July 4, 2006

China’s “Capitlist Roaders” go global – “Bandit, this is Snowman, what’s your twenty?”

Filed under: Automotive — Administrator @ 3:43 pm

Over the weekend, the New York Times weekend magazine ran an article written by Ted Conover titled “Capitalist Roaders“. (You’ll need to register online with the New York Times but it is free and worth the extra two minutes it takes to fill in your digits.)

Capitalist Roaders is not only a “docu-article” detailing Ted’s seven day “self-driving tour” with Beijing Target Auto Club but is also a glimpse at how an American might view China’s expanding/growing domestic automotive culture.

Some insights are accurate, for example:

But of course the story is not only about construction and production; car culture is taking root in China, and in many ways it looks like ours. City drivers, stuck in ever-growing jams, listen to traffic radio. They buy auto magazines with titles like The King of Cars, AutoStyle, China Auto Pictorial, Friends of Cars, Whaam (“The Car — The Street — The Travel — The Racing”). Two dozen titles now compete for space in kiosks. The McDonald’s Corporation said last month that it expects half of its new outlets in China to be drive-throughs. Whole zones of major cities, like the Asian Games Village area in Beijing, have been given over to car lots and showrooms.

Some insights are totally (sorry) off the mark, such as:

The astronomic growth of China’s car-manufacturing industry will soon hit home for Americans and Europeans as dirt-cheap Chinese automobiles start showing up for sale here over the next two or three years.

Raise your hand if you think US consumers will settle for dirt-cheap, unattractive, old-skool combustion engine Chinese made cars when they can have low cost, fuel efficient, stylish Japanese products instead? The answer is right in front of your face – U.S. sales fell for all three big American automakers in June, led by a 26 percent drop at General Motors Corp. (GM), while Japan’s Toyota Motor Corp. surged – this is on the back of US manufacturers virtually giving cars away for free.

But our hero, Ted, ultimately concludes his opus on a glorious note, accurately stating:

And, in heavy traffic at the end of a tiring trip, it was easy to worry that the Chinese, rather than charting an innovative, alternate route into the automotive era, were on their way down a road that looks a little too familiar.

I wonder how long it’s gonna take until China’s government bans all pure combustion engines (i.e. non-hybrid) from the market (for domestic sale)? I’d bet my little red book we’ll start seeing hints of new regulations within the next five years.

So what does this all mean, if anything?

Initially, I faded Ted’s article as yet another “I went to China and learned this” story. But something funny happened – over the past three days, I started getting a boat load of email from all these Americans, all well traveled, college educated, and completely ignorant to investing in China (i.e. no exposure to China) – sparking a thought, what does it mean that these guys are asking me whether or not they should consider investing in China’s automotive sector when these same guys never thought of lifting a figure to buy Baidu or Sina?

And moreover, what does it say about the interests of the notoriously fickle, often overly demanding NYT readers that seduced the magazine’s editor(s) to run an article about China’s car culture? Maybe it’s a desire to see fuzzy dice and CB radios make a comeback (…but I hope not).

Maybe we’re seeing the early signs of the next big big investment play out of China…and then again, maybe I’m just projecting…

No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a comment

Copyright © 2004 - 2012 | Ymer Venture Capital Asia (Hong Kong) Ltd.