China's Next Big Export Product: Automobiles
MADELEINE BRAND, host:
This is DAY TO DAY from NPR News. I'm Madeleine Brand.
NOAH ADAMS, host:
And I'm Noah Adams. Two hundred billion dollars - that is the trade deficit the U.S. ran up last year buying goods imported from China.
BRAND: And in the next few years, that deficit could grow even bigger, because now China has plans to move beyond selling us lots of cheap clothing, toys, and consumer electronics.
ADAMS: Several Chinese companies now say they'll begin importing automobiles into the U.S., perhaps as early as next year.
BRAND: To find out more about these Chinese cars, we called Jamie Kitman. He's the New York Bureau Chief for Automobile Magazine. He spoke with our colleague, Alex Chadwick.
ALEX CHADWICK reporting:
Jamie, welcome to the program.
Mr. JAMIE KITMAN (New York Bureau Chief for Automobile Magazine): Hello, Alex.
CHADWICK: What are Chinese car makers planning? How are they going to crack the U.S. market?
Mr. KITMAN: Well, I think their secret is going to be the ones that the Koreans and the Japanese before them used - and I guess the Europeans before that -which is to sell cars for less money than American makers do.
CHADWICK: China is incredibly successful at selling goods here, but for consumers, what's the difference between a pair of socks and a mini van?
Mr. KITMAN: To run the risk of stating the obvious, a mini van is more complex than most pairs of socks. There's a lot of, you know, different components that go into making it.
CHADWICK: And when consumers get around to buying a car from a manufacturer they're not familiar with, wouldn't they have to get over a hurdle that would be much more difficult with a mini van than it would be with, say, a five dollar pair of socks? If you could still buy socks for five dollars. I don't know.
Mr. KITMAN: Right, but I think the ultimate test is the same. Are these fit for the purpose for which I bought them? People will buy a pair of socks, and if they disintegrate, they probably won't buy another pair from that manufacturer. Historically, foreign manufacturers have had good success, initially, selling low-priced automobiles in the United States. The problem comes when they don't hold up, and it's almost a year or two later - or three - that you find out the real truth.
CHADWICK: Well, have you driven a Chinese car, and how good are they?
Mr. KITMAN: Well, I'm afraid I haven't, but from what I read, they're not really quite up to scratch. They tend to be aimed at a very low price point in an absolute sense - they're small and underpowered, and they tend not to be very safe. When they have been subjected to Western-style crash tests, they generally perform poorly.
Obviously, anything they would sell in the United States for use on public roads would have to meet our safety and emissions standards, which is, in fact, perhaps the thing that's slowing their arrival down as much as anything, because they don't.
CHADWICK: Do you know about auto parts? How is China doing with selling auto parts over here - maybe engines, that kind of thing?
Mr. KITMAN: Huge amounts of auto parts are coming into the United States. The number multiplies exponentially, and it's probably up to around five billion dollars last year. We see Chinese parts largely in places that people don't look, in electrical components, plastic moldings. But also, in more major components, like engines. Some Saturn's have engines that are actually made in China.
CHADWICK: Well, so they are succeeding at the parts level, anyway, and we'll have to see how they do with the entire car. There's this note - this might just help us out with the deficit part of this: I've read that the most popular car among the Chinese elites is an American car, and it's a Buick.
Mr. KITMAN: I mean, it really is the dark side of the moon. This is a car that, in America, its buyers have a median age of around 67 or something like that, and yet it's hip with Chinese youth. You know, all I can say is go figure. However, General Motors took a big position into China. Some of their critics argue that they would've better spent their money shoring up their position at home. But they do have a seat at the table in China, which is - unfortunately, it's a nasty game there. The pricing wars are cutthroat, competition is insane, and it really looks like the world, only even tighter.
CHADWICK: Jamie Kitman, New York Bureau chief for the magazine, Automobile. Jamie, drive on.
Mr. KITMAN: Thank you, sir.
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