once they have some revenue, they will start developing cars of their own.
...
And Vladmitsu, have you seen the rate China is developing? My dad is in the contruction field and he says that cities such as Shanghai are developing quicker than any other city he has seen, I've been to Shanghai only 3 times in my life, each about 1 year apart and everytime I visit, there seems to be taller skyscrapers and alot more development since my last visit.
andyhui01:
I'm not saying that chinese companies don't have the means or the expertise to produce advanced products, or to design advanced technology. what I'm saying is that in the automotive sector it's going to take a longer time to come to par with other international producers.
That's not because they can or can't design things or maybe can't afford to design things, it's because of economies of scale. To bring the price of a product down, an industry has to produce more items. Thus, to bring the costs and prices of the cars to a point of direct competition with other international companies, they'd have to produce quite a number of cars ... and of course, sell all of them. Now here's the problem: china may be one of the highest growing economies at the moment (and it is, as a business student I'm very aware of it), but the fact is that the average income for most people is not very big. So China's a very good and big market ... but it's most effective for low value items, like cellphones and dvd players as you said. But cars, that's another thing ... these are expensive items in terms of a person's expenses, not a business's expenses.
So if the automobile companies can't really count on the exports ... and with their current products the first wave doesn't look promising ... they have to count on their domestic sales to grow financially (in order to ultimately have enough money to spend on proper R&D). But how well would that go with the current personal incomes in China? ... I say they'd have to wait a while to evolve ... the economy is not there yet, it's growing at a pace that beats everything else, but it still needs time.
Plus, their business approach to firing up the automotive industry isn't that good. What they should do is what the americans have always done when they're falling behind in some department: if you don't have talent, import talent. Get foreign automotive engineers to design a few at first, sell those in large numbers, evolve from there. Good business means doing pretty much everything possible to make it work at it's most efficient pace. Why exactly they opted for the "let's keep to ourselves" version is beyond me ... many other chinese companies have gotten expertise from abroad before, in many cases very successfully. Getting someone with experience and already in the industry on their side is the way to go... at least in the beginning.
Now, what they did instead is copy designs and pretty much made the automotive industry mad at them ... now experienced designers might not even want to work for them anymore for any price from fear of being ripped off and robbed of their credit. That's a totally wrong approach to business.
That's why I foresee a slow growth ... they'll get there, but not as fast as you might think.
And what's with the "Vladmitsu" man ? is it a typo or you making fun of me? not cool.
