China’s Message to Its Carmakers: Quality Not Quantity

Chinese officials are encouraging automobile companies in China to shift their focus from producing more cars for sales, to producing fuel-efficient and technologically-advanced cars, such as hybrids and electric cars.

At a weekend conference in Tianjin, China, Chinese officials stressed the need for greater technological improvements in the world’s largest automobile market.

Chinese officials are encouraging automobile companies in China to shift their focus from producing more cars for sales, to producing fuel-efficient and technologically-advanced cars, such as hybrids and electric cars.

At a weekend conference in Tianjin, China, Chinese officials stressed the need for greater technological improvements in the world’s largest automobile market.

[quote]“For the auto industry to develop, we should not try to sell more, but to improve the units sold,” said Lu Shize, director of air pollution control at the Ministry of Environmental Protection, as quoted by the New York Times.[/quote]

Jiang Kejun, director of the Energy Research Institute at the National Development and Reform Commission, added that, “the government must take the leading role in controlling unrealistic growth,” highlighting how government initiatives had nurtured the auto industry to become the largest in the world in just one short decade.

From 2000 to 2010, Chinese auto production grew from less than 2 million vehicles produced in a single year, to almost 17 million last year. Consequently, the Chinese auto industry is now nearly twice the size of either the US or the Japanese auto industry.

However, high-ranking economic and environmental ministers now believe that producers should cut down on production in order to reduce traffic congestion, pollution and foreign oil dependence.

Since last December, the municipal government of Beijing has imposed stringent limits on the number of new-car registrations each month, effectively imposing a decline in sales of close to 70 percent.

According to Jiang, other cities in China are expected to follow in Beijing’s example. “Beijing is a very typical city from which other cities may learn,” he said.

Apart from addressing an overheating domestic industry, some analysts also believe that the Chinese auto industry could be preparing for a jump into overseas markets once they have improved the fuel efficiency and technology of their cars.

The Chinese government has specifically restricted Chinese automakers from making big jumps into the American and European market until 2015, so as to allow these companies to work on increasing the quality of their vehicles.

Many believe that the Chinese government do not wish to replicate a similar situation as when South Korean cars first entered overseas markets and quickly gained a bad reputation for their shoddy quality.