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Last Updated: Tuesday, 15 January 2008, 09:11 GMT
China carmakers eye US market
By Jorn Madslien
Business reporter, BBC News, Detroit auto show

Tanghua minicar at Detroit Auto Show
China is showing a striking range of vehicles
From a basement at the Detroit auto show, directly below the main show floor, several Chinese auto companies are displaying an impressive array of cars whilst eagerly eyeing the American market.

Cars made in China are set to go on sale in the US within months, industry observers predict.

"You might even see some early guys this year," says Angus MacKenzie, editor-in-chief, Motortrend.

The number of Chinese models on display at the show should be enough to spook the established automotive firms.

The weirdest looking of the lot is the egg shaped Tang Hua from Li Shi Guang Ming Automobile.

BYD Auto (short for Build Your Dreams), meanwhile, is showing a contemporary-looking convertible with a retractable hard top; the first by a Chinese car maker.

Yet it is Chamco, which is showing a couple of 4x4s, that is expected to enter the market first later this year.

"I think the consumers will embrace these sturdy cars," says Chamco chief William Pollack.

Slow progress

Do not, though, expect a massive influx just yet. The Chinese are not here merely to sell their wares, but also to learn.

Geely car launch at Detroit Auto Show
We will keep on studying it to see when car buyers want us to come
Shufu Li, chairman of Zhejiang Geely Holding Group

"We participate in this show not only to showcase our model line-ups, but more importantly to listen to the voice of our new customers in North America," says Li Jianxin, chairman of Changfeng Group, which is preparing to start selling cars in Europe in 2009.

"We're still learning about this market," agrees Shufu Li, chairman of Zhejiang Geely Holding Group.

"We will keep on studying it to see when car buyers want us to come," he tells BBC News, insisting that it is far from imminent.

"Maybe in five years, maybe in 10 years - but no longer than ten years."

Price and performance

Cars imported from China are likely to be priced far more aggressively than cars made by US, European or Japanese carmakers.

BYD car launch at Detroit Auto Show
Sporty models from China to compete with German imports

But it is not all about price, stresses Mr Li, insisting that Chinese carmakers are also developing technology of their own and they are hoping to compete by offering good service.

Besides, adds Mr MacKenzie, they are concerned about entering the market prematurely with products that are not good enough, the way the Koreans did a couple of decades ago, and the way the Japanese marques did before them.

"Stumbles early with product quality can be devastating," says Jack Nerad, an auto analyst with Kelley Blue Book.

Such concerns about reputation risks means some Chinese firms are loath to produce models on behalf of Western companies.

"We dropped the idea of making a car for Chrysler," says Mr Shufu.

"We don't think it would be good for us."

Home market

So clearly, China's carmakers have grand ambitions, and they are not in a desperate rush.

Changfeng press conference, Detroit Auto Show
China's plans generated intense media interest

BYD's chairman Wang Chuanfu wants to become the world's biggest carmaker by 2025, according to China Automotive Review.

But much of that growth is likely to come from China's rapidly expanding home market.

"China has a huge consumer base," says Changfeng's Mr Li.

China is already the world's second largest market for car sales, having overtaken Japan last year.

And the rush of Western companies to invest in China is a sign that they also believe in the huge growth potential of the Chinese market.

Made in America

But whereas some Chinese car companies will simply be working flat out to serve Chinese buyers, others will still aim for global reach.

They also believe that global competition will help them improve quality at home.

Some Chinese auto firms have even started shifting production out of their home country.

Geely is already building cars in Indonesia and Russia, Mr Shufu says, while Changfeng's Mr Li says it might even set up an assembly plant in the US.

"I believe Changfeng must set our mind globally," he says.

And if that sounds incredible, consider this: Kia's labour costs are lower in its factory in Slovakia, within the European Union, than they are back in Korea.

There is every chance a similar development takes place in China, according to one industry official.

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