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China Looking 20 Years Ahead
By JD Bluefield | May 15, 2008
Chinese Autos: Even as car sales slow to a crawl here in America, business is still booming in China. According to Bloomberg, sales are up 14%:
Passenger car sales rose 11 percent last month, also the slowest pace since July, 2006. Sales of commercial vehicles including buses and trucks rose 21 percent to 317,700 units in April.
Car sales rose 22 percent last year, helped by the nation’s benchmark stock index, the CSI 300, more than doubling. At least three-fifths of Chinese stock-market investors use their profits to buy new cars, the automakers’ group said last year.
General Motors Corp., Toyota Motor Corp. and other overseas carmakers are banking on China and other emerging markets to offset slower demand in the U.S., the world’s largest auto market.
GM, the biggest overseas automaker in China, expects to boost annual sales in the country by about half over the next three years to 500,000 vehicles, it said last month.
Toyota, the world’s second-largest automaker, aims to raise China sales 36 percent to 640,000 vehicles in the year ending March 2009, it said last week.
Honda Motor Co., Japan’s second-biggest automaker, said today sales in China rose 13 percent in April and 24 percent for the first four months.
How can this help you Engineer your investments? Japan spent 40 years making its way to meet American quality and performance in the auto industry. Korea spent half that time by watching the Japanese. China will only do it faster learning from both. The proliferation of information and technology will allow China to market a competitive product within the next 5 years. We’ve all seen the video of Chinese cars crumbling like a deck of cards in crash tests, but these were never meant for the heavy restriction American market. The most vulnerable will be the smaller Japanese companies like Suzuki, Mazda, Daihatsu (owned by Toyota), Mitsubishi and Isuzu.
The smart moved would have been what India did. I mean its a shame, Tata beat them to the punch and bought Jaguar and Land Rover. The could have skipped the basement seats at the auto shows.
Chinese Planes: Many may have heard that China had a major showing at the last several auto shows, but what about airshows? This may happen soon, as according to Businessweek, China has just invested over a billion dollars to create the Commercial Aircraft Corp. of China (CACC). Below is a quick quote of what you need to know.
The company’s mandate: assemble jets at home to reduce the nation’s reliance on Western-made planes. There’s no shortage of demand. The aviation industry conservatively predicts the country will buy 2,800 new airplanes worth $329 billion over the next 20 years to keep up with China’s scorching air travel growth
How can this help you Engineer your investments? If you own stock in Boeing, I’d keep a close eye on it. It dropped slightly on the news, but has since risen up. China does not yet have the technology to compete with Boeing on a global level, YET. But for now, local Chinese passenger flight will be the fuel to start further R&D for the larger and more profitably international market.
With all our money now sitting in their vaults, a surplus of $111 billion and $1.68 trillion in foreign exchange reserves, according to MarketWatch, and the dollar leaking value like a sieve, I wonder if they’d try to just buy or buy stake in a US air manufacturer. I would think the Government would block the move, just because of the military/defense applications, but you never know.
One Response to “China Looking 20 Years Ahead”
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May 16th, 2008 at 6:34 pm
China is no friend to the USA. China wants all the technologies it can get. Then they will treat us just as USSR does. Investment in China is very risky. They are not a stable democracy.