Industry Overview

Automotive
China is now the second largest automotive market in the world, trailing only the United States and Europe. In 2008, its estimated that ten million new motor vehicles in China will be sold. As of November 2007, China had already produced 8.8 million vehicles, a 33.33% rise over 2006’s figures. There are approximately 100 vehicle OEMs, with 40 producing passenger vehicles. Major domestic firms include the China First Automobile Group Corp. (FAW), Dongfeng Motor Corp. (DMC) and Shanghai Automotive Industry (Group) Corp. (SAIC).

Alternative Fuel Vehicles
China encourages the development of clean and fuel efficient vehicles in an effort to sustain continued growth of the country’s automobile industry. By the end of 2007, China plans to reduce the average fuel consumption per 100 km for all types of vehicles by 10%. The proportion of vehicles burning alternative fuel will be increased to help optimize the country’s energy consumption. Priority will be given to facilitating the research and development of electric and hybrid vehicles as well as alternative fuel vehicles, especially CNG/LNG. Major cities like Beijing and Shanghai already require Euro III emission standards.

Auto Parts
China has about 6000 automotive enterprises, which are scattered in five sectors: motor vehicle manufacturing, vehicle refitting, motorcycle production, auto engine production, and auto parts manufacturing. All tiers of the industry are being driven by the booming sales of the OEM sector. Nearly 80% of the revenue for the auto parts and accessories market is through new vehicle sales. However, revenue from after market is increasing rapidly.

Shanghai and its surrounding provinces (Zhejiang, Jiangsu, and Anhui) are the centers for component manufacturing, representing around 44% of national production. Shanghai is home to Shanghai General Motors, Delphi, Visteon, and other notable American automotive companies and, as such, provides a good starting point for U.S. automotive component exporters to begin to explore the Chinese market. Other major automotive centers in China include Guangzhou (South China), Chongqing (West China), and Changchun (North China).

China’s fulfillment of WTO requirements has helped drive new vehicle sales. As of July 1, 2006, China fulfilled its WTO requirements by lowering import tariffs for auto parts and accessories to 10% and import tariffs for new automobiles to 25%.

Used Motor Vehicles and Used/Refurbished Auto Parts
Although there are case-by-case exceptions for antiques and diplomats, it is currently illegal to import used motor vehicles into China. Refurbished heavy construction equipment can be imported with a special permit. Used and refurbished auto parts are not allowed to be imported into China.

Automotive After-Sales Products and Services
Although improvements have been made in this field in the past decade, China’s after-sales products and services still lag far behind those of developed countries. However, WTO commitments have brought about significant changes in the after-sale market. China’s aftercare market now faces the following challenges:

• Establishing an information feedback system with end-users in order to improve service;
• Modernizing outdated sales systems;
• Increasing the competitiveness of domestic auto parts and accessories;
• Cracking down on counterfeit products.

Transportation Infrastucture
The Chinese Government is in the midst of a massive upgrade of its transportation infrastructure. Until recently, China’s economy was able to continue to grow despite deficiencies in infrastructure development. This is no longer the case, and the Chinese Government realizes that in order to keep their economy moving forward, they need an efficient system in place to move goods and people across this 9.326 billion sq. km. land mass. According to World Bank statistics, goods lost due to poor or obsolete transportation infrastructure amounted to one percent of China’s GDP as recently as the most current survey (mid 1990′s). Logistic costs account for 20% of a products price in China, compared to 10% in the U.S.

Ports are being improved for greater use of China’s waterways, and airports are being improved across the country. All of these projects bring opportunities to U.S. construction equipment, engineering, and electronics and safety devices companies, especially for projects funded by the World Bank, Asian Development Bank, OECF, and similar multilateral lending agencies that use transparent bidding procedures.

Highways
In the past few years, China has been rapidly developing its highway system. The investment for highway construction has increased enormously from 2000 owing to increased government attention. Improving infrastructure has facilitated the increased use of automobiles. The government has added about 3,000 km of expressway a year to the existing network. China has already built a 30,000 km network of highways, second only to the U.S. in total kilometers.

US$4.25 billion was invested in Beijing’s infrastructure in 2004, and another US$22 billion will be invested before the 2008 Olympics to improve Beijing’s traffic congestion issues.

Ports
China has sixteen major shipping ports with a capacity of over 50 million tons per year. Combined China’s total shipping capacity is in excess of 2,890 million tons. By 2010, 35% of the world’s shipping is expected to originate from China.

The Port of Shanghai is presently undergoing significant upgrades. Shanghai Model Port Alliance is responsible for many of the upgrades that are expected to make Shanghai’s port more automated, minimizing the loss of goods and time while helping Customs collect more accurate tariffs. If the Shanghai project is successful, there is interest in replicating the process in other Chinese ports.

Rails
Passenger rail traffic has priority over freight on the many single-track rail lines across China, extending trips which should last a few days to two weeks or more, and limiting investment interests in all but a few coastal regions. Rail tracks are now being doubled to alleviate freight train conflicts.

U.S. Position in the Market
U.S. firms’ advanced technology and experience make them very competitive for projects using a transparent bidding system, such as those funded by the World Bank, Asian Development Bank or other multilateral funding sources. The massive upgrade of the transportation infrastructure currently being carried out depends a great deal upon available financing. In most cases, locally-financed projects use local construction products and services. Due to a lack of government funds, BOT (Build, Operate, Transfer) project financing is a possibility for U.S. firms, though these may not be viable business opportunities. Container security equipment should have good prospects in the near future.

