Here come Chinese cars (Detroit alert!)

Business Week ^ | 09 june 2005 | Business week

[voletti]

Korean cars gave Detroit fits in the late '90s by undercutting domestic small cars on price and outdoing them on quality -- then moving up into other segments. Autos from China could provide more lower-cost competition for the Big Three at a time when GM and Ford Motor Co. (F ) are already reeling. That could cost them, along with Chrysler (DCX ), more market share and prod them to move more of their own production offshore.

How fast can the Chinese gear up? The way things are going, it won't take 20 years to match Toyota Motor Corp. (TM ) quality levels, as it did for the Koreans. And with Chinese auto assembly workers earning $2 an hour -- vs. $22 in Korea and nearly $60 in the U.S. for wages and benefits -- it may not be long before China has the wherewithal to start selling competitively priced cars overseas. "The Chinese are probably five or six years away from being able to sell a competent low-end car," says auto analyst Maryann N. Keller.

The Chinese government is putting its heft behind the export push -- subsidizing the export drive of such local players as Chery and giving the likes of Honda big incentives. Beijing also is nudging foreign auto makers to divert investment into export production so local partners can become familiar with managing foreign-exchange risk and global supply chains. It's also pushing domestic companies such as Chery, Geely Auto, Brilliance China Automotive (CBA ), and Shanghai Automotive Industry to develop their own brands overseas.

[Nowhere Man]

Ah, I love that song from "Mike and the Mechanics," apparently I'm not the only one who thinks it will apply in the future. Other such songs of this theme I like come from Pink Floyd, such as "The Machine," "Another Brick in the Wall" and "Money." I also fear we are headed to a world depicted in Kubrik's "Clockwork Orange." Well, gotta run for now.

[mad_as_he$$]

I am sorry you lost your job. I do think this is funny ONLY because I lived in the Bay Area of San Francisco for 20 years. Asian drivers a a running jok,e now you give them a Chinese car it is funny, sorry.

I do agree with you about whoring jobs out. However, it was inevitable - unfortunately there is no going back now.

[A. Pole]

They are about half the price of the Japanese stuff, but I'd buy a 5 year old Japanese make before I'd buy one of the new Chinese models.

Japanese used to produce shoddy stuff too. Chinese are in no way inferior, they only got into the game later.

[A. Pole]

Well off American workers have already rejected socialism. When jobs don't pay living wages or provide health care etc, socialism will prevail.

People are weak, they tend to think is better to have food on the table and medical care even of lower quality than not.

Freetraders are very short sighted.

[A. Pole]

[Flying Circus:]The difference in wages should be purely a function of the difference in productivity and quality, if the third world worker can deliver the same quality and productivity then they wages should be equal. The American worker should only earn twenty times the wage if a third world worker if they can be twenty times as productive.

The main error of the freetraders is that they see the human labor as a mere commodity. They see the wages as a cost, as a necessary EVIL. The profit for the owners they see as a gain, as GOOD.

This is the foundation and declaration of the class warfare: One class of human beings is depicted as a burden almost like parasites the other more fortunate as the embodiment of merit and virtue.

The efforts of the working men should be seen as something noble, as creative activity of their minds, bodies and souls. They should not be forced into subsistence level by the merciless competition.

In this aspect slavery was superior to the free market fundamentalism. Slave owners could not HIDE (before others and before their own consciences) the fact that they BENEFIT from the labor of slaves, and that they OWE them moral debts as to fellow human beings. When slaves were sick or infirm owners had to provide for them, they were obliged to make sure that they do not go hungry and that they get enough rest.

The free market racket disguises the relationships which are inter PERSONAL under the cover of pseudo-scientific abstractions. It changes people into mere THINGS.

[John Filson]

The efforts of the working men should be seen as something noble, as creative activity of their minds, bodies and souls.

BRAVO!

WE hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the Pursuit of Happiness -- That to secure these Rights, Governments are instituted among Men, deriving their just Powers from the Consent of the Governed, that whenever any Form of Government becomes destructive of these Ends, it is the Right of the People to alter or to abolish it

[planekT]

...Japanese used to produce shoddy stuff too. Chinese are in no way inferior, they only got into the game later....

Good point. Fender guitars lower line (Squier) are made in China now (as well as in Indonesia). They are a very good instrument for what you pay for them. With Fender's designs and the quality control they have managed to implement, the Chinese now produce a guitar at a third of the price of the American Fenders, and imo there is not much more quality for the price difference in the American versions.

A Squier is a good option as a backup guitar or for tunes where you need an alternate tuning. I don't think the old Squier's (American made) were as good as the imports are now.

The first thing to go on a guitar is the frets, and replacing them costs around $300.00. I've seen badly worn frets on a U.S. made Fender within three years of regular use. So by the time you do your first fret replacement you'll have $1000.00 dollars in that U.S. Strat or Tele.

That kind of money will buy you 5 of the imports. If you're cost conscious, that's something to think about.

[staytrue]

They were never suited for Communism.

Who is suited for communism ? I can think of no where it has succeeded.

[staytrue]

The govt. likes to deficit spend. Deficit spending is popular because the public gets more services for less taxes and politicians like being popular. The problem with deficit spending is that you get inflation UNLESS you import cheap stuff that keeps inflation (and interest rates) down.

So the way it works is like this.

Politicians want to be popular. They spend money on "free" govt. services and keep taxes low. They need to keep inflation in check. They allow cheap imports to do that.

[jwh_Denver]

"I used to feel guilty buying a Japanese car, not anymore."

