job was to teach manufacturers there how to implement quality control. In a total quality control environment, workers on an automobile assembly line were supposed to pull a cord from the ceiling whenever a defect was found. This puts a complete stop to everyone's activities until the defect is fixed. Catching defects early on rather than having to mass inspect a finished product saves money, increases efficiency, and improves the overall quality presented to the consumer.

Ironically, Japanese automobile companies took Deming's 14 TQM principles by heart and US automobile companies ignored it. As a result, US cars suffered significantly in quality compared to their Japanese counterparts. My instructor told a true story of how US companies treated defects. One aspect of TQM was zero defects, and Japanese auto companies aimed for zero defects while US companies aimed for maximum allowed defect percentages like 0.05 or 0.08. In one real-life scenario, a US company told its Japanese manufacturing plant to ship parts to the US with a maximum allowed defect level of 0.05. The Japanese were puzzled and thought their American counterparts wanted some parts to contain defects. They put some defects into a few parts, put the defected parts in a plastic bag, and told the Americans, "We do not know why you wanted us to put some defects into your parts, but per your request, we have put them in a separate plastic bag for your convenience."

[马杰]

I think a big difference between US quality and Japanese quality is that the Japanese consider quality exports to reflect on the nation as well as the company, so what is exported is "the best" they can do, which is darn good.

American quality seems to be based on a balancing act between what is good enough quality that still saves the company money each quarter.

As a result, we can see the difference between US cars and Japanese cars, planning to meet quarterly numbers to get higher profits (and higher bonuses for execs) versus a long term outlook at sustained quality and customer loyalty, which will lead to profits.

I think there may be a tax write off for having a percentage of bad output. GE was using this loophole to make money off of making bad equipment.

After a long period of difficulty the Indians and Chinese car makers may build cars well based on the same principle, especially they will still be in the process of developing as nations and have something to prove. But I think the learning curve will take longer because of the state of the cultures.

[gato]

It sounds like "CUTE! CUTE!". I believe the web messenger QQ and the car QQ have no business relations between them. It's the time that everyone wants to be cute.

I see. I'm not sure if that I will be translate well in the US market: "cute" ->"QQ"->"Chery QQ"?

"Chery" doesn't sound like a such a great name, either. Beside its sexual connotation, it's the name of a fruit. I can't think of any other car that's named after a fruit. When you pluck down ten, fifteen thousand dollars for something, you want it to sound substantial, impressive. People are going to laugh at you if you tell them that you drive a Chery.

How about "chariot"? There are plenty of horsey precedents. Or a latinate name, like "Encino" or "Tirazi"? They kind of just roll off the tongue.

[Outofin]

How about "chariot"? There are plenty of horsey precedents. Or a latinate name, like "Encino" or "Tirazi"?

Yes, anyone of these is better than Chery. (Though I don't understand what the latin names mean.) And, Chery is just one letter different from Chevy.

Many Chinese companies have problem with naming them in English. Like this one, they try to find a English word sounding like its original Chinese name Qi Rui (or Chee Ray). They end up with Chery, which makes their cars like toys. Another bad example is Lucky film. It sounds cheap to me but its Chinese name Lekai itself is good enough. Changhong? What's this? How do yuo expect me to pronouce this? Some brands are just 2 or 3 letters. LG, JVC, ING... We have TCL, SVA, ZTE... I dont favor them. When more companies go global, branding will become a more important topic.

[gato]

"Encino" and "Tirazi" are just two random names. I used them as examples because they're fairly easy to pronounce and remember. Plus, Italian/Spanish-sounding names are hot nowadays, maybe because of the Starbucks effect ("a double grande mocha frappacinno, please").

"Encino" is a city in California. It's Spanish, but I don't think it means anything. "Tirazi" is an Italian/Arabic surname I once heard.

It's important to do a review of the proposed to see if they mean anything unexpected in your targeted markets. Chevy sold its "Nova" in Mexico without realizing "no va" means "doesn't go/work" in Spanish. In this case, "cherry" is a common slang word for a part of the female anatomy. I'd think pretty hard before using it for a brand name.

There's no need to find a global name that sounds close the Chinese names. Lots of Chinese immigrant parents try to do this for their kids in the West. They often end up with silly results. The Taiwanese companies learned that lesson years ago, though they could probably do still better. They don't have any brands that really stand out. Foxconn is 鴻海. ASUS is 華碩.

[liuzhou]

Chevy sold its "Nova" in Mexico without realizing "no va" means "doesn't go/work" in Spanish

Sorry, but that is a myth. See http://www.snopes.com/business/misxlate/nova.asp

[gato]

Sorry, but that is a myth. See [url']http://www.snopes.com/business/misxlate/nova.asp[/url]

Oops.

The Nova's model name was never changed for the Spanish-speaking market.

I wonder why I never saw a Chevy Nova when I was in Mexico. All the Nova-like Chevys were simply called "Chevy."

[bhchao]

Here is an interesting article from the New York Times. http://www.nytimes.com/2005/04/22/business/worldbusiness/22export.html?