Market Research Reports

China Brief: New Energy Vehicles (Issue 1, Issue 2, Issue 3, Issue 4)

•China’s Automotive Industry

•East China Automotive Aftermarket

•Guangzhou targets 3 years to fuel its public fleets with LPG

•Mass Transit Projects in Chengdu and Chongqing, China

Key Industry Contacts

Links to non-Commercial Service organizations are provided solely as a convenience to our users. The Commercial Service makes no representations about the accuracy or suitability of the information provided on the following web sites. The FCS is not responsible for the content of the individual organization webpages found through these links, and their inclusion here should not be understood as an endorsement of these organizations.

National Development and Reform Commission(NDRC)
Tel. & Fax: (86-10) 6319-2525
http://en.ndrc.gov.cn/

China Association of Automobile Manufacturers (CAAM)
Foreign Affairs Office
Tel: (86-10) 6859-4941
Fax: (86-10) 6959-5243

China Automotive Technology and Research Center
Tel: (86-10) 6328-3523
Fax: (86-10) 6346-2256

Ministry of Communications (MOC)
Tel: (86-10) 6529-2114
Fax:(86-10) 6529-2345
web: http://www.moc.gov.cn

Department of Highways
Tel: (86-10) 6529-2737
Fax: (86-10) 6529-2766

Ministry of Railroads (MOR)
International Cooperation Department
Tel: (86-10) 5184-2855
Fax: (86-10) 5187-9914
web: http://www.china-mor.gov.cn

Major Shows

China (Shanghai) International Boat Show (CIBS) 2010

Date: April 8th -11th, 2010
Venue: Shanghai Exhibition Centre, Shanghai, China
U.S. Commercial Contact: Juliet Lu (86 21 6279 7630 ext. 8780)

The China (Shanghai) International Boat Show (CIBS) – the largest boat show in China present its 15th edition this April in Shanghai, covering over 30,000 m2 with up to 400 exhibitors and over 100 real boats display in the historic downtown venue, Shanghai Exhibition Center. With a comprehensive display of China’s boat industry chain, CIBS offers you numerous boats on display, and several exhibition halls featuring thousands of products covering equipment, technology, supplies and service.

The Chinese recreational marine market has attached attention because of its stability and its huge market potential. CIBS is the leading platform in China for showcasing yachts, accessories and equipment for the marine industry. On behalf of the U.S. Commercial Service we would like to welcome you to the 15th annual China (Shanghai) International Boat Show, which has been certified by the U.S. Department of Commerce. Our mission in Shanghai is to assist U.S. firms doing business in China. We will staff an information booth in the show to provide assistance to American companies and Chinese clients at the show. We plan to make ourselves available to answers questions, offer advice and support your networking activities throughout the event.

If you have any questions, please do not hesitate to contact Ms. Juliet Lu as follows:

Juliet Lu Tel: (86-21) 6279-7630 Ext.8780
Fax: (86-21) 6279-7639
Email: Juliet.Lu@trade.gov

For more information, please visit www.boatshowchina.com

2010 Metro China

Date: May 19-21, 2010
Venue: Shanghai New International Expo Center (SNIEC)

Metro China 2010 is organized by China International Engineering Consulting Corporation and Intex Shanghai. It will be supported by the China Civil Engineering Society, co-organized by IMAG-Internationaler Messe-und Ausstellungsdient GmbH and Rail Transit Committee of Shanghai Communication and Transportation and Shanghai Shentong Metro Group Co., Ltd.

As one of the most famous trade shows on the Chinese urban rail and rail industry, Metro China has been held 5 times since its launch in 2002. Enjoying sound reputation in this industry, the last edition in 2007 covered 18,000㎡(193,757ft2), attracted 228 exhibitors from 23 countries including, Germany, UK, USA, Canada, France, Japan, Spain, Switzerland, The Netherlands, Italy and China etc. Exhibits cover early the planning stage such as design and planning, investment and financing, construction, the relative equipment such as metro train, train parts, station equipment, AFC systems, and the latter operation stage such as system integration, metro line management.

Exhibitors includs Bombardier, Seimens, Alstom, CNR, CSR, Shanghai Electric Group, CASCO, ABB, Alcatel, Knorr-Bremse, Mitsubishi Shanghai Railway Urban Rail Transit Design and Research Institute, Beijing Urban Engineering Design & Research Institute Co., Ltd., and Guangzhou Metro Design and Research Institute, etc.

Obviously, China is now the world’s biggest and most dynamic market for urban mass transit and railways. Metro China 2010 will provide a platform for business trade and technical cooperation in the urban rail industry.

For more information, please visit the website: www.metro-china.org

Contact Person: Ms Catherine Cui
TEL: +86-21-62958367
FAX: +86-21-62780038
Email: intexcl@sh163.net

U.S. Commercial Service Contact Information for Transportation

The U.S. Commercial Service offers a broad array of market entry services to U.S. companies in the transportation industry. Please refer to the following relevant contacts for additional information on how we can help you expand your business in China.

Beijing Office:
Tel: (86-10)8531-3000
Fax: (86-10)8531-3701
Gwen Lyle
Ida Peng
Zhang Qiurong

Shanghai Office:
Tel: (86-21)6279-7630
Fax: (86-21)6279-7639
Wenjuan Zhan

Guangzhou Office:
Tel: (86-20)8667-4011
Fax: (86-20)8666-6409
Lena Yang

Chengdu Office:
Tel: (86-28)8558-3992
Fax: (86-28)8558-3991
Chen Ling

Shenyang Office:
Tel: (86-24)2322-1198×8142
Fax: (86-24)2322-2206
Huang Wei

Source: BuyUSA