Foreign companies will succeed only if their business furthers the goals of Chinese policy, which is to build an independent Chinese auto industry, said Dr. Wess Tao.
"The Chinese don't want to have auto colonies; they want to build their own auto industry," said Tao, general manager of CBC (USA) Inc., a Taiwanese company with manufacturing plants in China and warehouses in the United States. "For the well-being of the country, the Chinese cannot yield and sacrifice this industry."
Tao will discuss why auto suppliers will fare better in the long run than original equipment manufacturers at a GlobalAutoIndustry.com half-day seminar and luncheon for auto supplier executives, "Entry Strategies into China," Sept. 30 at the Troy Marriott.
The Chinese government is pursuing a policy it successfully implemented in other industries, including telecommunications, which now is a wholly Chinese-owned industry after many years of heavy capital investment by foreign companies.
"Suppliers should heed the central government's threat to implement a policy that 50 percent of all vehicles must be domestically made by 2007, down to the technology that goes into the vehicles," cautioned Denton Dance, senior manager of Asia-Pacific Forecasting with the Troy, Mich., office of J.D. Power and Associates, a global marketing information firm.
"That doesn't mean vehicles that are produced and built by a joint venture with a Chinese company, but made by a Chinese company in a Chinese plant with Chinese technology," said Dance, who will also discuss why China's regional differences present obstacles for suppliers.
Critical to making a good acquisition is the understanding that traditional Western accounting methods of evaluating a company are useless in China, said David Watkins, president of Omnex, an Ann Arbor, Mich., based global consultant, training and software development company specializing in business quality and environmental management systems.
Two sets of books are common, for example -- one for the government and one for internal purposes, Watkins said. He was responsible for setting up a manufacturer's representative office in Shanghai, converting it to a wholly foreign owned enterprise and establishing two joint ventures in Shanghai and Tianjin.
"You have to look at how the day-to-day operations function, the actual flow of materials, rates of waste, delay and product cycle time," Watkins said. "That has to be done by people involved in Chinese management and manufacturing from the inside, who know where the bodies are buried. You're dancing on a razor with this kind of stuff."
The program will feature eight presentations from experts and companies familiar with the challenges in the Chinese market. This powerful lineup of speakers will address critical issues for auto suppliers considering entering China, expected to be the world's hottest automotive market for the next 20 years.
Other GlobalAutoIndustry.com experts featured include Saturn Electronics and Engineering Inc., Butzel Long P.C., Armstrong Teasdale L.L.P, Parsons Brinckerhoff International and Ford Motor Co.
The seminar will cover:
- China Before WTO: Lessons from Experience
- What Changes WTO Should Bring
- Why Do You Need to Be in China?
- Chinese Market Outlook
- Protecting Intellectual Property and Technology
- Why Traditional Due Diligence is So Difficult in China
- Challenges of Building an Automotive Facility in China
- Strategies for Sourcing in China
To see the seminar agenda and register visit www.GlobalAutoIndustry.com.
About GlobalAutoIndustry.com
GlobalAutoIndustry.com connects the worldwide auto supplier industry with the resources to effectively do business globally. Through the web site, www.GlobalAutoIndustry.com, auto supplier executives can find insight, solutions and strategies focused on doing business in the world's top automotive markets.
Monthly eJournals provide targeted information and insight on doing business in foreign markets and GlobalAutoIndustry.com Solutions provide effective international answers to suppliers' global business and operational needs.
Parent company, HCI Group Ltd., is based in Troy, Mich., with European headquarters in Amsterdam, the Netherlands.
For more information contact Managing Editor Marsha Stopa at (248) 526-3312 or MStopa@GlobalAutoIndustry.com.