In a turnaround that makes me dizzy, The Truth About Cars reports that one of China's largest car companies is looking to build cars in Brazil and Russia. What do they know that we don't know???
Let me get this straight. The world goes to China to build stuff. Heck, my company has plants there; I've visited them. Virtually every automaker I can name is feverishly working to scale up production plants in China and establish joint ventures with automakers there. On top of the cheap labor advantage, that old Henry Ford magic is creating a booming domestic market in China for the cars built there. So why would a Chinese car company choose to manufacture anywhere but in China?
I can speculate on a few answers. First of all, cars are heavy. It costs money to ship cars to their buyers; putting the plants where the customers are reduces costs. It also gets around import taxes. Remember how expensive Hondas and Toyotas were in the 1970s and 80s compared to Detroit iron? They weren't more expensive to build, they cost money to import. Another reason for Chinese companies to build cars elsewhere is to avoid boom-and-bust cycles in individual countries: if business isn't great in one part of the globe, another region might keep you in the green. For example, right now, Chrysler's strong sales in North America are offsetting its parent company Fiat's losses in Italy. For a contrasting example, Mazda is hurting because all its production is in Japan, where the high value of the yen relative to other currencies makes it a losing battle for them to sell cars overseas.
China's extraordinary climb from an inward-looking land of half-starved peasant farmers to a modern nation with a middle class has brought with it a lot of surprises. The Chinese leadership knows that their country cannot be a manufacturing economy indefinitely, no matter how good they are at it. There is a growing emphasis on "knowledge workers" in the form of advanced degree programs at universities and other efforts. And now, evidently, Chinese companies are willing to have other people build things for them.