Financial Times Reveals New Franco-Chinese Car Collusion

Bertel Schmitt
by Bertel Schmitt

The Financial Times has revealed an insidious plot: “Foreign carmakers wishing to build new plants or add capacity in China’s burgeoning car market are being told by the government that if they wish to expand, they must develop a low-cost local car brand.”

It must be a REALLY slow news day (it is). Our esteemed readers have known of this trend for a long time. First out of the gate with a local car brand actually was GM, which started the BaoJun brand last year at their SAIC-GM-Wuling joint venture. Ford has been rumored to be working on a standalone Chinese brand also. Nissan and Honda are in the game. Volkswagen is rumored to be working on a Chinese brand. Actually, it came so thick that in December, we couldn’t help it and headlined: “From Venus to Everus: Foreign Makers Create Fake Chinese Brands.”

There sure has been a lot of talk and action on this front for a long time. But “must”? I haven’t heard of any guns put to the heads of captains of joint ventures.

Indeed, the FT could find no smoking gun and writes: “While Beijing has spoken of promoting local car brands, no central government ruling or written policy is known to exist on the subject. “

According to the FT: “French producer PSA Peugeot Citroën, which is pushing its cars upmarket globally and, until recently, rejected the notion of producing low-cost cars, confirms that it is now studying the possibilities.”

That also is old hat. TTAC readers have long known of a not very enlightened make-low-cost-PSA-cars-in-China-and-export-them-to Russia project since last year. And doesn’t PSA want to revive SIMCA?

Anyway, it sure looks like the FT fell victim to a gabby Frenchman again.

Says the FT: “Philippe Varin, the group’s chief executive, recently told the Financial Times that developing a local brand was “part of the deal” in its new joint venture with Chongqing-based producer Chang’an, which is installing capacity to produce up to 200,000 cars a year from 2012 in Shenzhen. He said that Peugeot was considering offering some of the low-cost cars for export to other markets, but added that the French group had yet to make a final decision.”

Folks, I’ve said it before and I say it again: These “low cost Chinese cars” are not for China’s farmers. They are (read Varin’s last sentence) for export. One of my first articles I wrote for TTAC in 2008 was headlined “ Chinese Government: Our Car Exports Suck.” Exports still suck, now more than in 2008. The Chinese Government is anything but stupid. They are well aware that their own car companies are yet unable to build a car that will survive in the murderous world market. Enter the fake Chinese brand. Cars built with approved overseas technology. But the car is no longer licensed from a foreign entity that forbids export. Bingo.

Now please, FT, write it down. Thank you.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Stingray Stingray on Mar 23, 2011
    Enter the fake Chinese brand. Cars built with approved overseas technology. But the car is no longer licensed from a foreign entity that forbids export. Bingo. Even more important, of genuine interest in developing markets, since they can undercut established brands by some thousand $$$. Also, they may be sold in developed markets, where I suspect is a good potential for cheap generic K-mart style cars (if the Dacia case in France is any indication) Will these new brands be Chinese like Bajoun (which logo is very similar to IKCo's Samand one) or can be another abandoned one?
  • El scotto Oh, ye nattering nabobs of negativism! Think of countries like restaurants. Our neighbors to the north and south are almost as good and the service is fantastic. They're awfully close to being as good as the US. Oh the Europeans are interesting and quaint but you really only go there a few times a year. Gents, the US is simply the hottest restaurant in town. Have to stand in line to get in? Of course. Can you hand out bribes to get in quicker? Of course. Suppliers and employees? Only the best on a constant basis.Did I mention there is a dress code? We strictly enforce it. Don't like it? Suck it.
  • 1995 SC At least you can still get one. There isn't much for Ford folks to be happy about nowadays, but the existence of the Mustang and the fact that the lessons from back in the 90s when Ford tried to kill it and replace it with the then flavor of the day seem to have been learned (the only lessons they seem to remember) are a win not only for Ford folks but for car people in general. One day my Super Coupe will pop its headgaskets (I know it will...I read it on the Internet). I hope I will still be physically up to dropping the supercharged Terminator Cobra motor into it. in all seriousness, The Mustang is a.win for car guys.
  • Lorenzo Heh. The major powers, military or economic, set up these regulators for the smaller countries - the big guys do what they want, and always have. Are the Chinese that unaware?
  • Lorenzo The original 4-Runner, by its very name, promised something different in the future. What happened?
  • Lorenzo At my age, excitement is dangerous. one thing to note: the older models being displayed are more stylish than their current versions, and the old Subaru Forester looks more utilitarian than the current version. I thought the annual model change was dead.
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