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Last Updated: Wednesday, 28 March 2007, 12:32 GMT 13:32 UK
China seeks new leap forward with MG
By Zhuang Chen
BBC Chinese Service

Onlookers at the China MG launch
Nanjing Automobile hopes to take on the world with the revived MG

In its first attempt at vehicle production in 1947, Nanjing Automobile Company (NAC) made a light truck called Yuejin, or "Leap Forward".

Sixty years on, NAC has rolled out its first MG sports car and saloon.

China's media is hailing the Nanjing MG as the mark of a new era for the Chinese car industry.

It is the first international brand to be owned by a Chinese carmaker.

Yet for NAC, how to cash in on such a "leap forward" remains a question.

'New era'

The number of car owners in China is rising by 10 million a year.

We will make the best MG cars ever
Zhang Xin, Nanjing MG

The burgeoning China market has witnessed fierce competition among foreign and local companies. As a result, many lower-end models have been squeezed out of the market.

Priced between 180,000 and 400,000 yuan (11,800 and 26,300), the Nanjing MG7 saloon and MG-TF sports car target China's fast-growing and wealthy elite.

"In terms of brand and technology, our MG-TF sports car is unparalleled in the Chinese market," Nanjing MG general manager Zhang Xin told the BBC. "It will usher in a new era for sports cars in China."

But even at the higher end of the market, Nanjing MG faces a challenge from China's largest auto maker, Shanghai Auto (SAIC).

In July 2005, SAIC bought the rights to MG Rover group's Rover 75 and Rover 25 cars.

In February, SAIC launched a carbon copy of the Rover 75 saloon - the Roewe - a name which in Chinese even sounds like Rover.

The price tag is around 15,000 to 18,000, pitting it right against Nanjing MG.

Both Nanjing MG and SAIC emphasise the British pedigree of their products.

The MG turns out to be "modern gentleman" in the Nanjing version, while Roewe's slogans are "classic British car" and "gentleman racer".

After their bidding clash in 2005, MG Rover's two Chinese buyers are on the way for a market showdown.

'Third way'

A security guard at the China MG launch
Nanjing is trading on MG's pedigree

NAC's new MG and its production at Longbridge in the UK heralds new thinking in China's efforts to shine on the international stage.

During the annual session of the National People's Congress in Beijing earlier this month, NAC chairman Wang Haoliang proposed a "third way" for the Chinese car industry.

"After years of forming joint ventures and promoting self-owned brands, a third development model is emerging," said Mr Wang. "Through capital management, we'll be able to acquire world-renowned brands and key technologies and eventually naturalise them."

He said the collapse of MG Rover was due to "British conservatism", after failing to shift production to developing countries.

But Nanjing MG's Zhang Xin expresses optimism about his company's prospects.

"Although the Chinese car market is developing rapidly, it lacks a truly British-style saloon. Our MG cars will cater for highly educated consumers with taste," says Mr Zhang.

He is also confident that Nanjing MG will perform well on the world market.

"First, it's a world renowned brand of British origin. Secondly, our product is cost-effective and finally, Chinese workers are very efficient."

Despite high expectations on the Chinese domestic market, Mr Zhang says the priority is the British and European market.

"British people like their own brands, and people in other European countries and the Commonwealth know MG's performance well," he says.

"Nanjing MG will provide them with the same or better driving experience. We will make the best MG cars ever."

Financial concerns

However, to make Mr Zhang's leap forward into Europe and elsewhere a reality, NAC will have to succeed where the former MG Rover failed.

MG logo at a dealership
Nanjing Automobile bought the MG brand in July 2005

As yet, China's car models are little-known overseas.

Many industry analysts have cast doubt on NAC's ability in reviving MG.

NAC also faces the daunting task of reviving the MG supply chain and dealership across Europe.

Moreover, there are financial concerns.

According to a report by the Shanghai Securities News, NAC's Mr Wang submitted a proposal to China's annual parliamentary session, seeking official help to secure loans of up to 3 billion yuan.

This sparks speculation about NAC's production capabilities in the next several years.

As Mr Zhang himself admits, "every step forward has been very hard", since the purchase of MG and the biggest challenge for NAC is their lack of understanding of international laws and regulations.

As the MGs roll off the production line, NAC will "have to make extra efforts" to succeed, he says.


SEE ALSO
Chinese plant rolls out first MG
27 Mar 07 |  Business
In pictures: Chinese MG cars
27 Mar 07 |  In Pictures
MG Rover's Chinese reincarnation
27 Mar 07 |  West Midlands
Rover sold to Nanjing Automobile
23 Jul 05 |  Business

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