Chinese cars - they may take a while, but they're coming

They may only have been making decent cars for a few years now, but China's car producers are eager to build on the success of…

They may only have been making decent cars for a few years now, but China's car producers are eager to build on the success of their domestic market by putting Geely, Chery and SAIC cars on the streets of Dublin, Detroit and Dar Es-salaam.

Big players such as GM and Ford are worried about China's export potential. They've been there before - with Japan and Korea.

Powerful economic growth is fuelling confidence among China's car-makers who are gearing up to design the kind of cars that they believe will sell abroad - and they can do it cheaper than anyone.

China has more than 100 car-makers and new cars can be bought for less than €3,000. However, the car firms have been trailing the market for a few decades now, relying on joint ventures with foreign companies to produce a pretty dull array of cars. That could be all about to change.

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China's biggest passenger car-maker, Shanghai Auto (SAIC) has global ambitions to become a world player with its own brand, not just a joint venture partner with VW and GM.

Its target is to produce 50,000 cars under its own brands by 2007. A spokeswoman at the Shanghai car show last week said that the company is still examining listing its shares abroad. "We are very clear in our objective - it's internationalisation, to be a global competitor," she said. "We will build our brand and gain R&D capability."

China's domestic car companies were certainly among the busiest people at the show, unveiling new plans for their own-branded projects, internationalisation, marketing schemes. The buzz word was "export".

As well as the giant SAIC, there was a lot of buzz at the show about Chery, a company accused by GM of copying one of its cars, the Chevrolet Spark. The charge is strenuously denied by Chery.

The man who plans to sell the Chery in the US is Malcolm Bricklin, the entrepreneur who introduced the Yugo to America in the 1980s, which didn't exactly send GM running for cover.

However, he also gave America the Subaru, which was a success. He's now looking for applicants for a network of 250 dealerships.

Bricklin plans to sell 250,000 Cherys in the first year starting 2007. He plans to undercut competing US-made models by 30 per cent.

Within a year and a half of starting to import, his Visionary Vehicles group plans to introduce five models, including an SUV and a "crossover," or hybrid car-SUV.

Geely, a former motorcycle producer, is based in the eastern private enterprise hothouse of Zhejiang province. It's run by Li Shufu, one of China's richest people. Geely wants to sell two-thirds of its cars overseas once everything comes together. Its mid-term target is 650,000 cars a year by 2007. The company has sold more than 300,000 low-cost cars since it started making own-brand cars in 1998 - over 100,000 were sold last year.

However, cheap and cheerful Chinese cars will not hit the market overnight. There are a number of hurdles the Chinese must scale.

They have to deal with the idea that everyone thinks their cars are no good - a refrain familiar to the Lada and Yugo marketing executives of yore. It's also something Nissan had to deal with - remember how people initially laughed the Datsun off?

China is still trailing in terms of innovation in the industry and lacks the production and design technology to keep new products rolling out in a significant way. It also needs to tighten up on intellectual property.

Despite cheap labour, making cars is not as cheap as you might expect in China. Logistics can be poor and, with a lack of technology to produce many parts, the producers are forced to rely on expensive imported parts.

Buicks and VWs are generally more expensive in China than in the US or Germany, once duties are factored in.

There are still questions about ability to satisfy US safety and emission standards, but increasingly it looks like a matter of not if, but when, Chinese cars hit the streets of Europe and America.