Wednesday, 31 May 2017

China - A Two Edged Sword

Chinese owned Volvo. A rare chance for technology transfer 

The way the car industry is moving, I wonder about how it is managed. It is a huge employer and and a massive part of industry and commerce. All to give us personal transportation. It is unprecedented in history and not sustainable the way it is done. What are some of the pitfalls?

One is China. It has fuelled growth and profits but the growth is about over. The Chinese government set up a system that would see a transfer of technology to China but that hasn't happened as expected. Criticism of foreign firms is now the norm. Where that will lead I don't know but the whole situation is uncertain. Car makers are still building plants like the growth will just go on. Yet some cities are so congested, that restrictions are being applied to limit car ownership. 

So why the drive to keep building? There is a fear of having insufficient capacity to meet the market. There is still growth and the money to be made is too tempting not to chase. Reduction in import duties would allow car companies to regulate the situation better, only building plants once the demand was assured. The way things are set up, it is very incertain. If growth dies totally then any car maker in the process of expanding will get caught. The gravy train could also come to its end at the whim of a government decree. The only card car makers hold is the technology. When that has been played and Chinese firms get to understand how important a good brand reputation is....

The whole situation is based on greed. Everyone involved in it is making big money on it, both within China and the foreign car makers. The road ahead could get bumpy for those who have much invested there. It has all the hallmarks of a two edged sword.

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