Chinese automobile exports keep low

According to a report appearing in the National Business Daily, China has imported a total of 954,800 automobiles from January to August, representing year-on-year growth of 28.8 percent. Meanwhile, China has exported 601,300 vehicles over the same time period, down six percent from the previous year.

Chinese automobile exports account for less than six percent than of the country's total sales. Wang Dazong, head of the United States-China Automobile Exchange Association, points out that automobile exports in developed economies account for approximately 40 percent of total sales in those markets.

Chen Lin, commercial counselor for the Ministry of Commerce's Department of Outward Investment and Economic Cooperation, echoed these sentiments in his speech at this year's Global Automotive Forum, where he stated that "sales in the Chinese automobile market are nearing 24 million vehicles, however, automobile exports are still less than one million vehicles."

In order to help build the image of Chinese automobiles overseas, manufacturers are looking to set up factories and invest capital overseas. Chongqing-based motorcycle and automobile manufacturer Lifan Motors signed an agreement with the government of Russia's Lipetsk Oblast to build a $300 million automobile factory in the area. An analyst on the Russian industry pointed out that Lifan is just one of many manufacturers eyeing the Russian market.

Mr. Lin believes that this is an important step for Chinese manufacturers to take. "Transforming from product exports to capital investment is an important change occurring in the Chinese automobile market," Mr. Chen stated. However, Mr. Chen admits that these investments are still in their preliminary stage.

Another factor Chinese manufacturers are dealing with is the low price of their exported vehicles. According to statistics, the average price for Chinese vehicles overseas is $6,535, while those of imported vehicles in China is $37,800. Analysts believe that the low profit margins mean that even if Chinese manufacturers are successful in opening new markets, it will be hard for them to provide the customer service and other operations needed to keep their brands attractive.

Mr. Chen recommends that manufacturers be sincere when making investments overseas and establish realistic development plans. These manufacturers, he recommends, need to show their competitive advantages to be able to realize their expansion goals.