Chinese companies strive to charm American market

Chinese companies strive to charm American market
Updated 09 February 2014

Chinese companies strive to charm American market

Chinese companies strive to charm American market

Chinese cars companies are well known in emerging markets as far apart as Latin America and Russia; however, they are yet to make their presence felt in the American market.
There was no significant Chinese presence and no Chinese cars on display at this year’s Detroit Auto Show.
Quietly, though, Chinese companies are studying the American market and tracing steps taken by Asian companies before them, especially by Hyundai.
Michigan is currently home to more than 100 Chinese firms, and since 2005, the area has benefitted from more than $1 billion of Chinese investment.
America welcomes Chinese investment but will American consumers ever buy Chinese cars?
Chinese companies plan to be in the American market sooner rather than later: BYD, a Chinese car maker in which Warren Buffett has invested, recently said it had plans to bring four models to the US by the end of 2015.
But for any Chinese carmaker looking to expand in the US, there will be many challenges, such as passing US safety and regulatory standards, gaining brand recognition and setting up dealer networks in the US.
In preparation for accessing the American market, two of the so-called "big four" Chinese carmakers — SAIC and Changan — quietly expanded their facilities in Detroit.
Changan recently opened a research and development facility near Detroit, to help the firm improve its capability to design appealing vehicles.
The facility — one of the firm's four overseas outposts - focuses on chassis design, particularly for middle to high-end passenger cars and sport utility vehicles (SUVs).
Just this year, the office has doubled in size to 30 employees, and Changan says it wants that staff to double again by 2015.
It would do the Chinese companies good to study the example set up by Hyundai in the American market, which the company entered in the 1980s.
American consultant and author Greg Anderson said it was tough for Hyundai at the beginning as American consumers could not even pronounce its name.
To gain entry to the American market, Hyundai was forced to discount its cars and offer a 100,000-mile warranty to reassure jittery consumers.
The strategy worked. Hyundai now has 4.7 per cent of the American car market and plans to reach five per cent in the near future.
Most observers predict that within five years the Chinese companies would make a run for the American market.
They are now paving the way to set up shop and try to charm American consumers.