Automotive logistics China 2008

The turning point in Beijing's and China's modern history came in 1949 as the Chinese People's Liberation Army formally entered Beijing on January 31st. It was in Tian'anmen Square on October 1st, 1949, that Chairman Mao Zedong proclaimed the establishment of the People's Republic of China, with Beijing as its capital. The People's Republic of China opened its doors to the West in the late 1970s, American Motors (AMC) began negotiations in 1979 to sell its vehicles in its vast domestic market and to use low-cost Chinese labour for its supply chain. The Chinese sought access to modern automotive technology, as well as new hard currency investment and income. The result was BJC in partnership with the Beijing Automotive Industry Holding Corporation, to produce AMC's Jeep Cherokee (XJ) in Beijing. The Chinese government created a large-scale joint venture with AMC that was a successful venture. It became a showcase that was often visited not only by communist Chinese leaders, but also by foreign politicians and business executives. Although there were many problems, AMC's joint venture was used to attract other business from abroad, as well as placate other foreign investors who struggled to establish operations in China. Production was limited to military consumption until the 1990s. The factory was relocated and integrated into Beijing-Benz DaimlerChrysler Automotive in 2005.

A city in the midst of reinventing itself, Beijing is a place of frenzied construction that covers an area of about 750 square kilometres. New housing, office complexes and roads seem to spring up overnight. But the city remains the epicentre of tradition, with the treasures of nearly 2,000 years still on view -- in the famed Forbidden City and in the luxuriant pavilions and gardens of the Summer Palace. The city features the massive austerity of Tiananmen Square to bustling new business and shopping districts that gleam as brightly as any in the West. The palaces and city towers along both sides of the square are preserved as Beijing's cultural legacy. Former imperial residences and gardens have been opened for public viewing. Beijing is a city that intrigues, inspires, and rewards. Mainland carmakers and foreign partners such as market leader Volkswagen have unveiled plans to spend more than $15 billion in the country, tripling capacity to more than 7 million cars by 2008.

China will become the world's second-biggest car market by 2010, McKinsey & Co predicts, but the country could become a victim of its own success in that there are millions of unsold cars. With this huge capacity, the next step to consider is to export Chinese-made cars to the rest of the world. General Motors, Toyota and Honda are planning to introduce hybrid vehicles in China in the next few years. Hybrids will play an important role in OEMs' future growth in China. The Chinese government wants the country to be energy-efficient and actively encourages the introduction of hybrid technology. Consequently, GM has agreed to share hybrid technology with Shanghai Automotive, GM's principal partner in China. GM also is committed to sharing its fuel-cell technology, another area in which SAIC and the Chinese government have taken an interest as the technology matures. Ford Motor Company's Premier Automotive Group, which has had its share of troubles in the past couple of years, is looking forward to doubling the number of cars it sells in China next year, from roughly 10,000 to 20,000. The demand for luxury vehicles is very strong and Volvo, which accounted for about half of PAG's China sales for 2007, expects sales to climb 80 per cent in 2008. Land Rover sales are expected to double from the current level of 2,500 units, and Jaguar sales should be up by 60 per cent.

"What the Chinese can copy is the appearance of a product. They cannot copy the inside technology, like the engine and transmission," according to Chuan Tang, an analyst at KGI Securities.

Poor logistics and the expense of using imported parts also raises the cost of car making in China. It costs some $10,000 more to buy a Chinese-made Buick Regal compared to the price in the United States.

Finally, persuading Europeans and Americans to buy cars made in China, a country known more for shoes, textiles, toys and cheap electronics that have flooded Western markets in recent years, could require a leap of faith.

"Passenger vehicles are not like PCs in that the design, brand and other value-added factors weigh heavily in a buyer's purchasing decision," said Nissan's Shiro Nakamura.

"If we're just talking about whether (the Chinese) will be able to build vehicles that can transport people, they'll go a long way. But when it comes to building up a brand, it's going to take a long time."

Dadi Western Restaurant
For a Western take on Beijing dining, visit the Dadi Western Restaurant.
Recommended Dishes: Chicken Roll with Butter, Ham Salad, Jilin Prawn, Pan Fried Hodgepodge, Roast Mandarin Fish with Milk, Stewed Beef in Pot, Fried Pork Chops

Visitors to Beijing are warned to stick to the fashionable tourist spots to avoid being charged Tourists are however advised to stick to spots fashionable with tourists, to avoid being charged extortionate prices for drinks and food, for example. Nightclubs usually charge an entrance fee.

To experience the nightlife of the city, visit the larger-than-life Tango Club, complete with three different levels, perfect for a dazzling night of dancing.

Time: Beijing is 12 hours ahead of US Eastern Standard Time and 6 hours of ahead of Central European Time. All of China is in the same time zone.

Money: Renmimbi (RMB or yuan for short). China's currency is pegged to a group of foreign currencies, and hovers around 7 RMB per US dollar 15 per GBP and 11 per Euro.

Phone Calls: To make international calls, dial "00" to be connected to an international (English-speaking) operator. Within China, dial 11-digit mobile numbers directly. For local calls in Beijing, just dial the 8-digit number without the city code (010). For domestic long distance calls from Beijing, dial the city code first.

Getting there: Beijing Capital International Airport, about 12 miles (19 kilometres) north-east of the city centre. Currently, using a car or taxi is the only way to travel to the city.

Getting around: Driving in Beijing is on the right side of the road. The top highway speed is 120km/h (about 75mph), and highway signs generally use Pinyin, the phonetic spelling. Beijing's four-line subway is a good, if limited, way to get around the central part of the city; buses and inexpensive taxis (no tipping required) fill the gaps. Consider hiring a car and driver.

Checklist:
Passport/Visa: You can't enter China without a passport and visa. Keep copies in a secure place.
Health concerns: SARS and malaria are no longer concerns in Beijing, but AIDS and Hepatitis A are, so take precautions.