09-06-2003 03:20									#1
	World Bank:China to take over many industries including the Japanese auto industry. Put an end to popups!

quote: Chinese competition will hurt Japan car firms: World Bank SINGAPORE (Kyodo) Japan's automobile industry will shrink in the long run due to fierce competition from China, the World Bank said in a report released Thursday. "Our analysis projects a contraction of automobile production in Japan and the newly industrializing economies," the World Bank said in its report "East Asia Integrates." The 264-page report released by the World Bank's Singapore office says China's current plan to restructure its auto industry following its 2001 accession to the World Trade Organization is expected to make it a more efficient assembler of vehicles and eventually an exporter, leading to a contraction in production in other newly industrializing economies of the region as well as Japan. "This prospect could provoke a major reorganization of the industry across the region," it says. In addition, the report says China will also make inroads into Japan's position as a key center of production-sharing operations in East Asia. It notes that although Japan will maintain its position as a hub, originating about one-third of all regional exports of components for assembly, "China is finding niches," with its exports of parts and components rising by almost $20 billion from 1996 to 2001. Another sector to be hard hit is the textile and apparel industry. It says the garment industries in Japan, Taiwan, South Korea and Hong Kong "will be squeezed," especially in the North America and European Union markets. The report says the abolition of import quotas on Chinese textiles and apparel in key markets in 2005 will make China a formidable competitor. It says the growth of these countries' textile exports to India and Southeast Asia, including to Vietnam and the Philippines, are also expected to drop as their garment industries are also hit by competition from China in third markets. However, the report also says that a major impact of China's entry into the WTO is that China will become a more attractive location for Japanese investments, mainly because "some of the concerns about China's weak legal and administrative environment for foreign investment are likely to be addressed in line with WTO accession." It says that overall, the industrialized and newly industrialized economies in East Asia will benefit from China's accession to the WTO. The report does not take into account the expected impact of the SARS epidemic. "We are currently viewing SARS as a temporary shock whose impact has been more on the demand side and therefore affected service, tourism, retail," said Homi Kharas, the World Bank's chief economist. "But it's much too early to think whether SARS has affected supply-side and investment decisions. "Right now, that impact would be quite small compared with the demand-side impact." The Japan Times: June 7, 2003

I don't always agree with the World Bank, but they are focusing on a real issue. Chinese industry is putting downward pressure on prices. It's going to get worse. The trade deficit between the US and China may tripple in the next decade.

	09-06-2003 03:42									#2
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Good news

Cheaper, better cars can be the only result .

	09-06-2003 03:57									#3
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quote: Originally posted by Imran Siddiqui Good news Cheaper, better cars can be the only result .

Cheaper is starting to mean lower employment. It's called deflation. The prices that are falling in Japan are Chinese imports.

	09-06-2003 05:19									#4
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I just don't see the Chinese economy producing a Sony or GE level competetor in the next 10-20 years. Their auto industry is really a mess with foreign brands eatting up the best parts of the market with a bunch of low capitalization, low tech, mostly partially state owned domestic competetors who produce old copies of foreign designed cars. True, Korea's automakers & Malaysia's Proton started off in a similar situation but Proton make junk and will be bankrupt soon and Korea never let any foreign makers into the market period and as soon as they did then the domestic industry crashed with only one domestic automaker surviving independently (Hyundai). China currently has something like 100 different automakers most of them owned by various national and state government agencies while the largest privately owned automaker, China Brilliance, is sinking fast under an Enron style fraud case.

	09-06-2003 08:22									#5
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they are producing really cheap tv's and such. The thing is they are pieces of sh!t. you get what you pay for.

I expect the autos will be the same. Cheap as hell, but will fall apart in 5 years or less.

	09-06-2003 08:28									#6
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quote: Cheaper is starting to mean lower employment.

That is what happens when you can't compete. As long as Japanese companies can stay competitive they won't lose much.

It is what we in the US had to go through with cheap Japanese imports... kinda ironic .

	09-06-2003 08:51									#7
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Why don't we just submit to our future Chinese overlords already?