"Industrial heartlands from the Great Lakes region to Germany, look out - here comes the Chinese auto industry.

A senior DaimlerChrysler executive, Ruediger Grube, startled a roomful of journalists and his own aides at the Shanghai Auto Show on Thursday by disclosing that the company intended to export small cars from China to the United States. Daimler is already in talks with one of its Chinese joint-venture partners to build a factory for the exports, he said, and would like to work out the details and make a final decision on the project in the second half of the year.

But any cars from such a venture would be only part of what now seems to be shaping up as a broad assault on global automotive markets by Chinese companies and the Chinese divisions of multinational companies.

China's auto parts exports of everything from Delphi parking-brake components to Johnson Controls seat covers are already increasing to countries around the world. Sizable exports of fully assembled cars by Chinese-owned automakers like Hafei and Chery have already begun to developing nations in South America, Africa and the Middle East....

Until recently, high costs for auto parts, a scarcity of top-quality steel, a shortage of experienced engineers and a history of uneven quality had prevented China from using its inexpensive labor to gain any significant share of the world automotive market.

But all these problems, including quality, are gradually being fixed, even as Chinese industrial workers, at $2 an hour or less including benefits, remain among the lowest paid in the world.

"In terms of quality, the cars from China and the cars from Korea are the same," said J. M. Noh, the president of Beijing Hyundai and an automotive-quality expert who spent 15 years in Hyundai's quality-control departments in South Korea before coming to the company's joint venture in China....

In China, Honda has just finished building a factory in Guangzhou, near the southeast coast, for exports to Europe starting in late May or early June. More speculatively, the Chery Automobile Company has announced plans to begin shipping some cars to the United States in 2007, although it faces formidable difficulties in developing an American dealer network.

To be sure, China's auto sector still faces several obstacles to exports - most notably the uneven quality of many small parts and the lack of a dense infrastructure of reliable local suppliers of the many different screws, rods, bearings and other parts essential in assembling larger auto components.

Timothy R. Donovan, executive vice president and general counsel at Tenneco Automotive, said that quality problems had been a significant cost in Tenneco's manufacturing of shock absorbers, struts and mufflers, which are sold almost exclusively in the Chinese market.

Tenneco has to employ extra workers to sort and check incoming parts because defect rates are 15 to 20 percent higher than in advanced industrial nations, Mr. Donovan said. But the workers inevitably do not catch all the defects, which are found later in the production process or even on arrival at the assembly plant, he said.

The later a defect is found, the higher the cost of rebuilding or throwing out the entire part. To make matters worse, the same grades of steel often cost more in China than elsewhere because of high local demand, and many high-strength grades must be imported at even greater expense.

"Their supply base, from a cost standpoint and a quality standpoint, is not up to world-class standards," Mr. Donovan said, while adding that quality is now improving. "

So the greatest obstacle for Chinese auto makers gaining significant market share overseas is still quality. I think that should be the first priority for auto makers. Based on the article, defected parts are being caught much later on in the process rather than earlier. Another concern is the very low wages earned by Chinese auto workers, at $1.96 an hour. That should be another area of improvement to focus on, and would make it easier to motivate workers to produce better quality parts, even though quality is slowly improving.

[gato]

Here's something on the now collapsed Rover-Shanghai Auto deal.

http://www.detnews.com/2005/autosinsider/0504/21/1auto-157805.htm

Shanghai Auto rules out more foreign forays

By Ben Blanchard / Reuters

SHANGHAI - Top China car maker Shanghai Auto said on Thursday it was not looking to buy or forge ventures with any other overseas auto makers after the collapse this month of a proposed partnership with Britain's MG Rover.

State-owned Shanghai Automotive Industry Corp. has been at the forefront of a push by Chinese vehicle makers to expand their global reach. Last year, it bought a controlling stake in South Korea's Ssangyong Motor Co. for about $500 million.

Its ambitions hit a snag after it failed to seal an agreement on setting up a joint venture with Rover. The 100-year-old British car maker, which once made the iconic Mini and the Land Rover, collapsed and is now in administration.

European media have reported Shanghai Auto, the main partner of both Volkswagen A.G. and General Motors Corp. in China, was now setting its sights on Italy's Fiat.

Shanghai Auto already owns intellectual property rights to build some Rover models, including the BMW-developed Rover 75, but cannot market them under the Rover banner.

The spokeswoman added Shanghai Auto was still committed to developing its own brand and becoming an international player.

The company hopes to have a full range of own-brand vehicles on sale by 2007. It now mainly makes cars with its joint venture partners, GM and Volkswagen.

[39degN]

"Chery" doesn't sound like a such a great name, either. Beside its sexual connotation, it's the name of a fruit.

Yeah, another car maker Hafei has been joked by posters at car funs forums as "halfy".

So the greatest obstacle for Chinese auto makers gaining significant market share overseas is still quality.

