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Howes: Chinese businesses are buying their way into the auto industry

Aug 31, 2017

Howes said he was surprised to learn GM has 17 manufacturing plants in China already. He said businesses go where the customers are.
Credit Steve Carmody / Michigan Radio

Detroit is rightly seen as the center of the U.S. auto industry. But looking ahead into the years to come, the Motor City can expect to see competition from an increasingly influential player in the industry: China.

Detroit News business columnist Daniel Howes says Chinese companies are approaching U.S. markets slightly differently than other foreign companies that have built on American soil.

Howes says companies like Toyota, Honda, and Volkswagen used the success of their car models to build a brand in the United States. Toyota is now larger than Fiat-Chrysler in the American market.

“The Chinese look at this and say, ‘The fastest way for us to get credibility globally is to buy our way into the party,'” Howes said. “And in 2010, [the Chinese auto manufacturer] Geely bought Volvo from Ford Motor Company.”

The Taiwanese company Foxconn is, according to Howes, the largest contract manufacturer in the world, with most of its operations based in China. It is a contractor to Apple and helps manufacturer its smartphones and other devices.

These days, the company is being courted by states in the Midwest trying to land a Foxconn plant based in the United States. Foxconn agreed to open a facility in Wisconsin, but Michigan still hopes to land a plant too.

Howes says American firms and governmental agencies are not necessarily setting the pace of business anymore.

“Chinese government policy is driving a lot of this,” Howes said. “The industry that we know here in Detroit, a lot of the decisions that are being made about future product, future power-trains, and future market investment is being driven essentially by Chinese consumers and the Chinese government.”

American manufacturers are also spending more time and resources in Chinese markets. Howes says GM has 17 plants in China. And earlier in the year, Ford announced it would be moving production of its Focus model compact car to China and shipping it to the U.S. for sale.  

Listen to the entire conversation with Daniel Howes, Detroit News business columnist, above. 

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