	09-06-2003 09:03									#8
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It's funny to remember back to the late 1980's to early 1990's when everyone had this anti-Japanese histaria and believed Japanese corporations were going to take over the world. They said the west was dead and the future belonged to Japan. Then Japan tanked and the US under went the greatest economic expansion in the history of the world.

I suspect China is another one who isn't really as big a competetor that everyone thinks it will be. It is often hard to turn low wages into successful design and marketing. Much depends on management, market knowledge, and organization which are all weak spots for the Chinese.

Don't get me wrong; they'll go far but world domination isn't in the cards atleast for the next 50 years and a lot can happen in a half century. Remember that in 1910 people were saying the Russian economy was set to take over the world then the communists killed that promise.

	09-06-2003 10:06									#9
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quote: Originally posted by chegitz guevara Why don't we just submit to our future Chinese overlords already?

I'm not saying the Chinese are going to take over the world. I'm just saying that they are exporting deflation, and it could get much worse.

	09-06-2003 10:18									#10
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Chinese auto exports will be nothing compared to the Chinese domestic market. The amount of change I've seen on the streets of Shanghai in 2.5 years is startling (latest to appear: Citroen Picassos, very cool!).

The rapidly growing middle class here is intensely interested in auto ownership for many reasons (not the least of which is status). This is driving a whole host of related industries, everything from manufacturing & maintenance to hotels and tourism.

The Chinese auto industry appears destined to grow into an immense juggernaut. I wouldn't be at all surprised to see high-quality Chinese cars on the streets of the US in fifteen years.

	09-06-2003 10:25									#11
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quote: and it could get much worse.

That certainly depends on your point of view. There's going to be an awful lot of people benefitting from this. But since they live in another country, I guess their welfare isn't as salient.

	09-06-2003 10:28									#12
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What about the next 5-10 years? 15 years is a long time.

	09-06-2003 10:33									#13
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quote: Originally posted by mindseye But since they live in another country, I guess their welfare isn't as salient.

Not really.

	09-06-2003 10:33									#14
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china is the reason why many korean companies, and less so japanese, german, dutch, and american companies are going upmarket with the electronics, as well as numerous other things.

until recently, korean companies often made knockoffs that were cheaper and easier to mass produce than the japanese sonys, but with lower quality; as soon as china started to look like it would do the same, it exerted such a pressure on korea that korean companies swiftly went upmarket, dropping the knockoff lines and investing fortunes in r&d.
that's why samsung isn't making b&w tvs anymore (when japan did that to the us, rca, et al stopped making b&w. then korea did it to japan, now it's china to korea).

it'll happen as more and more countries start exporting lower end goods, pushing everyone else further up or killing them in the process.

it might end up that in the future, owning an american--or even japanese-- car will be like how owning a british or german car is in the us.

	09-06-2003 10:37									#15
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Manufactured goods are starting to run into the gluts that raw materials have always run into. Once you have a competitive market producers will always over produce. That's why prices are falling so much.

	09-06-2003 12:28									#16
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bah

You can't predict things like this.

Every country has to find a niche

I didn't even know China HAD an auto industry

And secondly, where are they going to put all those cars if a Chinese dometic market became a reality.

	09-06-2003 13:53									#17
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just to reiterate in case no one heard me

chinese products are of inferior quality. So they will find a niche market. Japan will be in the middle. They will be the balance of quality and low price. Korea is slightly lower on that scale, and then you will have china.

	09-06-2003 13:54									#18
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dissident, people usually buy on the basis of price.

	09-06-2003 14:05									#19
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no, I buy american cars. They aren't as cheap. I usually stick with Dodge, but I may get a Ford for my next vehicle.

	09-06-2003 14:39									#20
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big ticket items are often bought on quality. other items are often bought on the basis of price.

electronics have gotten so cheap that people by them by price more often than not, these days, while cares are still as expensive as ever, so often they're bought on quality or appearance.

i myself would probably buy a used asian car, simply because i don't plan on driving much at all, and don't want to shell out a lot for insurance, gas, or price.

