China's exports to emerging markets like Algeria, Brazil, Iran,
Russia, Saudi Arabia and South Africa are surging as its own auto
market slows and its automakers keep pouring billions into new
factories.
For more than a decade, automakers around the world have been
nervously awaiting the day when China would start exporting sizable
numbers of cars to the West.
Now it seems they were worried about the wrong threat.
China is shipping just a few thousand cars a year to the European
Union and virtually none to the United States. But China's exports
to emerging markets are surging as its own auto market slows and its
automakers keep pouring billions into new factories. Roads in
countries like Algeria, Brazil, Iran, Russia, Saudi Arabia and South
Africa are increasingly dotted with cars from manufacturers like
Geely, Great Wall Motors and Chery.
Less affluent buyers from Santiago to Baghdad are starting to buy
cheap Chinese cars as alternatives to used cars, motorcycles and low-
end models sold by multinationals. Chinese car exports were up 21
percent in the first five months of this year and up 43 percent in
May from the level of a year ago.
The buyers are men and women like Jessica Gonzalez, a 43-year-
old agronomist in Santiago. After owning several used cars, she
wanted her next car to be new, but the more established models from
Japanese, European and U.S. companies were out of her price range.
Although her mechanic criticized the quality of Chinese cars, she
ended up choosing a Chery S21, because it was roomy and well
equipped.
"The price factor is fairly decisive," Ms. Gonzalez said. "I paid
$5,500 new and full. Toyota with similar features costs around
$12,000."
Chinese automakers said they were preparing for further expansion
in exports to developing countries.
"They're easy for us to operate in," said Steven Wang, the deputy
general manager for exports at Great Wall Motors. "In Europe, they
have lots of laws for new entrants, and in Europe and the United
States, customers like to keep familiar brands."
The Chinese companies pose a potential challenge for the overseas
divisions of companies like General Motors, Ford, Toyota, Volkswagen
and Fiat, all of which are looking to emerging markets for growth
and watching the Chinese contenders with varying levels of concern.
Annual auto sales in developing countries other than China have
risen 45 percent since 2005, to 21.3 million cars and light trucks
last year, according to LMC Automotive, a global data company.
Including China, emerging markets passed industrialized countries in
2010 for the first time in the number of cars and light trucks sold.
Since 2005, auto sales in industrialized countries have fallen
17.4 percent, to 36.2 million cars and light trucks last year.
The market in industrialized countries was still worth more than
those in emerging markets, because sticker prices tend to be
considerably higher. But with so much growth in developing
countries, "you have to be incredibly aware of the domestic brands"
emerging in China, said Michael Manley, the head of Chrysler's
international operations.
Western automakers have been buying a wide range of Chinese cars
and then having engineers dismantle them to study the quality and
likely cost of major components.
"We have a very thorough benchmarking process" to assess Chinese
