I’ve just come back from three days in Shanghai, perhaps the most international of China’s megacities.
Inevitably, you end up spending a few hours on buses, staring out of the window at the astonishing infrastructure of the place. From the massive motorway network, to the choice of either a tube train or super-fast maglev train when leaving Shanghai’s hugely impressive airport.
But, like I’m sure you would, I spent most of my time on the bus just watching the passing traffic. It doesn’t take long to realise that, in this city at least, virtually all of the passenger cars on the roads are from foreign manufacturers, even if they are locally built.
The only domestic cars that seemed to have any real presence on Shanghai’s streets were Roewe 550 saloons and a smattering of the new MG3 supermini. Of course, the Roewe 550 has its roots in the Rover 75 and the MG3 was mostly engineered and designed in the UK.
This, no doubt, is something that the more affluent Shanghai buyers know this well. An ‘international’ brand car – to use the local shorthand - is the first choice of Chinese buyers, most of whom are first-time buyers in their 20s.
Even more so than Europeans, young Chinese are permanently attached to the web and their smart phones, so they have a global view of consumer durables. Buyers in the bigger cities have no time for domestic Chinese brands, which ruined their reputations from the outset by making cars that were poorly built, often very unreliable and saddled with questionable safety standards.
Megacity residents aspire to European premium brand clothes and luxury lifestyle items and are well versed in understanding deep-seated quality. The upshot is the Western car brands, and nameplates from Japan and Korea, have now taken the bulk of the new car market.
According to figures published in the Economist, international brands have a good 60 per cent of the new car and light van market in China. But there again, domestic brands still have a good hold over commercial vehicles, so the figures for just passenger cars might show that the grip of International brand passenger cars is even higher.
Many of these international brands are on a sales push into the China’s ‘second tier’ cities and inland megacities such as Chengdu, which is likely to further chisel away at the market share of the Domestic carmakers.
In fact, I was in Shanghai to see the Chinese-Israeli start-up brand Qoros. Chinese carmaker Chery is one of the two investors in the company, though it is very much a silent partner, as I understand it.
Qoros is making huge efforts to convince the Chinese media that it is as good as any international brand, an impression underlined by the fact that the company’s senior engineers and designers are all European.
Indeed, a senior engineer who had previously worked at Saab delivered the briefing on the safety of the new Qoros platform in a reassuringly Swedish accent.
While Roewe, MG and Qoros will help the Chinese domestic car industry get a foothold in a market that is inexorably turning to international brands, the wider domestic Chinese industry is under huge pressure which it may not be able to counter.