Page last updated at 11:45 GMT, Saturday, 10 July 2010 12:45 UK

China's enigmatic car industry

By Michael Robinson
Beijing

While many Western economies are in trouble and preparing for an age of austerity, China is talking about a new prosperity, with its carmakers in particular poised to challenge the established global giants.

Cars stuck in traffic in Beijing
The cars filling Beijing's roads are increasingly made in China

As the traffic zipped by on a 10-lane highway running through the centre of Beijing, just a couple of blocks from Tiananmen Square, I tried car-spotting with Rick Hull - the founder of Australia's biggest independent chain of car distributors.

Rick has been coming to China for years, watching its motor industry mushroom.

And it certainly has. Last year China overtook Japan as the world's biggest carmaker. This year it overtook America as the biggest car market.

I am no motoring journalist, but even I could recognise some of the American, European, Korean and Japanese models zooming by.

But what about all those models from the 20 or so new carmakers who have sprung up all over China in the past decade?

Rick studied the traffic carefully, then shook his head, threw his hands into the air and laughed.

"It's, it's impossible," he shouted above the traffic roar. "There are so many of them. It's just too confusing."

It was certainly a relief to find even a craggy veteran of the motor business baffled because the day before, at the press conference for Beijing's 2010 auto show (now also, of course, the biggest in the world), I had certainly been confused.

Question of nationality

The auto show at first was familiar enough.

Music and flashing lights blasting at me from all directions and a multitude of glamorous, sometimes bored-looking young women showing off a seemingly endless array of cars. But then the puzzles started.

BYD car at Beijing's auto show
BYD has caught the attention of Western investors

At a stand for the famous Swedish brand Volvo, I wanted to know about the Chinese carmaker - just 12 years in the business - which had just bought the Volvo name from Ford.

A helpful press officer came over. "So this car used to be Swedish," I asked him. "And then it was American - owned by Ford. And now it's Chinese-owned. So what is it now - Swedish or American or Chinese?"

The press man looked uncomfortable. Would I like to see inside the cars, he asked me. Or perhaps some brochures?

Clearly he had no ready answer. Not surprisingly, since Volvos are anyway already manufactured in China.

But what about all those new Chinese brands?

On a stand showing a range of family saloons, I met a Spanish-born designer for the French maker Renault holding his chin and eyeing them up.

"The back is like a Renault Megane Cabrio," he told me. "And the front - well, it's like a Mercedes CLS."

"So is it a Chinese car - or a copy," I asked him, mindful of the endless complaints about Chinese music and software piracy.

He shrugged his shoulders. "We all copy one another," he said with a smile. "That's why so many modern cars look the same. The real issue is quality and style."

He climbed into the driving seat and scrutinised the interior. "The plastic could be a bit better," he said, pointing to a near-invisible blemish. And the new-car smell is not quite right."

Apparently, that is really important.

"But give them five years and they'll be a strong competitor for Renault. I've no doubt of that."

Outward vision

At the luxury end of the market - among the admirers of a shiny, red, Ferrari-like Chinese sports car, with a scorpion emblem instead of the famous prancing horse, I came across Hideichi Misono, the former chief designer for Toyota.

For chief designer for Toyota, Hideichi Misono
Hideichi Misono finds Chinese students have a different perspective on design

I expected him to be amused by all the copying. But instead I found him worried about the future of the Japanese motor industry.

Why? Because he says the Japanese design students he now teaches are all inward-looking, focused on Japan, while the students he teaches in China want to design for the world.

"If you watch their eyes while I talk to them," he told me, "you'd be deeply impressed. They look outwards and want to be world-level car designers. And they'll catch up very quickly."

In technology, one Chinese company is already ahead. With triumphant music, billowing smoke and a troupe of flamboyant dancers in white quasi-military uniforms, BYD launched its latest car, powered by a battery design so revolutionary that Warren Buffet, America's most famous investor, has put $250m (£170m) into the company.

I suddenly realised that, in the auto show, I was looking at a microcosm of China's high-speed industrial revolution, its quick-step march from next-to-nothing to manufacturing for the world.

But there was one last puzzle, why so few of the Chinese-branded cars are now exported.

Back at the highway by Tiananmen Square, Rick Hall had an explanation for that.

"There's so much demand for cars inside China now," he told me, "the new makers don't need to export.

"But just you wait until they decide to, which won't be long. Then you're going to see some real competition".

In Australia that process has already begun because last year Rick started importing Chinese-branded vehicles for the first time. And, he says, his customers love them.

Michael Robinson and his new series, China: Shaking the World starts Monday, 12 July 2010 on the BBC World Service

How to listen to: From our own Correspondent

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