Back in the early 80's I was doing a business out of my car and I knew that I needed to get a truck. So whenever I saw someone with a light truck I stopped to ask the owner how the truck was. Toyoto's got the highest marks. 2 owners said that their trucks had over 200k miles on them with no troubles. Mazda didn't get the accolades the Toyoto's did but I knew it would be better the Ford S10.

Bought a Mazda (took up payments) from a customer and that truck was fantastic. Never let me down.

I'm not into cars as much as I used to be but my wife and I now will only buy either a Honda or a Toyoto. I wish Detroit made cars with the same quality.

[iconoclast]

Most union members in the U.S. run the Federal government. Do your homework.

Not to mention the the state govts, the counties, the cities, the schools, etc. ad nauseum.

[andy58-in-nh]

My Dear Herr Marx:

I was rather astonished to discover, upon reading you latest missive, that the rumors of your death were greatly exaggerated. I am impressed that you remain as spry as ever, even at the age of 187. Will the miracles of modern medicine never cease?

Just a few minor points before I go on my way back to my business endeavors.

1. Capitalists do not view labor as evil, nor do they view it as a commodity. It is work - human activity that adds value by creating products and services for people.

2. As you note, profit is good. It is the reward one gets for taking risk.

3. People who offer their services in a free market are not slaves or servants - they are traders. Work - and you are paid. You do not need to work for me or anyone in a free society. If you choose, you can learn how to create things that other people desire. If you choose, you may risk your capital by creating a business and hiring others to work for you in order to create value that did not exist before. If you make a profit - you have earned it.

4. The honest efforts of working people is always noble because it reflects the desire to earn things rather than demand them by reason of need. One person's need is not a claim on another's rights. There is a name for the activity that results from such a belief: it is called Theft.

5. Every advance in the human condition since the beginning of time is due to three things: the rule of law, the right of property, and the free exercise of the human mind. These have been guaranteed in practice only by constitutional republics, democratic institutions, and by competition.

6. People who take risks that others do not, and work harder than others do, and make better choices and plan more effectively than other people are entitled to the fruits of their labors. To involuntarily deprive them of such, (as is most often accomplished in this world by threat of force) is to enslave them. The purpose of such thievery matters not: the essential nature of one's action is not changed or ennobled by motive.

I certainly trust your living conditions have improved marginally since I last heard from you in the 1880's, and please send my regards to Herr Engels (assuming that the old man is still with us).

Regards,
Andy

[Redcloak]

The main error of the Socialists is that they fail to see that labor is a commodity. They refuse to allow workers and employers to arrive a fair price for that commodity. Instead, they insist upon seeing their own version of "fairness" set the price.

[ex-snook]

"Every advance in the human condition since the beginning of time is due to three things: the rule of law, the right of property, and the free exercise of the human mind."

You might add being willing to fight for their country against foreign threats to that human condition and expect reproprocity as citizens.

[iconoclast]

I don't want to pay 30 grand for a 4 cylinder GM/Ford sedan that will be in the junk yard 5 years after I drive it off the lot, and neither do most consumers. Don't blame the consumer.

I've read this kind of hate-American workers and products crap for years.

I'm retired, wife's cut back on her hours. We own 1999 vans, a Honda and a Pontiac. We arm wrestle over who gets to drive the Pontiac.

[andy58-in-nh]

You might add being willing to fight for their country against foreign threats to that human condition and expect reproprocity as citizens.

That's part of what it means to live under a constituional republic - we elect a government whose primary role is protect us from external threats to life and liberty. The process of evaluating just what constitutes such a threat is carried out in the arena of politics (as ugly as that process may sometimes be) and the resultant decisions are executed by those we choose to represent us. Does it always work? Well, as Winston Churchill famously said, democracy is the worst form of government, save all others.

[iconoclast]

GM announced they were firing 25,000 peeps over the next few years. I think they are building auto manufacturing plants in China. Are they gonna hire 25,000 Chinese people to work at these plants?

Nope, all robotic .... part metal, part flesh and blood.

[Iscool]

The global economy will not-in the long run help American workers.

It took me a while to figure it out but I think I have...Everyone is shooting for the 'American Dream'...The American Dream means different things to different people...

From what I've seen, Republicans (not to be confused with Conservatives) strive to live the good life...Massive wealth is the American Dream to Republicans...At least the Neo-Republican types...

And you've seen many examples wandering thru these threads...Play the stock market...Doesn't matter whose stock as long as it pays good...Go into business for yourself...Make as much profit as you can, any way you can...And if you can hire illegal aliens, all the better...It's the money...

There's nothing as important as the money...It transcends borders, laws, sovereignty, charity, etc...

I am learning there are tons of people that will, and do welcome any Chinese product if they will benefit financially even if it destroys the fabric of this great country...Obviously, most all Republicans in our gov't share this American Dream...

To a Constitution loving, patriotic, America firster, this doesn't make any sense...And like they say, if it doesn't make any sense, there's a buck in it...

[John Filson]

These faux capitalists want government subsidies in the form of currency exchange rates, a steady stream of undemanding laborers, and the privilege of exporting manufacturing, services, and reimporting the results at significant profits. Then they have the nerve to cry "communist!" the minute we free market supporters complain.

[Iscool]

How come the foreign auto makers can build here cost effectively and the US auto makers can't?

I believe you are mistaken...A Honda or Toyota will cost more than a Ford or Chevy of comparable body style, etc...

GM and Ford are union, the Japanese companies of course, are not...Figure that one out...