China Real Estate

Foreign investend auto part enterprises have accounted over 500 in China!

Decidedly this last time, the collaboration of the foreign sino JV seems very difficult. After the disappointments of the giant food Danone with Wahaha's partner, the American Visonary Vehicles paid of a treason of the automotive constructor Chery.

Profit shrinking is the fundamental reason. In the first quarter of 2005, profits of automotive industry decreased about 10 billion yuan year on year, down by 60%. Influenced by the stagnation of automotive assembly industry and the rising of steel price, it is the first time in the past ten years that the profit has declined.

China's auto part manufacturers can be divided into the following four types: the first is part plants affiliated to large automotive groups. Depending on state-owned parent groups, these plants are accustomed to China's traditional plan production mode and deviates from market orientation in price mechanism.

Together with the development of China's economy, relatively rapid growth has been maintained in China's auto part market in the recent years. Currently, there are about 5 000 large part enterprises in China, whereas 15% of these enterprises get a monthly profit of 50 million yuan. Part cost takes up over 70% of the total auto cost; therefore, the development of auto part industry directly influence the automotive industry development.

Foud's activities have won the company praise and admiration in all sectors of Chinese society. In 2005, the Ford Motor Company won the "Best Corporate Citizen Behavior Award" for the second time, in recognition of its active promotion of environmental protection. In 2006, the China Environmental Protection Foundation awarded Ford the "China Environmental Award Corporate Environmental Protection Green Oriental Award," making it the first foreign enterprise ever to have won it.

In addition to the advanced technologies and management methods that transnational corporations have brought to China, they have introduced many corporate concepts, most notably that of corporate accountability/responsibility. Since 2000, Ford Motor (China) Ltd. has awarded RMB 1 million (US $ 125 000) annually to those making outstanding contributions to environmental protection. The award, given with the aim of promoting active environmental protection, has been commended thoughtout Chinese society.

Geely has plenty to do on the comfort, safety and technology of its cars before American motorists will be allowed a test drive. But the company's export figures tell a hopeful story. Total exports of 12 000 cars in 2005 represents a fast jump on the 5 000 cars it sold abroad the previous year. At home, Geely accounts for a 4.7 percent and Mazda is on similar figures. Ford holds 2.5 percent.

Today Geely, the company Li Shufu founded 20 years ago, is getting ready to sell Americans a "high quality" family sedan for "less than ten thousand dollars." The number eight is lucky to the Chinese, hence 2008 will be Geely's breakout year on the American market, promises Li Shufu. America will get the fifth generation of Geely's CK sedan, says Li. He's hired John Harmer, a former US senator, as the CEO of the automaker's US subsidiary.