Untitled - China Europe International Business School

Organization of the logistic chain in the Chinese international trade
Overseas markets
Chinese manufacturers are using foreign partners to build overseas sales networks. Some examples
are:
� Chery Automobile has partnered with Visionary Vehicles in the US, aiming to sell 1 million units of
passengers’ cars in 2010, starting in 2007.
� Jiangling Motors set up an agreement with the import company Sino Motors, to start selling in
Spain around 1.500 units. The Chinese automaker Great Wall is planning to develop a sales
network around Europe.
� Jiangling Motors also signed an agreement with Peter Bijvelds (Netherlands, Automobile Sales) to
sell two thousand units the first year.
� Zhongxing Automobile signed a sales cooperation agreement with ZXNA, which is a subsidiary of
CHAMCO (China America Cooperative, Inc.) to sell 40 thousand units by 2007. (Products to be
sold are the Landmark (SUV) and Grand Tiger (pickup))
Foreign plants are planed for the near future or being built overseas by Chinese manufacturers to
conduct assembly of Chinese automobiles. Some examples are:
� Chery Automobile has established assembly plants and began a small-scale assembly of the QQ
model and other 3-4 passengers’ cars. Some of the partners are SKT in Iran ( Parts Supplier),
Daewoo Motors Egypt in Egypt ( Automobile Assembly), Avtotor in Russia.
� Nanjing Automobile and Oklahoma Sovereign Development LLC (US, Investment Group) have set
up a JV in the US for the construction of a plant early in 2007. Operations are scheduled to start at
the end of 2008 for the production of passengers cars.
In the vehicles segment, Chinese companies with major plans to export are the producers without
major joint-venture tie-ups with large international producers. Although vehicle manufacturers in China
still focus on the domestic market, it is likely that they will start to export as quality and efficiency
improves. The industry reports agree that a competitive Chinese Automotive Industry will be ready in 5
to 10 years. And Chinese vehicle exports will in several years arrive to European and US market.
Automotive parts Industry
To remain competitive, carmakers need to reduce their components costs. The components industry
has traditionally been a local one, but the situation has changed considerably over the last decade and
will see even more changes in the next years. There has been increasing investments from European
and North American parts manufacturers in Asia, and China especially.
Chinese automotive parts exports have been growing fast and are already important with the U.S.. For
the US market, many of these exports are aimed at the aftermarket as main products are wheels, brake
parts and electronics.
The component industry in Asia will develop considerably in the next years. As Asian local components
manufacturers improve and progressively meet multinational vehicle manufacturers’ requirements they
will not only serve the sector within Asia but will become a source of components for the rest of the
world.
CEIBS Port of Barcelona Chair of Logistics 40