Dont worry, Chinese companies promote double standards, it's different from Japanese's double standards, Chinese made good quality products for exporting, and poor ones for domestic market. What a shame.

However, the car makers in China are getting improved so much, several years ago, the design of cars are so poor, and now, with new design ideas and foreign talents involved, some of them look pretty cool, tho still not that mature. I'm confident enough to expect the Chinese car makers will be competitive internationally(wish it wouldnt be low end market) before 2015. In the far future, if a company is considered huge in China, it will be simultaneously a big player in international market, of course taking China not to get a major great depression as a premise.

[39degN]

here is a spoffish article by Reuters

Chery is showing its M14, a code name for a future product, at the Shanghai auto show.

AUTOSHOW-China's Chery will be next Toyota - U.S. importer

By Chang-Ran Kim, Asia auto correspondent

SHANGHAI, April 22 (Reuters) - It's the last thing the U.S. auto industry needs: another Toyota Motor Corp. (7203.T: Quote, Profile, Research)

But that's exactly what Malcolm Bricklin, the energetic 66-year-old founder and CEO of Visionary Vehicles, is predicting will become of China's Chery Automobile Co., whose cars he plans to begin selling in the United States in January 2007.

"We're going to make billions from this business," Bricklin said in an interview at Chery's booth at the bustling Shanghai auto show, which opened to the public on Friday.

"Chery is going to be the next Toyota," he told Reuters.

He intends to help the Chinese maker join the ranks of General Motors Corp (GM.N: Quote, Profile, Research) , Ford Motor Co. (F.N: Quote, Profile, Research) and Toyota to sell at least 2 million cars in the world's biggest auto market.

If Bricklin's calculations go to plan, the day when Chery emulates the world's second-largest and most profitable car maker could come as early as in several years.

The man best known for importing the cheap Yugo hatchback into the United States in the 1980s wants to sell 250,000 Chery cars in the first year through 250 dealerships nationwide.

By 2010, the Visionary/Chery partnership would have 18 models including two-door, four-door and sport-utility vehicles, to help sales to 1 million units. The line-up will not include the QQ minicar, which General Motor Corp. (GM.N: Quote, Profile, Research) claims is a copy of its Chevrolet Spark and for which it is suing Chery.

Click here to read more.

[39degN]

An article by Detroit news auto insider

Chinese SUV makers smother the Cherokee

By Michael Dunne / Autos Insider

SHANGHAI -- Beijing Jeep has been hit - and hurt - by competition that other global carmakers in China may soon confront: Intense, sustained, price-driven challenges from Chinese manufacturers.

"Competition in China has forced me to completely re-think twenty years of theory," said Dr. Michael Enright, a noted expert on competition, at a recent conference in Shanghai. "Chinese companies in a given industry can make no profits for five years in a row, then come back in the sixth for more of the same."

When Beijing Jeep launched the Cherokee 2500 in late 2002, there were high hopes of opening a new market segment for SUVs. The 2.5 liter, 4x2 Jeep was designed to attract young Chinese buyers for city cruising.

The price was set between $12,000 and $13,000 U.S. , an aggressive positioning designed to get buyers in the door. The plan worked. Sales of the 2500 reached 13,201 units in 2003, up from just 7,199 in 2002. Beijing Jeep in 2003 also earned profits for the first time since 1997.

But strong demand for affordable off-roaders soon drew the attention of three young Chinese pickup truck makers, based in Hebei Province, some 200 miles south of Beijing. The trio - Great Wall, Zhongxing and Shuanghuan - are state enterprise companies with degrees of private ownership. Great Wall at the end of 2003 listed some shares on overseas stock exchanges.

All three firms had already expanded their product line-up to include SUVs. But none was sure about volumes. T he early success of the Beijing Jeep 2500 gave evidence of demand, enough demand anyway to attract the Chinese makers.

Great Wall attacked first with the 4x2 Safe, a large SUV that looks like an older Land Cruiser. When the SAFE sticker price was revealed to be $9,800, executives at Beijing Jeep cringed. Within a few weeks, it was apparent that SAFE was stealing sales and market share. Zhongxing and Shuanghuan followed with their own offerings.

By the end of 2004, Cherokees sales limped to 10,801 units, down 25 percent from the year before. More importantly, profits also saw steep declines. Cherokee sales dropped to only 138 units in the first month of 2005.

Great Wall achieved sales of 27,000 Safes in 2004. Zhongxing and Shuanghuan also beat Cherokee totals. But Chinese SUV makers are suffering poor financial results too. Great Wall's stock price has dwindled from $22 a share in early 2004 to just $3 today.

Beijing Jeep's company's rough experience demonstrates the willingness among some Chinese firms to forego profits in exchange for more employment or increased market share. "It's like a lose-lose situation" is the way one dealer in Beijing put it to me. However bitter, these may the not-so-distant future terms for staying alive in China's auto industry.

here

A new model of CUV(Crossover Utility Vehicle) named Hover by Baoding based Great Wall Automobile looks pretty cool.(also be shown at the Shanghai auto show).