	09-06-2003 18:56									#21
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In the auto industry you get huge economies of scale so volume is important. China will surely attempt to lower their costs by producing in volume. Then quality surely won't matter, because everyone elses cars will be too expensive.

	09-06-2003 19:00									#22
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quote: Originally posted by Kidicious Then quality surely won't matter,

Only to idiots that don't care how they spend thier money.

	09-06-2003 19:02									#23
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quote: Originally posted by mindseye Chinese auto exports will be nothing compared to the Chinese domestic market. The amount of change I've seen on the streets of Shanghai in 2.5 years is startling (latest to appear: Citroen Picassos, very cool!).

No! Cars will ruin China! Mark my words! The traffic is bad enough!

	09-06-2003 19:18									#24
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quote: Originally posted by Imran Siddiqui quote: Cheaper is starting to mean lower employment. That is what happens when you can't compete. As long as Japanese companies can stay competitive they won't lose much. It is what we in the US had to go through with cheap Japanese imports... kinda ironic .

I remember the ripples of fear that went through American auto manufacturers when Mexico began making cars. Later, the same thing happened with the introduction of the Yugo. China will have to prove that it can build quality products before most people will by their "cheaper" cars.

	09-06-2003 19:25									#25
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quote: What about the next 5-10 years? 15 years is a long time.

As Oerdin pointed out, the best cars built in China today are all foreign marks (Citroen, Renault, Buick, Ford, Jeep, Audi, BMW, MBZ, VW, Toyota, Lexus, etc). I think it will take a few years for domestic Chinese cars to catch up. In the meantime, I think Chinese trucks (at least in some categories) are already pretty good. Some buses as well.

This cycle has ocurred in other industries where the middle class has already created a huge demand: refrigerators, heater/air conditioners, washing machines, PCs, microwave ovens, large televisions (I don't think you can buy a new B&W set here). In these areas, the quality of domestic Chinese products is often quite good.

quote: I didn't even know China HAD an auto industry

The number of brands is surprisingly high (I don't recall the exact number), but they tend to be smaller, regional brands. China is much more regionalized than most westerners realize. People in different parts of the country speak different languages, eat different foods, have different customs, have somewhat different styles of architecture, and ... drive different cars. It depends on what brands are built in your area.

For instance, in Shanghai you will see droves of Volkswagons and Buicks. In Wenzhou, in the next province to the south, the majority of cars are Renaults and Citroens.

	09-06-2003 19:32									#26
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quote: No! Cars will ruin China! Mark my words! The traffic is bad enough!

I was interviewed on television recently, the topic was what foreigners thought of Shanghai's transportation system. I urged the city leaders to take measures to discourage the use of private cars downtown, e.g. keep expanding the excellent mass-transit sytems, more buses (especially LPG ones), not build parking lots downtown. I suggested that they learn from the mistakes made in the US (thinking of my beloved San Francisco).

	09-06-2003 19:43									#27
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I pictured the cities already developed, but I guess they have to modernize them still, right?

	09-06-2003 23:05									#28
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quote: Originally posted by mindseye quote: No! Cars will ruin China! Mark my words! The traffic is bad enough! I was interviewed on television recently, the topic was what foreigners thought of Shanghai's transportation system. I urged the city leaders to take measures to discourage the use of private cars downtown, e.g. keep expanding the excellent mass-transit sytems, more buses (especially LPG ones), not build parking lots downtown. I suggested that they learn from the mistakes made in the US (thinking of my beloved San Francisco).

One of the things I loved about living in China was not owning a car. Cars can be such a hassle, and in China, you really don't need one.

	09-06-2003 23:41									#29
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quote: I wouldn't be at all surprised to see high-quality Chinese cars on the streets of the US in fifteen years.

I can't wait . It can only make American, Japanese, German, etc. car makers better. A Chinese outlook might lead to some fun new technology in our cars! More competition will be better .

	09-06-2003 23:52									#30
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quote: I wouldn't be at all surprised to see high-quality Chinese cars on the streets of the US in fifteen years.

I can't wait . It can only make American, Japanese, German, etc. car makers better. A Chinese outlook might lead to some fun new technology in our cars! More competition will be better .