Familiar theme, unfamiliar perspective. China's relentless push up
the value chain creates big waves around the world, not least in South
Africa. Local newspaper Business Day says cars are now foremost amongst China's higher value exports and this is likely to have a significant impact on the trade balance between China and SA.

“No
longer will textile and garments be the (contentious) focus of the
relationship but Chinese cars will be in the trade spotlight.”

As
every carmaker knows, China is currently the world's third largest
market, behind the US and Japan. By 2008, 4.2m cars will be sold. The
market is growing even faster than China's gross domestic product at an
annual rate of over 14%.

The rise of China as an exporter is a
more recent phenomenon and owes much to an overcrowded domestic market.
China has 20 automotive manufacturers. South Africa has eight. To
counter rising overcapacity, the government is encouraging its domestic
players to export.

In 2004, China exported less than 10,000
cars, a very small figure, mostly to the Middle East. Nevertheless,
exports to the US could reach 250,000 cars in 2007 and 1m by 2012.
Similar sales forecasts are made for the European Union.

Chinese manufacturers are also buying established international brands, such as MG Rover and Ssangyong, toindigo.jpg “fast track” their international expansion.

If Chinese vehicles are exported to South Africa, Business Day
says consumers will be offered an affordable entry-level car competing
primarily with the likes of India's Tata — responsible for the Indigo,
shown right — and obsolete models still sold in the local marketplace.

Beijing hopes to gain a global share of 10% of the automotive market within the coming decade.

“Regardless of whether it reaches this target, China is set to shake up the global automotive market.”

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