April 22nd, 2011
07:42 AM GMT
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Beijing, China (CNN) – Hundreds of thousands of Chinese are expected to stream through the Shanghai Auto Show, but walking around the convention center, it feels as though everyone is here at once. Crowds of people are gawking at the new designs and concepts – the eco-friendlier GM Chevy Malibu, the "masculine" VW Beetle, the Geely motorcycle cum mini car "McCar" that can transport your elderly mother in her wheelchair.

This show is running concurrently with the New York Auto Show, but I'm told the difference is the number of people eager to buy their first car. Auto analysts say 3 out of 4 Chinese car customers are first time buyers - and nearly all of them pay in cold, hard cash; No wonder carmakers are racing in to the Chinese market.

Executives here have been playing up the potential growth; however, many have also voiced their concerns about a recent trend. GM, Ford, and PSA Peugeot Citroen have acknowledged the push here by Chinese authorities for indigenous brands.

Philippe Varin, CEO, PSA Peugeot Citroen, said government pressure crept in to the European carmaker's recent discussions to expand in China. He said it's clear that today a critical matter for the Chinese government is to promote local brands. "That is the reason why we have decided to have a local brand," he said at the unveiling of the company's DS5 model.

Doing business in China is getting tougher for international businesses and the big car brands are feeling the pressure. Despite the government's restrictions on foreign carmakers, companies like GM and VW are highly successful here. The reason is that Chinese people like to buy foreign branded cars. This is not the case for many other industries - such as white goods – where Chinese players reign.

Even though international carmakers would earn money off a Chinese brand, there is still some concern that the new demand could curb brand loyalty among Chinese consumers to foreign cars.

Which car brands will come out ahead in China?

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Filed under: Auto industryBusinessChina

soundoff (11 Responses)
  1. annmason

    one secret is "Auto Insurance Clearance" doesn't spend much on splashy TV ads, but in large surveys, its customers say clearance auto insurance is terrific in every way - low prices, helpful customer service and no hassles over claims

    April 22, 2011 at 9:08 am |
  2. Yip Feng

    The china carmakers won't achieve that with their current bad quality of cars they make now.

    April 22, 2011 at 10:07 am |
  3. Penyiar

    I suppose Chinese branded cars with international engineering (GM, Volkswagen/Audi) would be safer than purely Chinese cars with horrible structural integrity.

    April 22, 2011 at 12:54 pm |
  4. Dan

    The eternal quest for money pursued on the basis of capitalism is being cleverly exploited by the Chinese. What the Chinese are doing? Let me put illustrate some points so you can make your own opinion: protectionism, building Chinese brand awareness and brands using foreign knowhow and technology so that at a certain point they will give up on the foreing investment and start reselling those chinese brands outside China. World domination by China is through manufacturing and a clever exploitation of capitalism for their own good. Capitalism is failing due to the fact that we are being controlled by multinational companies with an unrelentless quest for yearly profits, no matter the human, moral or longterm costs. Capitalism in its current form is dooming us all because no one is thinking at a sustainable future, only the present matters. And money, lets don't forget is just paper.

    April 22, 2011 at 2:26 pm |
  5. John Gabriel

    And gold, ... it's just metal, but having it is more important than human life or wellbeing. Nothing new under the sun...

    April 23, 2011 at 7:16 am |
  6. Fuck GM!!!Fuck the 80000 dollars 3.6L camaro!

    U know how much a camaro 3.6L cost in China?80000 dollars.Fuck GM!We have to pay 4 times for a 3.6L Camaro!Why can't GM give us a 23000 dollars camaro?Fuck!!!I love Camaro,but the price of Camaro in CHina is nonsense!

    April 23, 2011 at 12:56 pm |
  7. BABAB

    GM will be substituted by Chinese Indigenous Brand soon, like white goods in China.

    April 23, 2011 at 3:01 pm |
  8. Frans

    When is anyone going to understand that China is on a warpath with the rest of the world. This time it is the Dollar war.
    By importing rubbish made in china from recycled rusted metal and coke tins you are paying good money for crap.
    How many times must you replace a TV, washing machine and a car? Global warming and carbon tax my ass.
    All goverments are bussiness now, now longer to protect your country and provide the basic services for which we are prepaired to pay a fair price. If it is not made in your country you don't need it. Imports should be capped and reserved for high technology product only. We are all to lazy to do the work ourselves so let the chinese do it. Don't cry to me if you are without a job, Everytime you buy crap from china a person is losing a job. Wake-up to reality. Once you have given money to china it is gone forever. Capitalism is a pyramid scheme upside down and it busy falling over. What happened to "made in the USA" and "made in Australia" We should be ashamed of ourselves.These so called goverments are all working together to screw the taxpayer. Most of them are lawyers and accountants and would have no clue how to run a country on a good day.All they know is how to take your money. Pure greed.They don't give a crap about you and me. Have a nice day from Brisbane, Australia

    April 25, 2011 at 5:12 am |
  9. Helmi

    wah?!!! So amazing the business n economis in china..

    May 16, 2011 at 3:13 am |
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