About a leopard and its spots

The Chinese auto-manufacturing market may look intimidating, but it's actually alluring for machine-vision companies.

The Chinese auto-manufacturing market may look intimidating, but it's actually alluring for machine-vision companies.

by Andy Wilson

Speak to anyone about countries with fast-growing economies and China will always be one of the first mentioned. According toAsia Times Online (www.atimes.com), China's economy grew nearly 10% last year, although many overseas investment banks estimate actual growth rate at 2%–3% higher. In the first quarter of 2004, China's economy grew 9.7%, and the Ministry of Commerce said first-half growth would exceed 9%.

With a population of more than 1 billion people, China's economy has plenty of room to grow. Currently, only 10 million of its population drive automobiles—a fact that has not gone overlooked by the world's largest automobile manufacturers. Indeed, more than 90% of China's passenger-car market is controlled by brands such as Volkswagen, GM, Honda, and Citroën.

Geely Group (Taizhou, China; www.geely.com) is not one of them. In 2002, the company built and shipped close to 46,000 automobiles, a 97% increase in the number shipped in 2001. Unfortunately, the company has a long way to go before it can compete in the world market. Its "Beauty Leopard" (that's the name of the car!) shown at this year's Beijing car show is billed as an urban sports car whose "infinite vital force and the excellent driving feeling heats up your endless enthusiasm in your blood vessels."

What's perhaps less amusing is that cars from both Geely and Great Wall Motors (Baoding, China; www.gwm.com.cn), which manufactures the Sing SUV, are already heading to the USA and Europe. Last month, China Motors of Texas said it would import automobiles made by Geely and Great Wall Motors. According to theHouston Chronicle, the company will be headed by David Shelburg, a man who has already visited the Great Wall and Geely factories.

While this may at first sound like the death knell of American, European. and Japanese automobile manufacturing, it does not paint a complete picture. Among those speaking at the Beijing car show was General Motors' affiliate Shanghai GM president Chen Hong. "Although it may appear that cars are being manufactured in China," he said, "the fact is they are only being assembled. There are clearly many technological differences between China and advanced automaker nations, the most conspicuous being in the area of car parts. If the Chinese auto industry as a whole is to succeed in the future, it must first succeed in this field."

Chi Hung Kwan, consulting fellow at the Research Institute of Economy Trade and Industry (Tokyo, Japan; www.rieti. go.jp), agrees. "China has adopted a policy of swapping its domestic market for foreign technology," he says, "and the auto industry is a model of this." Foreign firms have completely occupied China's market, but the country has yet to gain key technology. He says, "In the future, if foreign firms are allowed 100% ownership, the significance of Chinese firms will be further thrown into doubt. While the future of foreign automakers in China is not exactly rosy, prospects for Chinese firms could be even worse. China's domestic car manufacturers may disappear before China becomes the top automobile producer."

This trend may pose short-term problems for Chinese automakers, but it is very good news for industrial-automation and machine-vision vendors. Working through American, European, and Japanese auto manufacturers, OEM suppliers of automation equipment can leverage already established relationships and rapidly penetrate the Chinese market.

While no domestic automobile manufacturing may exist in China in the next few years, American, European, and Japanese companies can boost their share of this market while improving automobile quality through the installation of efficient computerized auto-manufacturing and inspection processes. If you decide to purchase a Beauty Leopard, you can rest assured that it was inspected with North American, European, or Japanese machine-vision equipment.

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