Author: wanzheli

Auto industry feels the pain of inflation [Copy link] 中文

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Post time 2008-4-27 10:42:10 |Display all floors
Interesting
It's just too difficult to outsource higher education to the less developed interior. The middle and west of China does have its higher education, but higher education needs a lot of investment. As I said, a number of families do not even let their children to finish 9-year primary education as they can not see the benefits. The higher education can put too heavy a burden on a regular family coz its no longer free and the fees are rising every single year. This is still not the most important issue as they can get a loan from the state banck, The real problem is that these universities and colleges can not provide enough opportunities for each student. the overall entrance rate of higher education is too low there. It's not all about money.
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Post time 2008-4-27 11:03:03 |Display all floors
This time i agree with you on the point that Chinese car companies are not so good at designing around their own production capabilities, at least at the first. This is why Chinese government used its market as an exchange for foreign technology including management methods and production systems, of which the tactic is now called" market trade for technique" Another obvious example is the Shanghai Auto Industry Corp's acquisition of British car company Ronwe. Besides the British counterpart's brand assets, SAIC wanted very much to have its production system, design models and platforms. I am not an engineering expert on car manufacturing, but i am sure this is very important in developing new model cars and adjusting existing ones.
As to Chery, it's now the flagship of Chinese national car industry. Its product QQ is much better  known in China than either Spark or Matiz which you claimed to be the original models that Chery copied from. I am also not gonna bebate on this issue as i know little about this. But why Chery can produce QQ so efficiently and sell it substantially cheaper than GM or Daewoo?
Chery is certainly a student of GM, but a student can also outperform its teacher. We have a Chinese idiom for this.
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Post time 2008-4-27 11:17:21 |Display all floors
Technical training does pay! Do not doubt this. Any question with this, please check Nobel prize owner Schultz 's human capital theory which explains the relationship of investment in human education and increased productivity. China does not invest heavily in polytechnic education, so as a result, the auto industry usually can not find enough qualifies low level engineers. It's the cause-and-result. In return, car companies have to make up for this  and invest more in on-the-job training. But i doubt the effectiveness of this form of training, can you learn everything on the job? If this is the case, why should we bother to let polytech school to exsit.

China will sooner or later pay  a heavy price for its underemphasis on polytech education. Germans can make the best cars in the world,which is due to their sound mentor system and great emphasis and respect given to polytech jobs.I am sure China can learn from Germany on this point.
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Post time 2008-4-27 11:25:14 |Display all floors
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Post time 2008-4-27 15:02:11 |Display all floors
Originally posted by fatdragan at 2008-4-27 11:25

What's so funny? share with us ~
I am gonna work for a auto company, so i need to know more of this industry and the inflation will hurt my company's competitive advantage:)
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Post time 2008-4-28 10:53:54 |Display all floors

Reply #2 caringhk's post

joe, joe!

Inflation is created when you have "too much cash chasing too little goods"

basically, what we have is US$ in abundance, and less good available.
only states that keeps their currency cheap versus the US$ will face inflation.

look, Amerikan Regime has no choice, they just printed too much US$, and we are now facing it's effects.


Look at the rise in Amerikan per capita income at US$, just because of the minting and nations greedy to export to the United States!


ha ha ha


Green Dragon

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Post time 2008-4-28 10:54:05 |Display all floors
Wan,

On the outsourcing, I mean that there are a number of manufacturing processes currently done in better educated areas which do not require access to the educated workforce and could, were it not for infrastructure issues, be transferred to the interior. The up side of this is that it would reduce migrancy (because of access to continuous work) and thus allow mandatory universal education to stick like it's supposed to.

The QQ is made at a vastly lower quality at lower labor costs. Even though every major part from a Spark/Matiz is compatible with a QQ, the quality of the parts used on the QQ give it a significantly lower crash-test rating. Also, IIRC, a lot of standard features from the Spark/Matiz are optional features of the QQ or unavailable altogether. Really, I'm very happy they copied the design because it's such a good copy in its basic features (they look like, their parts are almost completely interchangeable, etc.) that it allows a very direct comparison to see where cost advantages come from. I actually love it when a company copies another design and then strips it to make it work in their market, it gives a very immediate appraisal of the gaps between developing and developed market products in that sector.

As to Ronwe/Rover (funny thing, "Ronwe" sounds like "wrong way" and will be the source of endless humor for expats) I've never been sure whether purchasing manufacturing capacity outright is useful to developing car companies. It hasn't seemed to ever do much good for the buyers either because they meet the quality already (BMW --> Rolls Royce) or because there is no incentive to internalize the methodology of the company (Volkswagen --> Bentley). Anyhow, I hear too much about Chinese corporate culture that suggests that any leaps in quality in many industries is a long way off; usually Chinese automakers look like GM with access to lower labor costs.

We have no disagreements on technical training, really, but I would just have you know that later on, technical training looks a lot less attractive for a variety of reasons and starts to become a mark of lower social standing. In China, I wonder (now quite openly) whether having a technical certification as opposed to a degree hurts your chance of CPC membership.
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