From small industry into becoming China's economic driving force

Without a doubt the Philippine auto industry is one of the most diverse in the region. The established automakers are here whether they hail from Japan, the United States, Germany, the UK, South Korea, France and even India. For now, however, we turn our gaze to one of the more interesting countries for cars to originate from: China.

It's already been quite a few years since Chinese cars first rolled onto the streets of Manila, much to the confusion of many in the general public, as the typical automobile made in the People's Republic of China resembled (to a great extent) many original Japanese or even German automobiles. Before we get ahead of ourselves, let’s take a look at the history of China’s automotive industry and find out how they've developed through the years.

During the height of the Cold War, cars in China were only meant for a small number of high-ranking officials in the Communist Party; which is essentially the same as the government since it is the only party. Most vehicles produced were trucks and the production of passenger cars was limited. It was in 1978 when the Chinese automotive industry came to life with the two pioneering automotive companies; the aptly named First Automotive Works (FAW) and the Shanghai Automobile Assembly plant, the latter now commonly known as Dongfeng Motor Corporation.

Foton Assembly plant in China

It was also during this year that the Chinese government implemented economic reforms which enabled the automotive industry to grow. New car manufacturers were established in China such as Chery, Geely and Brilliance Auto. The Chinese government also made significant steps to support the local automotive industry as well as to improve the build quality and bolster the production of cars. The automotive industry was later chosen as one of the Chinese national economy's “Pillar Industries.”

With a huge role in the nation’s economy, the Chinese automotive industry needed to expand as the domestic demand for vehicles grew as fast as their population. In doing so, the Chinese automotive industry opted for a variety of international joint ventures, mergers, acquisitions and cross share holdings. In a study conducted by the University of Edinburgh, joint ventures were used by the Chinese government to “achieve technology transfer and rapid growth.” The study claims that joint ventures were a strict government requirement if foreign companies want to operate in China. However, China prohibited automotive plants to be fully owned by foreign manufacturers. As a result, joint ventures became the backbones of the Chinese automotive industry.

Joint Venture contract signing between Volkswagen and FAW at the Great Hall of the People last November 20, 1990

The first joint venture was between Beijing Automotive Industry Co. (BAIC) and Chrysler in 1983. The second joint venture was established in 1985 involving the Shanghai Automotive Industry Company (SAIC) and Volkswagen AG. Then, other Chinese automakers followed the same strategy, therefore becoming a trend in the industry. However, foreign manufacturers worried about the protection of their intellectual property as JVs involve sharing resources and ideas among the parties involved, making copyright and patent infringement a common occurrence.

Left: Chery QQ / Right: Chevrolet Spark

One fitting example to this issue was between Chery and General Motors. In 2003, Chery released the QQ; a model that looked a lot like General Motors’ Chevrolet Spark (marketed as Daewoo Matiz in China). As a result, General Motors accused Chery of copying the design of the Daewoo Matiz, but Chery denied the accusation and said that QQ was developed independently with a little inspiration from the Daewoo Matiz, even though some body panels (i.e. doors) are interchangeable between the QQ and the Matiz.

The Baic A523T

To address the issue on intellectual property, Chinese automakers hired notable European designers to take on the role of conceptualizing design concepts and to make their cars more pleasing and at par with foreign competitors. In 2012, BAIC hired Leonardo Fioravanti, the designer of Ferrari Daytona. On the other hand, Brilliance China Automotive Holdings hired Dimitri Vicedomini of Pininfarina while Chery Automobile signed former Ford, General Motors and DaimlerChrysler designer James Hope.

The Geely GC9

Furthermore, former Volvo chief designer, Peter Horbury, joined Zhejiang Geely Holding Group as senior vice president in charge of design. The list goes on as General Motors designer Dan Darancou joined CH-Auto while Qoros Auto, a joint venture between Chery Automobile Co. and Israel Corp. hired former Mini chief designer Gert Hildebrand. With foreign designers taking the lead, Chinese cars are slowly having their own unique identity in terms of design.

Here in the Philippines, Chinese cars have been around for about seven years now, and it really started with Chery. The brand made a big bang in the industry with dealerships popping up left, right and center as Iseway (then distributor of Chery) hoped to make immediate progress and grab market share. They had the products and the pricing to make them truly attractive, but had problems bringing up the tail end: aftersales. Chery was plagued with problems with regards to parts supplies and registration; the latter reportedly caused by homologation papers submitted to the LTO written in Chinese.

The Foton Thunder

With this, Chinese automotive companies had a difficult time progressing to become major players in the country, but that didn't stop other brands from breaking into the local automotive industry such as Foton, BYD, FAW, JAC, Geely, Chery, Chana, Lifan, Haima, BAIC, among others. Of these brands, Foton appears to be the most viable and the most successful.

The BYD L3 

Today's Chinese cars seem to look better, but may still resemble the designs of other automotive manufacturers or even direct copies. Disregarding the copyright issue, there is plenty of room for improvement for Chinese automobiles particularly in the areas of performance, refinement, quality, engineering and more. One example would be the BYD L3 which looks like the previous generation Toyota Corolla Altis. The car itself drives alright, but there are clear areas that could use improvement.

As a whole, Chinese cars have gone a long way from being products of a small industry into becoming a huge part of China's economy thanks to support from their government. Internationally, Chinese cars will probably still be viewed with plenty of raised eyebrows, and that's normal. However if the major players in their industry apply their vast resources in funding, labor and materials to designing original, quality, home-grown automobiles, there's no telling what they can come up with in the years to come to compete on the world stage.