Chinese Cars In Detroit, Part 2

Let me ask you this. A lot of your clothes and shoes might have been made in places like Bangladesh, Vietnam, and Thailand. And they’re pretty good right? But who designed them, selected the materials, and set up the supply chain to deliver finished product stateside?

It’s only a matter of time before Chinese made cars are brought here. Aren’t many (most?) of the products you and I use made in China? They’re the world’s factory. A lot of the stuff made there is really, really good. Computers for example.

They contain a lot of parts from companies based in other countries. Perhaps they contain a fair amount of parts made in other countries. But your Chinese made or assembled laptop is probably well designed and manufactured, or you wouldn’t have bought it.

In time I don’t believe it will be any different for a car, another complex machine assembled from a large number of components. It could come from anywhere. The Chinese automobile industry is going to progress faster than the Japanese and Koreans did. The trail was already blazed. The only thing that might rival their pace is that of the Indians.

There is no doubt we are going to see some massive change. And I think that pace of change has been and is being accelerated by the world’s automobile manufacturers and suppliers setting up shop in China and combining their skills with the manufacturing capabilities that exist there.

If I were to guess which Chinese made vehicles will succeed in the US market first, I’m going to place my bet on a non-Chinese company that already successfully sells vehicles in the US, and has strong ties to a Chinese partner. That’s the firm that has the least steep learning curve.

Chinese Cars In Detroit, Part 1

Here are some observations I made about Chinese cars I saw at the Detroit auto show last month. Everyone says they have a long way to go and I agree.

If you could buy a Chinese car in the US right now you would have only one reason to do so: The short term price advantage. The car would probably fall apart and end up costing far more in the long run than buying a quality used car. I see 3 major weaknesses: Design, quality, and marketing.

Chinese Design

They don’t get it – yet. The serious cars are complete knock-offs of models from other manufacturers based in other countries. BYD (Build Your Dreams) for example, helped themselves to a Toyota Corolla design, with some previous generation Camry rearend thrown into the mix.

What happens when you cross a Mercedes SL with a Volkswagen Eos?

And here’s a faithful reproduction of the last generation Honda Accord, accentuated with a subtle BMW 7-series Bangle-Butt:

It’s readily apparent that intellectual property is a serious issue. Without respecting IP it makes it hard for an industry or a society to innovate because there’s less incentive to do so. You create something new, everyone copies you and undercuts you while you have higher costs because you had to invest in R&D. This is why counterfeit and pirated goods are so harmful to the economy (more info here). They need to differentiate themselves from others by building unique products the market wants.

Chinese Quality

They don’t get it – yet. Paint, fit and finish, and trim are all below par. A two foot long piece of plastic trim promptly fell off the trunklid of one car I touched. There is also apparently one main door handle supplier in China, or they all copy from one another. Note the handle that won’t retract. It makes you wonder how well their engines and transmissions are made.

Chinese Marketing

They don’t get it – yet. The brochures I read were full of spelling and grammatical mistakes. Not only that, the use of language often didn’t make sense. Something is definitely lost in the translation. If they want to succeed here, they need to get native PR and marketing people to get the message out. Here’s another example:

Serial or item number as vehicle name isn't going to be memorable for the right reasons.

Despite all these shortcomings, I think Chinese made cars are going to be here sooner rather than later. They will eventually get it. To be continued….