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Peter Bijvelds, pictured beside a Landwind in Erp, Netherlands, says there is a
lot of car in the mainland SUV for the money that you pay.PETER
GOODMAN, WASHINGTON POST
The dealers call impatiently from France, Italy and Moldova. They have heard
that a Chinese-made automobile, the first to land in Europe, is a third cheaper
than anything on the market. When will the ship arrive?
With each call, Peter Bijvelds swells with vindication. On a continent defined
by BMW, Renault and Mercedes, he has bet that he can interest Europeans in the
Landwind, a sports-utility vehicle made in China at a factory the government
owns. The first 200 reached Antwerp, Belgium, a week ago. He has already sold
the lot, plus 100 more.
''You cannot compare it to a VW or a BMW,'' said Bijvelds, president of LWMC,
Landwind's sole European distributor. ''But, for the money, you get a hell of a
lot of car.''
The Landwind is among the first in a wave of Chinese-made cars reaching Europe
this summer, part of China's quest for overseas markets.
CNOOC's bid to take over Unocal is the clearest sign of this ''go out''
strategy, but the migration of its own companies overseas is largely about
bringing goods to new consumers: Mainland factories, long focused on churning
out low-priced products, are seeking to become recognizable brands.
China's global reach has already reshaped the home appliances and electronics
sectors, with Lenovo buying IBM's PC unit, TCL snapping up France's Thomson and
rights to its RCA logo, and Haier pressing to buy Maytag.
Now, the same trend is emerging in the auto industry. Last year, firms exported
only 100,000 vehicles, mainly to Southeast Asia, Africa and the Middle East,
said Frost & Sullivan China researchers in Beijing. The European foray is
the first test of the world's richest markets. Last month, Honda loaded a ship
near Guangzhou with cars for Germany and Italy. Brilliance China Automotive
Holdings plans to sell sedans in Germany this fall. Chery Automobile plans US
sales by 2007.
``I just look at the Chinese and I see how fast they are moving on the
international scene,'' said automotive consultant Maryann Keller. ``They're
taking the Japanese plan for national development and compressing the time.''
These developments are occurring as US carmakers struggle. An hour of
assembly-line labor costs about US$55 (HK$429) an hour in Detroit, US$30 in
Germany and less than US$5 in Poland. In China, wages are about US$1.50 an
hour.
Some say China's carmakers will overcome doubts that once plagued automakers in
Japan and South Korea.
But the move overseas is driven by weakness more than strength. A flood of
credit has nurtured too many factories, resulting in gluts. This is
particularly pronounced in the auto industry.
China is home to more than 100 firms with a collective capacity for about six
million cars a year. Yet sales last year totaled only 2.3 million. An ongoing
US$25 billion expansion is expected to exacerbate the glut, nearly doubling
existing capacity by 2007. Meanwhile, sales growth has slowed from 76 percent
in 2003 - fueled by easy credit terms that have produced many bad loans - to 15
percent last year. Prices have fallen between 5 and 14 percent every year since
2000, according to Frost & Sullivan.
Landwind is made by Jiangling Motors, set up in Nanchang in 1963 to repair
trucks and buses. Recently, it has profited from the passenger car boom.
The Landwind was born like many Chinese products: Jiangling purchased all the
SUV models it could, took them apart and studied them. In 2001, it built a
factory, aided by tax breaks and cheap land from the local government. The next
year, it made 200 SUVs: some front-wheel drive and some four-wheel. The
following year, Landwind sold 2,800. This year's target is 21,000.
But Landwind has been hurt by the glut, chopping the price of its most popular
vehicle to US$20,000 from US$22,500. By late 2003, Jiangling marketing director
Liang Bo was looking for export possibilities.
``We have to be stable and show very good performance in Europe, and then we
will go to the United States,'' he said. ``We want to be a global brand. It
might take a long time, but we're starting now.'' But how? How would it meet
European emissions standards?
In came Bijvelds, 27, who runs his own import-export firm, bringing Nissans to
Holland from Italy.
In April 2004, he visited the factory in Nanchang, a gritty city in Jiangxi
province. He liked what he saw, a tidy factory of 1,000 workers that can make
50,000 vehicles a year. It has Japanese robotics, British assembly equipment
and a German paint system.
When he drove the SUV, he was impressed. For Europeans wanting to tow a boat or
seeking a roomy vehicle, it could challenge the Korean Hyundai Tucson and Kia
Sorrento.
Bijvelds shipped two sample models to Europe and hired engineers to work on
making them emissions compliant. Three months and US$1.8 million later, he had
the fix: the addition of about US$350 worth of gear.
In March, he became sole distributor in the European Union, plus Switzerland. He
has since ordered 600 vehicles.
The retail base price is US$20,400. That includes 64 percent in Dutch taxes. The
closest competitors, Hyundai and Kia, sell for at least US$33,000.
``It's a nice-looking car, a lot of space and a really good price,'' said Peter
Karel, 58, buying a 2.8-liter diesel model for about US$25,000 - less than half
that of a Nissan he had considered.
``When Nissan first came to Europe, people said, `Well, it's a Japanese car and
we don't know what that is,' but it has worked out well,'' he said. ``If it's a
good ride, then fine.'' WASHINGTON POST
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